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House prices and the state of the property market have probably hit rock bottom, according to banks and building societies.
Property values are about to level out and then show a modest increase, says the Council of Mortgage Lenders (CML), which speaks for all Britain’s major mortgage lenders.
Mortgage availability is also ‘broadly stable’ and has remained at around the same levels for two years, adds the CML.
The housing market analysis is based on the latest economic figures released by the government and the Bank of England.
The CML backs a Treasury forecast that suggest house prices have bottomed out and will stabilise over the next 18 months or so before beginning to rise in line with wage inflation.
“Despite the weakness of consumer sentiment associated with ongoing pressure on household incomes and the uncertain economic outlook, there are no signs of significant house price falls,” said CML chief economist Bob Pannell.
“Values continue to be strongly underpinned by the limited volumes of new build and forced sales. While current survey data suggests that house prices nationally may be drifting modestly lower in nominal terms, the prevailing view among economists is for house prices to stabilise through 2012 and then revert to growth of four to five per cent per year from 2014 onwards.”
Meanwhile, research by the Intermediary Mortgage Lenders Association (IMLA), the trade body representing lenders that market products through brokers, has revealed 34 per cent of intermediaries believe standard mortgage business levels will improve during the fourth quarter of the year, with 26 per cent expecting business levels to increase between three per cent and seven per cent.
IMLA chairman John Heron said: “This positive attitude from intermediaries is a reflection of the general improvement seen recently in the mortgage market. The pickup is slow but market conditions are gradually improving, particularly in the buy-to-let and remortgage markets.”
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