UK Homeowners Do Not Need To Worry
Not everyone is in a panic, despite the fact that the UK housing market hit its lowest point since November 1992. Mr Kuo from fool.com said that data from the Royal Institution of Chartered Surveyors (RICS) is confusing mortgage borrowers.
"Within the space of a week, RICS has reported that house prices are unlikely to decline materially and it has also said that house price falls have reached levels not seen since the early nineties," he explained.
Mr Kuo reassured borrowers by predicting: "As part of a wider report entitled Your Finances in 2012, Fool.co.uk predicts that the price of an average house in the UK will fall this year before resuming growth at the long-term rate of eight percent per annum after that."
The recent RICS report states some current truths about the housing market, but it also offers some promises.
"The majority of mortgages that are resetting are either two or five-year fixed-rate products. According to data from the Bank of England, interest rates on five-year fixed-rate mortgages with a 75% loan-to-value (LTV) ratio were averaging below 5% for most of 2003. The same mortgage product had an interest rate of 6.08% in November."
"With base rates expected to fall further (we see them at 5% by the middle of 2008) all of these rates should come down somewhat reducing the difference between borrowers' new rates and their old ones. However, there is no getting away from the fact that higher rates (mortgages) will be a reality for many home owners."
This may be true of homeowners with high-risk credit ratings, however, most mortgage homeowners will not be hit hard.
Published on January 21, 2008
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