House Prices Fall 13.5%
The deepening economic condition left it harder for people to get a mortgage due to the financial markets being in crises and people are scared to commit to a mortgage as unemployment continues to rise. Uncertainty about the future along with job security worries has put people off from buying a new home despite the fall in house prices.
The Bank of England has been cutting interest rates to try and stimulate the economy but as yet the economy shows no signs of recovery just further shrinking. As banks have less money for customers to borrow there is a shortage of mortgage funds. It is expected that the housing market will not improved until the economy stops shrinking and there is increased credit in the financial markets meaning mortgages will become more affordable once again.
The amount of people failing to pay their mortgages has doubled in recent times up 92% from last year. The government has come up with a string of initiatives to try and help people keep their homes despite the rising unemployment and economic turmoil.
The initiatives include a scheme where not-for-profit housing associations buy homes from vulnerable people who are struggling to pay their mortgages and then allow them to keep living their. Lenders are also legally compelled to use repossessions only as a last resort.
House prices are expected to fall further for the first half of 2009 and then make a slight recovery in the second half of the year with an overall drop for 2009 expected to be around 5%.
