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Associate Article

House prices slow with consumer confidence

House prices across the UK fell by 1.1 per cent during November, which is the biggest monthly drop since December 2006. Prices in London also took a hit, with the sharpest drop since August 2005 taking place in October. Average residential property in the UK now costs £194,895, and £354,272 in London.

Prices seem to be dipping in the wake of the interest rate rises between July 2006 and July 2007 and the consequent rise in mortgage repayments, which is having a knock on effect on consumer confidence. In November Standard life was the first mainstream lender to increase its mortgage rates despite the Bank of England keeping interest rates at the same level during November. It raised its Standard Variable Rate by 0.15 per cent, and other lenders are likely to follow suit.

Purses are likely to tighten further in the next year as lenders become more cautious about who they lend to. Additionally, a report by PWC has said that thousands of people will come off their fixed rate deals in 2008 and unless they refinance they will be hit by extra monthly costs of some £140. It is possible for consumers to refinance, but with mortgage approvals currently at a three year low it’s going to be a harder market place to do this.

The fall off in the housing market is being mirrored by a slump in general consumer confidence. The Nationwide Confidence Barometer fell twelve points in November, which was the biggest ever fall. Fionnuala Earley, Nationwide’s chief economist, said, ‘Uncertainty about the effects of the credit crunch together with rising oil and food prices seem to be affecting feelings about jobs and the future economic situation.’ The report also says that consumers are also aware of house prices slowing, with an expected increase of only 1.2 per cent over the coming six months.

If you’re going to be coming off your fixed rate in 2008 it comes as recommended to shop around and look at new mortgages now. With the full extent of banks’ subprime losses not yet fully known, there is the possibility that we’re in for a more significant economic downturn where it’s more difficult to be accepted for credit. With that in mind, loans are also less likely to be approved next year. 1.4 million people have been rejected just since September, but personal loans remain a good way to consolidate debt. ASDA Finance offer personal loans with a typical APR of 6.9 per cent, they also offer 0% credit cards as a more short term option for debt consolidation, and Natwest has a variety of loans, including graduate and fixed-rate types to help you with decision making.





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