Housing Prices Cease to Rise

After January’s credit issues with mortgage companies lending fewer and fewer mortgages the housing prices cease to rise, according to HBOS. The average price of a home in the UK has been £197.244 since December. It seems that prices fell about 1 percent in the last three months until January. At the beginning of last year prices were actually on the rise at 4.5 percent the HBOS commented to the news.

The UK lenders have been making fewer and fewer loans for those in the UK as they have been faced with their own credit problems. Part of the issue resulted from the credit crisis in the US. Since the US mortgage lenders began to lose with the subprime loans the UK has been seeing some of those same effects. The Bank of England was talking about cutting interest rates this week to further help the credit crunch affecting many of the UK residents. This is the second cut in three months that the Bank of England is talking about making. The last reduction was in December.

HBOS believes there are continuing signs that the housing market will continue on the downturn and weak. They believe that the cost of housing will continue to turn for the lower numbers all through 2008. The hope is that with the interest rate cut through the Bank of England the slowdown will be minimal rather than great. The central bank believes the cut will be .25 from 5.5 to 5.25. The meeting is to last two days before any decision will be mentioned in the news.

Employment is another concern in the UK economy. In previous months unemployment was low. This directly affected the property market. Unemployment is now lower than it has been since 1975. This is great news for the UK right now. Since unemployment is down this means that many are able to look at the falling housing prices as a good thing. The unchanged housing prices of the last view months are still at .4 percent decline. Of course this means that housing is more affordable for many, but the lack of any mortgages makes the situation equally difficult.

Luxury homes in London seem to be the only homes currently moving in the market with any success. The reason behind this is the new owners don’t need financing; therefore they can find mortgages if they want and if, they don’t, they just by the homes outright. It seems the homes making sales are more than 10 million pounds.

Another area of the economy to look at is the insolvencies. The UK insolvencies on a personal level have fallen to 3.9 percent in the fourth quarter. This is a good sign that the consumers are now managing to deal with some of their debts since the last year. HBOS is hoping that the interest rates will help the housing market regain strength along with the economic turns towards the better for many. Though the economic growth is slow it is still there.