Stability of UK Housing Market Contingent upon health of the Eurozone
The condition in the Eurozone remains abysmal and eventually will affect all European banks. Those in the UK will also feel the ripples in the pond, according to those close to the banking industry. To think the base rate will stay at 0.5% for another 2.5 years is becoming more of a certainty, according to one broker. A collapse in other European countries will be like the bottom row of a house of cards falling, so economically, a struggling economy here is that much more likely.
The UK housing market will certainly be negatively affected by the fall in the house of cards. High loan to value mortgages are at risk of becoming rare again, due to banks not functioning well with high amounts of debt. Mortgages are an area where they have an extreme amount of control. Either those types of loans are approved, or not.
Ray Boulger, of Jon Charcol, commented on this area of housing and its significance, saying: "If this results in a reduction in their mortgage appetite, it is likely that the first sector to be hit will be the higher loan-to-value mortgages, where there has been a significant improvement in availability and pricing over the last few months.”
Boulger added: "This suggests either buying a lifetime tracker, where the price of the best is generally only 0.25%, 0.5% higher than for a two-year tracker, or a reasonably long-term fixed rate, say for five years.”
The base rate was voted to stay at the low rate of 0.5% recently, approaching the three year mark of the opportunistic level.