Full Recovery Of Mortgage And Secured Loan Markets Some Time Away
We have had a little bit of good news for the mortgage and secured loan markets over the course of the last week.
Firstly, the Bank of England announced a cut of 0.5 per cent in the base rate of interest, which will hopefully make loans cheaper for many borrowers and then the Government announced that it was pumping £37 billion into the banking system as a rescue package, with the benefits to be passed on to those with, or looking to take out, a mortgage or secured loan.
Despite these positive moves for the housing market, the UK’s biggest building society, the Nationwide, has warned that it is likely to take another twelve months before the housing and loan markets fully recover.
Even though the average price of a house has fallen by more than 10 per cent over the course of the last year and are still continuing to fall, coupled with the reduction in interest rates, affordability is still a major problem for many potential home owners, both for movers and in particular for first time buyers looking to take the first step onto the housing market ladder.
The Nationwide has predicted that interest rates will continue to fall, probably to around 3 per cent, along with inflation and as these factors restore some level of affordability to the market, the demand and desire for home ownership will eventually drive the housing and secured loan markets forward.
A reduction in the London Inter Bank Offered Rate (LIBOR) is also expected over the course of the next few months, which will make it cheaper for banks to borrow from each other, enabling them to pass the savings on to those customers with loans and mortgages.
