UK House Prices

Credit Crunch

The ‘Credit Crunch’ has affected everybody in the UK from banks to individuals, read details and information on the origin of the credit crunch, its impacts, current solutions and lots more...

House Price Implications

Get a Free Quote Credit Crunch and UK House Prices

The UK housing market was beginning to show signs of slowing down even before the effects of the credit crunch started to become apparent. Strong house price growth in the ten years leading up to 2006 had led to prices almost trebling, with the result that many potential purchasers, particularly first time buyers, were priced out of the market.

Falling House Prices: The Lowdown
These record high prices actually started to drop in 2008 and an annual decrease in property prices has been recorded for the first time since 1996. Some commentators, including David Blanchflower, a member of the Bank of England’s Monetary Policy Committee (MPC), are predicting further falls in prices of up to 30 percent by 2010, as a result of the credit crunch. However, others are suggesting that the reductions in interest rates being encouraged by the central banks will result in lower costs for borrowers in the medium to long term, with the result that house prices will not fall as far as the pessimists are predicting.

Nevertheless, one thing that all the pundits do agree on is that the mortgage market has changed forever as a result of the credit crunch and 100 percent mortgages will not be available anytime soon.

Future House Prices
Although the Bank of England has attempted to reassure mortgage lenders that the worst effects of the credit crunch have passed, predicting future house price levels is difficult if not impossible, at present. After predicting a 7 percent fall in house prices for 2008, in May, the Council of Mortgage Lenders (CML) has now abandoned further predictions as ‘futile’. Although not putting any figures on it, the CML stated that ‘any market recovery is unlikely before 2010’.

The Nationwide Building Society is predicting prices falls of ‘up to 25 percent’ by 2010, whereas Savills, the estate agent, appears slightly more optimistic, suggesting falls of around 15 percent during this period.

Until the effects of the credit crunch and all its ramifications have been fully assimilated by the mortgage market, speculation regarding the level of UK house prices is likely to remain pure conjecture. If the experts can’t agree, what hope has the average punter?

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Typical Interest Payments

First Time Buyers

2.89%

Purchased Fixed

2.89%

Discounted Rate

2.99%

Buy To Let

2.99%

Commercial

3%

 

 

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