Home Values to Fall More By Next Year
The Bank of England released data revealing that home prices will fall more by next year. The slow housing sales and stagnant economic growth is likely to end in a crash of the housing market. In fact economists say a double dip recession in the housing market is more likely to occur than not.
The Bank reported that mortgage approvals are at half the amount as they were at pre-crisis level. In the early 1990’s the average was around 100,000 per month and the numbers in May showed approvals were down to 50,000. That number is expected to remain or fall versus grow. The Land Registry revealed that house prices in England and Wales fell between May and April by 0.2 per cent. Sales are not expected to increase due to the high level of deposits required by first time buyers. Pre-crisis deposits averaged £13,000 and it is now £33,000. Those seeking a remortgage have declined as well. This combined situation of lower applications for first time buyers and remortgage along with lower home values is a disaster waiting to happen. Lenders will be pushed to come up with solutions to prevent more economic problems. New options will have to be visited and lenders will need to come up with creative and sustainable solutions for borrowers. The new options would increase the number of applicants and give a small boost to a market that is suffering and has a major role in the overall economy’s health.