Mortgage rate rise predicted for 2012
Housing market experts are predicting a mortgage rate rise and property value drop for 2012.
Slightly more optimistic market predictions, advise that 2012 is likely to be a static year for house prices with a risk of a sharp decline if the Euro collapses. Supply and demand should prevent a serious collapse in prices, many believe. One reason things are unlikely to change significantly is that few houses are being bought and sold. The only transactions are "forced sales", say some commentators, where sellers are moving to take up a new job, or where the owner has died, or where the borrower cannot keep up with the mortgage repayments.
Jeremy Leaf, a north London estate agent, said: "Economic uncertainty rather than mortgage availability has been constraining activity. As a result, I expect that prices are likely to continue their pattern of the end of 2011."
When it comes to Bank Rate, predictions are much easier. Economists are almost unanimous that it will remain at 0.5pc for at least the next year. Unfortunately, it doesn't follow that mortgage rates will also stay low, a mortgage rate rise seems likely.
Wholesale money markets in Europe are drying up as the Euro crisis drags on, and there are signs that the contagion is crossing the Channel. The Government has admitted that Britain has entered a second credit crunch, and the Bank of England has warned of a mortgage rate rise by some lenders, to pass on higher funding.
