A “MORTGAGE price war” would provide a welcome boost for the housing market, a leading property association has said.
Reports today revealed housing is more affordable than a year ago, according to the UK’s biggest mortgage lender.
But high mortgage rates mean it is still a stretch. The Halifax, part of Lloyds Banking Group, said that a typical home in the UK cost 6.7 times average annual earnings of a full-time worker.
This is down from 7.3 times a year ago, which was a record level
Commenting on the figures Jonathan Rolande, from the National Association of Property Buyers, said Brits would embrace a lending war: “The first shots have been fired in what many commentators are calling an outright mortgage war. Many are hoping that mortgage rates will fall, closing the huge gap with savings rates which have been slower to increase in line with the base rate.
“With Autumn approaching fast, many will be hoping for reductions to help them make ends meet when fuel bills drop in. Unfortunately, any new, lower mortgage rates are usually only for new customers or those who take a new product.
“Anybody with a Variable Rate loan that has seen increase after increase will have to refinance to reduce costs unless the Bank of England drops the base rate – something that seems very unlikely to happen for many months or more.”
He continued: “A mortgage price war would be welcome. With sales volumes at a ten-year-low and prices falling it would be a parachute to help slow the descent of the property market. There is a real fear that once prices begin to tumble quickly, we could be in a phase where it takes years for them to recover, leaving millions unable to move and thousands of households with negative equity.
For a month or two we should be content that rates do not increase. To see them fall would be a huge relief for much of the UK.”