House Prices and the Housing Market Continue To Circle The Drain
House prices are now 2.3 per cent lower than they were a year ago. That’s the latest finding from the Land Registry who also report that property prices in England and Wales fell by 1.1 per cent in March 2011 alone.
Many lenders have confirmed that house price movements have remained stagnant for the last half of 2010, and that there appears to be little sign of growth in the early part of 2011, however it would seem that this is in direct correlation with other UK markets which have also seen sluggish growth in the first quarter of this year.
What is even more concerning is that the Land Registry figures indicate that property values are still on the decrease in the UK, which is not good news for homeowners who were intending to move home as they will not get the best value when they come to sell and move on.
The only area in the entire country that have seen an increase in property prices since the crash are properties in the capital of London, however this has always been a sought after area and is not hugely correlated to the rest of the country. Meanwhile, properties in North East England have seen a drop in prices of almost 10%.
With house prices reducing to more affordable levels and banks rediscovering their appetite for mortgage lending, it is perhaps surprising that the housing market has remained so subdued.
There are signs that things are improving. According to HM Revenue and Customs, there were eleven thousand more house sales in England and Wales in March 2011 then there were in February as the number of sales rose to 66,000.
The Bank of England also reports that mortgage approvals have risen since the beginning of 2011 and experts predict that this number will continue to rise as remortgage rates become more and more attractive. Remortgage deals are likely to stay competitive all the time that the Bank Base rate remains at its record low of 0.5 per cent.
Of course, news of interest rate increases caused many homeowners to start looking for remortgage deals in order to take advantage of the low interest rates that are still available. Many are looking to obtain a new fixed rate remortgage in order to try and hedge against hikes in interest rates over the coming months and years. But this high demand has caused interest rates on fixed rate remortgage deals to shoot up prematurely.
Most who own their own property are unwilling to sell at this point in time as they would lose out on a lot of growth in the value of their homes due to average property prices being so low, so looking to remortgage and ‘waiting out the storm’ is the only other option.
Remortgages were often a way for people to release equity from their home and finance home improvements, however as lending criteria is far more strict now, many are unable to obtain the full amount of finance required for such projects.
Timothy Frodsham writes for JustRemortgages.com one of the UK’s top sites for the latest remortgage rates and best remortgage deals.