Mortgage News Can Gordon Brown Help Avert Further Mortgage Market Woes 1392

Can Gordon Brown help avert further mortgage market woes?

15 April 2008 / by Joy Tibbs
Gordon Brown is meeting with a number of banks over breakfast this morning to discuss the current state of the housing sector. He is expected to reassert the importance of passing Bank of England rate cuts onto consumers, which some mortgage lenders appear reluctant to do amid increasing turmoil in the global financial markets.

Representatives from Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide and the Royal Bank of Scotland will attend the Downing Street discussions. The prime minister said yesterday that sorting out the economy is currently the Government’s “sole focus”.

The meeting coincides with several worrying reports about the mortgage market, including a particularly dismal report from the Royal Institution of Chartered Surveyors (RICS). Its most recent figures show that a higher number of surveyors reported a fall in house prices in March than ever before in the history of the survey, which began in 1978.

The house price balance fell for the eighth consecutive month, with 78.5 per cent more surveyors reporting a fall than a rise in house prices. This is an incredible 65.7 per cent increase compared with February, exceeding the historical low of June 1990, when 64.5 per cent more surveyors reported a fall.

RICS spokesman Jeremy Leaf says: “Sentiment is at a very low ebb and will continue to remain depressed while the economy suffers from this unique liquidity blight. The slowdown in prices is directly attributable to a lack of available finance which has hit demand.

“However, until new supply increases dramatically a significant crash remains unlikely. The next six months will be a crucial period for homeowners but would-be buyers with larger deposits may see this market as an opportunity to acquire property in areas to which they could not previously aspire as recently as the end of 2007.”

Chief executive of the National Association of Estate Agents (NAEA), Peter Bolton King, agreed that there was hope for the mortgage sector in spite of the somewhat negative RICS report. “The market is battling with the credit crunch, which has undoubtedly had an effect on confidence,” he says.

“However, the key factors that underpin the housing market still exist – low unemployment, historically low interest rates and a pent-up demand for houses. We can see from the figures that it is not all doom and gloom out there and we need to tread very, very carefully before making long-term judgements on the market at this current, unsettled, time.”

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Written by Editorial Team