Mortgages Uncovered

Lender’s requesting government intervention in helping their desperate funding requirements may not be the necessary answer in the long term, but is certainly needed. Frankly, without mortgages, the housing market is deprived of oxygen. As long as this continues to be the case then stamp duty will only provide a sideshow.

Although, amid the gloom, we should at least keep a strong sense of perspective. For reasons that do not appear entirely clear, both the Nationwide and Halifax are reporting large interest rate falls over the year, 8.1% & 8.8% respectively. There are other measures that reveal a different picture. Such as the FT house price index, which is produced by Acadametrics showed prices up by 0.3% year on year during July, whilst the official measure which is produced by Department for Communities and Local Government, showed annual rises of 0.6% in June 08. Both these series of figures cover a wider range of general transactions than just the lender’s data.

Based on these measures, house prices are clearly falling back, although thankfully have not yet completely collapsed, however, builders will tell you that activity has. However, if there is no faster remedy to this 3 year squeeze on lending, then the current differences in house price measures could soon prove academic.