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Mortgage and property markets forecast to rise again
11 June 2008 11:41
Mortgage lending will improve again once liquidity improves, an independent advisory firm has predicted, while falls in house prices will stimulate activity in this market too.
Latest Council of Mortgage Lenders data revealed that gross lending dipped by eight per cent year-on-year to £25.3 billion in April, while figures from Nationwide indicated that property prices fell by 4.4 per cent year-on-year in May to an average of £173,583.
Yet Bestinvest head of mortgages Peter O'Donovan has forecast that as liquidity returns to the market, criteria will ease and lending will pick up again, asserting that the Bank of England will eventually act to end the discrepancy between base rate and product rates.
He claimed as well that the recent decrease in house prices would make properties more affordable for first-time buyers as, although rates are higher than previously, they will be able to save up the ten per cent deposit currently needed to obtain a mortgage.
Mr O'Donovan also anticipated that there would be a further stimulus to property sector activity as first-time and single property-owning landlords are prompted by high rates to cut their losses, leading to a greater flow of housing stock back onto the market.
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