Date Published 22 May 2008
Home owners received a double dose of good news yesterday as experts dismissed predictions of a property crash - and Britain`s biggest mortgage lender cut its rates.
Despite doom-mongers` gloomy forecasts, house prices remain up on last year with annual growth at 1.7 per cent last month.
The figure comes as Halifax announced it is to cut some mortgage rates by between 0.10 and 0.20 percentage points for existing customers, potentially saving them hundreds of pounds per year.
John Wriglesworth, housing economist at Wriglesworth Consultancy, said "There is no sign of a property crash and never has been. Predictions otherwise have been grossly exaggerated. What we have we seen is a small correction from a massive peak and there is very little chance falling into an abyss. What we need is for lenders to loosen the purse strings."
Halifax`s decision to slash rates on its three- and five- year fixed and tracker deals means customers looking to remortgage will now pay up to £200 a year less on an average £100,000 mortgage.
The cuts follow the lead of the Nationwide Building Society and Abbey, which reduced rates last week.
In further good news, the latest house price index - based on information from five major UK house value surveys - showed annual growth remained steady at 1.7 per cent last month.
Although, down for 3.6 per cent in March, the figure shows the house prices are still up on last April.
The typical house in the UK is now valued at £215,089 six months ago. But annually, the typical home owner would have seen the price of their home rise by £2,279 since April 2007.
Stuart Law, of Assetz House Price Index which carried out the research, said "I`m yet to see any firm evidence of a house market crash. Values in this country have remained extremely robust." He said with some lenders now cutting their rates, the market "should return to a degree of normality, perhaps as soon as September".
Peter Bolton King, chief executive of the National Association of Estate Agents, also predicted an upturn in the market in the second half of the year. He said: " We just need a couple of good deals offered by lenders and people will start to borrow and buy again."
But while mortgage market looks more positive, the cost of personal borrowing is soaring, with the rate for a £7,500 loan rising by almost one per cent to an average of 8.88 per cent in the past six months.
A survey for MoneyExpert.com as found loans were becoming more difficult to obtain as lenders imposed stricter criteria.