30/04/2008 by Dave.

The UK housing market is not set for a major crash, according to one expert.

Assetz said that much of the media hype surrounding the housing market and a possible crash is unfounded.

It claims that the market is simply levelling out after years of rapid growth and believes that prices will begin to pick up again towards the end of 2008.

“As I have been stating for some time now, the housing market is very unlikely to crash,” said Stuart Law, chief executive of Assetz.

“The fundamental economics of supply and demand support this – the government has made it clear we need to build 240,000 new homes per year up to 2016 to meet current targets but in reality, today’s house-builders are building nowhere near this target.

“In fact, a fall, as opposed to an increase, in new starts is expected over the next two years,” he added.

Mr Law went on to say that he expects house prices to rise by five per cent.

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21/04/2008 by Dave.

The average borrower seeking credit card deals is finding the cost of plastic increasingly steep, it has been claimed.

Financial website MoneyExpert.com has claimed that credit card providers are defying the Bank of England’s recent interest rate cuts and raising their own interest rates, landing borrowers with increased risk.

According to the financial site, the average standard APR on credit card purchases has shot up 0.56 per cent over the past six months, reaching 17.12 per cent.

Sean Gardner of MoneyExpert.com said: “Everyone is finding it more difficult to make ends meet as the cost of living rises. People will want to turn to credit and that means splashing the cash on the plastic.

“Most of us would normally seek out a new zero per cent deal to tide us over the bad times, but with lenders playing a cautious game getting one of those cards is more difficult than it used to be. You’ll need to convince the card company that you can afford to repay your debts.”

Further worrying signals were issued last week as banks met the base rut cut with a series of increases in the interest rates on their mortgage products.

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02/04/2008 by Dave.

Six per cent of Britons intend to put off plans for buying a house as a result of the global credit crunch.

That is according to new figures from Money Expert, which said that people are becoming increasingly concerned about their own financial stability.

A report from the firm highlighted that 57 per cent of Brits plan to cut back their spending over the next 12 months.

This translates to fewer people making big purchases such as holidays, cars and homes.

Although Money Expert welcomes the prudence of many Britons, Sean Gardner from the firm warned that panic must not set in.

“The credit crunch is moving on from being something that just affects bankers to having real effects on real people in the real economy,” he commented.

“There is however a risk that we could talk ourselves into a recession by panicking unnecessarily. Certainly anyone who is struggling financially should be taking action but that has always been the case.

“There are still plenty of good deals out there and people with good credit records still have plenty of choice. There’s no need to panic,” continued Mr Gardner.

The global credit crunch has affected the number of available mortgages, with many lenders pulling deals from the market.

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20/03/2008 by Dave.

UK buy-to-let property investors may turn away potential tenants who receive the local housing allowance (LHA) because they feel they cannot trust them to keep up with rent payments.

New research from the National Federation of Residential Landlords (NFRL) suggests that many buy-to-let investors are unhappy with the LHA scheme.

It is a break away from the traditional housing benefit scheme, which saw rent paid directly to landlords from the government.

With the LHA, money will go to the tenant, who is then free to find accommodation and pay the landlord personally.

The NFRL research shows that many buy-to-let investors may begin turning away potential tenants over fears of missed rental payments.

“At forums I have attended, landlords have complained about not being paid rent,” Tom Reynolds, from Hampsons letting agents, told the Observer.

“In the past, they have been very accepting of housing benefit tenants because they would get regular payments, but now fewer may be prepared to accept them,” he added.

The government is trialling the new LHA scheme in 18 areas with a view to expanding it across the country.

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11/03/2008 by Dave.

House price falls have increased to near ‘historic levels’, the latest house price balance compiled by the Royal Institution of Chartered Surveyors (Rics) has revealed.

According to the survey, 64.1 per cent more chartered surveyors have recorded a fall than a rise in house prices - up from 54.7 per cent in January.

This rivals the all-time low of June 1990 when 64.5 per cent more chartered surveyors noted a fall than a rise in prices.

It is thought that the price falls have been driven by weak demand rather than an over-supply, as there has not been an upturn in the number of instructions to sell property - and this is unlikely to change given that employment conditions remain strong, meaning homeowners are under little pressure to sell.

Meanwhile, weak demand caused the stock of unsold property on surveyors’ radar to increase by 8.5 per cent in February.

“Confidence in the market is clearly having an effect on prices,” commented Rics spokesman Ian Perry.

“A combination of a lack of available finance and weakening demand is causing a slow drop in capital values. While there is very little new supply coming onto the market, it is unlikely that there will be significant price drops in the short term but the build up of unsold stocks will encourage buyers to negotiate lower asking prices.”

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04/03/2008 by Dave.

New research has shown that clothes selling cheap fashions are enjoying a boom during these days of economic slowdown.

A survey by consumer analysts Mintel found that there was a growth in the value clothing market - which includes bargain retailers such as Matalan and TK Maxx - of 45 per cent over the past five years. This came during a period when the clothing market as a whole grew by only around half this rate.

Katrin Magnussen, senior retail analyst at Mintel, thinks that value clothing has become “a lot more accessible and more importantly acceptable” recently.

“Value clothing is one market that could escape unscathed if British shoppers do choose to tighten their purse strings,” she said.

The lure of the ‘buy today, wear tonight, forget next week’ outfit is illustrated by the fact that 36 per cent of adults buy all their basics at these shops.

This figure is 41 per cent amongst 15-24 year olds, who need to be even more thrifty with their threads as, on average, they receive lower wages and benefit payments.

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27/02/2008 by Dave.

Financial experts have claimed that harsh lessons on bad debt and unrestricted mortgage lending for residential property have been dealt out by the credit crunch.

Noting a changing climate for lending in the US and the UK, independent financial services group Blevins Franks claimed that mortgage products were getting harder to come by, but saw the downturn as an inevitable part of a cycle.

Matthew Weston, overseas mortgages manager for Blevins Franks, claimed that the effects of the credit crunch were helping to breed more caution in the UK and the US – among lenders and borrowers alike.

He said: “Lenders over there [USA] have become more risk averse since the credit crunch. High risk profiles such as non-resident buyers and subprime clients have noticed the biggest changes.

“When times are bad lending becomes more restrictive and then frees up again as and when the economy strengthens. In a way it serves to educate mortgagors not to borrow recklessly.”

According to the Global Property Guide 2007, US home prices fell five per cent year on year in October 2007, slipping to an average value of $207,800 (£106,000).

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25/02/2008 by Dave.

Alistair Darling is being put under pressure to make big changes to the stamp duty system.

The chancellor is due to deliver his first Budget in March and many commentators believe that he may take the opportunity to raise the stamp duty threshold.

However, although the National Association of Estate Agents (NAEA) is also calling for the threshold to be raised, the organisation would like to see other changes made.

Under the NAEA’s proposals, the threshold would be increased to £200,000, with a one per cent tax levied on properties worth up to £300,000.

The organisation wants a system to be introduced whereby tax is only paid on the part of the value above the threshold.

For example, on a property worth £250,000, the first £200,000 would be tax free, while a one per cent tax would be levied against the final £50,000.

“The government needs to be aware that with inflation rising consumers need a helping hand. We would like to see a scale of stamp duty that reflects the house price inflation in recent years,” commented Stewart Lilly from the NAEA.

The proposals would see the highest level of council tax, 4.5 per cent, levied on properties worth over £2 million.

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15/02/2008 by Dave.

Despite many analysts forecasting that interest rates are set to fall over the coming months, one firm believes that cuts will be limited.

Legal & General has expressed its view that interest rates will not fall sharply due to a mixture of domestic and global market conditions.

It follows the publication of the Quarterly Inflation Report, which led many commentators to predict that the Bank of England would take a cautious approach to reducing interest rates.

However, most still forecasted significant cuts over the rest of the year but Legal & General is not convinced.

“It is important to remember that the pound has fallen significantly in value, particularly against the Euro and Asian currencies. This will provide a stimulus to the economy by making UK exports more price competitive but it will also mean that imports will be more expensive, putting upward pressure on inflation,” commented James Carrick from the firm.

“The Bank of England might find it difficult to strike a balance between moderate growth and stable inflation.

“With this backdrop the prospects for significant rate cuts in the UK are quite limited in my view,” he added.

Thebase rate of interest was cut by 0.25 percentage points in February, bringing interest rates down to 5.25 per cent.