Gloomy outlook for mortgages and house prices

Recent report continue to reiterate that there are bleak times ahead for the mortgage and housing markets in the UK for the future, with some industry officials stating that the unexplained house price increases in the UK over recent years could have set the nation up for an almighty house price crash. Officials from the International Monetary Fund have stated that house prices in the UK are around 30% higher than they should be, and this could lead to their collapse.

The IMF has said that Britain could be one of the most vulnerable countries in the world to fall victim to a major house price collapse because of the unexplained rise in house prices over the past decade. In addition to this bad news about house prices, the Bank of England continues to warn the nation that the mortgage meltdown is set to get worse, and said that already the number of mortgage deals has fallen by a massive 70% since the credit crunch swept across the country late last summer.

According to the bank of England, around 43% of lenders expect more mortgage deals to be withdrawn over the coming months, and there is set to be an increase in the number of people getting into mortgage arrears well as the number of people facing repossession. A Tory Party official said: ‘Reading between the lines, the Bank of England is telling us that “we ain’t seen nothing yet”. Hard-pressed British families are going to pay the price of Gordon Brown’s economic incompetence as the credit squeeze bites further on an ill-prepared nation.’

An official from the Liberal Democrats stated: ‘We are in the nightmare scenario where banks can’t lend and people can’t borrow. The UK economy has been running on little else than the wide availability of cheap credit for several years. With lending now drying up, there is a real danger this will have a serious impact on growth in the economy.’