House prices have continued to slide downward in all areas of the UK except that of London.  While London has continued on the pace of rising house prices it has been helped along with investors looking to purchase homes near the Olympic venues.  Elsewhere, prices have dropped and homeowners have seen their equity levels decline as well. 

Lower house prices and low interest rates on mortgages have not helped bring an influx of buyers to the market.  Lending has been difficult to obtain and deposits are high.  Homeowners looking to remortgage are also finding it difficult to obtain approvals.  Yet, there is a more competitive market emerging among lenders.  While lower interest rate mortgages and remortgages were enough a few weeks ago to bring in borrowers, it appears it is going to take higher loan to value (LTV) deals.  Some higher LTVs have already been showing up in the mortgage lending market which will help borrowers tremendously.

Higher LTVs and continued cheap remortgage and mortgage deals will help bring in borrowers.  This should bring in more first time buyers and help those homeowners who had wanted to upgrade their property to do so.  Prices will start to level off and the housing market will see a boost.  Without a healthy housing market the economy will continue to remain weak.

Lenders are due to keep their fixed rate and tracker rate deals low as interest rates remain low.  The Bank of England’s Monetary Policy Committee is expected to leave the interest rate levels at 0.5 per cent for many months ahead.  If the deals on the market are sweetened up by higher LTVs then perhaps the housing market can rally somewhat.