The,shortage,property,pushing, finance, share, loan The shortage is property is pushing up the prices
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However, there are signs the market is beginning to cool, with April's rise the smallest recorded for the year and annual growth falling slightly to 10.9 per cent, from 11.1 per cent in March. The Bank of England's monetary policy committee recently raised the bank rate from 5.25 per cent to 5.5 per cent. Thats a six-year high and the last time the cost of borrowing was so high, Britons collectively owed less than £700 billion. Now however, the figure has soared to more than £1.3 trillion and is mostly made up of mortgage debt. Good economic and employment conditions have been underpinning housing demand, while the stock of unsold property on agents' books fell in March this lead to the tightest market conditions in the UK for almost three years. The demand for property remains healthy and together with tight supply, will continue to push up prices. The steady economic growth and a strong labour market will continue to support healthy housing demand. This view of the market is also taken by those looking at remortgages. Whether this outlook will remain for the future who can tell. However, negative real earnings growth and the increase in interest rates since last summer are expected to exert increasing pressure on householders' finances, resulting in a slow down in house price inflation over the coming months. The Council of Mortgage Lenders (CML) released figures recently that showed the proportion of first-time buyers' salaries taken up by mortgage payments is at its highest level since early in 1992 when interest rates stood at 10 per cent. First-time buyers will see the dream of home ownership slip further from their reach as the Bank of England continues to raise interest rates. A rise in the cost of borrowing is seen as a certainty and will push the bank rate from 5.50 per cent to up to 5.75 per cent if the Bank decides that decisive action is necessary to tackle the threat of inflation. Either way, the bank rate will be back at levels not seen since 2001. Any increases in mortgage costs also pushes people to consider remortgages. This will be a major set back for families and young people already struggling to get a foothold on the property ladder. The situation is so tough that millions of over-30s will never be able to afford their own home and will live out their lives in rented properties. Home ownership is falling in the UK as more people choose, or are forced, to rent. Figures from the CML showed that first-time buyers spent an average of 18.3 per cent of their gross income on mortgage interest payments in March. The figure is up from 16 per cent at the same time one year previous. The CML figures also show buyers are now forced to borrow an average 3.31 times their income to buy their first home. This compares with 3.15 times only one year ago. The growing cost of buying a home is preventing many from entering the market with the number of first-time buyers falling to 33,100 in March, down 8 per cent on the same month in 2006. Affordability constraints continue to be a barrier to home-ownership for many first-time buyers. Mortgage lenders are trying to help by offering innovative products where appropriate, but will want to ensure lending remains prudent. In any case, its best to shop around for the best deal and still prepare for the worse. If you are spending more than half of your monthly income on mortgage repayments, maybe it would be a good idea to hold off on buying and wait until prices go down.
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