Zoomf Blog - UK Property Blog.

• Michael Coogan, director general of the Council of Mortgage Lenders had this to say…“We expected the MPC to hold rates today as it wrestles to control rising inflation in a weaker economic outlook. But clearly there are still affordability pressures on borrowers and a widespread funding shortage for lenders. We hope that as the effects of the Bank of England’s liquidity scheme feed through the financial system there will be some benefits for mortgage lenders, and in turn borrowers, later in the year.”
• Helen Adams, MD at FirstRungNow.com commented on the affect on first time buyers…“Today’s announcement leaving no change in interest rates means a period of stability which is good for first time buyers. Low-ish interest rates mean that mortgages are no more expensive than last year. With property prices stabilising too, there is no rush to get onto the property ladder. However, the reluctance of mortgage-lenders to lend first timers as much as they used to, means that many will only achieve their home-ownership goals if working with their parents either for help with the deposit or some sort of co-financing.”
• Liam Bailey, head of residential research at KnightFrank, was disappointed in the decision…“Maintaining rates at 5.00% is not at all helpful for the UK housing market. The market remains under very significant pressure at the moment, year on year sales volumes are down by more than 50% and prices have fallen by 7% since the peak in October last year. The difficulties experienced by mortgage borrowers accessing finance are likely to continue putting further pressure on prices and volumes. The Bank of England have a difficult job in squaring the need for easier credit conditions with inflationary pressures elsewhere in the economy. Our view is that the UK housing market will see prices fall by at least 5% in 2008, but without lower base rates and a more normalised mortgage market we could easily see price falls well into double digits.”
• Neil Chegwidden, Head of Residential Research at Jones Lang LaSalle comments… “millions of UK households and homeowners will notionally be ‘understanding’ of the position facing the Monetary Policy Committee (MPC) – stuck between a rock, spiraling inflation, and a hard place, a deteriorating economy and housing market. Today the MPC has come down on the side of the rock, rather than the hard place which suggests, in simplistic terms, that they are more concerned about inflation than a recession.”

Technorati Tags: property, real estate, economy, interest rates

Some wanted a cut in interest rates to boost spending, but most predicted that interest rates would be held at 5%, as indeed they have been. Last night, Peter Bolton King (Chief Executive of the NAEA) commented that more needs to be done to ease pressure in the housing market ahead of today’s decision. He had this to say…

“The NAEA is calling on the Chancellor and Prime Minister to consider other options to give people a break such as a stamp duty holiday for first time buyers and temporary tax relief on the mortgage interest of people’s primary residence. This would at least ease the difficulty that people in this country are facing and give them the confidence boost that is needed to the market to get back on a more positive footing.

“The housing market is vital for our economy and the Bank of England has to make a decision about interest rates. But what is clear is that interest rates are dislocated from the situation and that the banks are not passing on any interest rate benefits to customers, if anything the mortgage rates are getting tighter. Clearly, more action needs to be taken to ease pressure in the markets.”

Technorati Tags: Property, real estate, economy

According to new figures released today by RICS’ Building Costs Information Service, the average cost of home improvement work has risen by 20% over the past two years. The main causes of this increase being rising prices of oil and raw materials combined with cheap Eastern European tradesmen returning home. As we reported a while back, the number of Poles leaving Britain (now around half of the estimated one million who had come to the UK) was always going to drive up labour costs. Now it seems we’re feeling the affects.

Repairing overflowing gutters typically cost between £160 and £460 in 2006, now the same job would set you back between £205 and £580 - an increase of 27%. Those who can’t afford to move right now and want to create an extra bedroom from a loft conversion will also feel the strain, a 6×5 loft conversion with 2 Velux windows started at £14,000 a couple of years ago. Now, that same conversion would start at £17,000 - a 21% rise. The cost of a conservatory has also increased by around 22%. But it’s still probably better to pay for the home improvements now than to expect them to get any cheaper.

BCIS Executive Director, Joe Martin, had this to say…

“The current downturn in the housing market is forcing some homeowners to become more creative in meeting their accommodation needs. Many are choosing to stay put and renovate or extend in order to upgrade their property rather than taking on more debt in a falling market. This can be a wise strategy as home improvements add value to a property, and people will be well placed to take advantage of this uplift in value when the market shrugs off the current slump. Given that the cost of home improvements rose by 20 percent over the past 2 years compared with only eight percent in average wage growth, many homeowners are opting to act now rather than paying more further down the track.”

Maybe if we put together a nice plate of Polish biscuits we can tempt them back?

Mmmm Delicje

Technorati Tags: Property, real estate, home improvements

The Bank of England have done the expected and reduced interests rates from 5.25% to 5%. It’s the third cut since December and the decision is said to be largely based on the problems with the housing market. Unlike with previous cuts, homeowners should be feeling the full benefit of this reduction with nine of the big lenders quickly announcing that they would pass on the full reduction to those customers with standard variable mortgages. Those on fixed rate mortgages are likely to be especially disappointed. Oh dear, I’ll put the kettle on.

Technorati Tags: Interest rates, mortgages, property, real estate