Lenders in the UK and worldwide are still cash-strapped which means the mortgages on offer to first time buyers and current homeowners alike are being restricted. Lenders are currently in the process of refinancing their debts and with The Bank of England’s Special Liquidity Scheme being unwound, emergency funding needs to be refinanced by the end of January 2012. The progression of this has been more fluid and successful than predicted as a number of banks and building societies are making lending somewhat more accessible, however the levels of business are still way below average and borrowing in many instances is reserved only for the ‘best borrowers’.
As is well publicised in the press, the Eurozone debt crisis is having a major impact on the banking sector all across Europe which in turn has a direct affect on ability to buy houses. The swap rate money market costs have seen dramatic falls as a direct result of this and as such so have the fixed rate mortgages that are heavily influenced, however banks will find their balance sheets is disarray if the downward trend continues.
In the UK Lenders have made cheap interest-only loans much less accessible which is decimating and resurgence in house sales, unfortunately these loans have been one of the forces having a positive impact on the property market. As this is a massive reduction in availability of credit we will see further falls in house prices if no action is taken.
Other factors having an impact on house sales include;
Government cuts, as the UK attempts to balance the books. Even though we have already seen many public sector job losses, higher taxes and a dip in consumer confidence these trends are likely to continue in waves.
The cost of moving house is actually at it highest level since records began. Is say looking to buy a house in for example Manchester where family homes cost more than £250,000 will face stamp duty bill of £7,500 plus. Then if you add solicitors’ fees, estate agents’ fees, the cost of moving can be upwards of £15,000. This is not even taking into consideration the fact that a 25% deposit may be required on a more expensive home.
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