House Prices and the Housing Market Continue To Circle The Drain

House prices are now 2.3 per cent lower than they were a year ago. That's the latest finding from the Land Registry who also report that property prices in England and Wales fell by 1.1 per cent in March 2011 alone.

Many lenders have confirmed that house price movements have remained stagnant for the last half of 2010, and that there appears to be little sign of growth in the early part of 2011, however it would seem that this is in direct correlation with other UK markets which have also seen sluggish growth in the first quarter of this year.

What is even more concerning is that the Land Registry figures indicate that property values are still on the decrease in the UK, which is not good news for homeowners who were intending to move home as they will not get the best value when they come to sell and move on.

The only area in the entire country that have seen an increase in property prices since the crash are properties in the capital of London, however this has always been a sought after area and is not hugely correlated to the rest of the country. Meanwhile, properties in North East England have seen a drop in prices of almost 10%.

This news is surprising many, as there has been news that lending is back on the increase for both new mortgages and remortgage deals, however this has not affected the property prices and they continue to fall.

HM Revenue and Customs recently commented that the number of properties sold in England and Wales in March was substantially higher than in February, increasing from 55,000 to 66,000.

Bank of England figures also show that mortgage approvals have risen in the first quarter of 2011 and they expect the number of transactions to continue to rise over the next few months. As the Bank of England Base rate remains at its record low level of 0.5 per cent, remortgage rates remain extremely competitive and these are attracting many borrowers.

Mortgage approvals rose by 1,000 in March and just under 50,000 home loans were agreed in the month. Whilst this figure is lower than in the 'boom' times, it does represent an increase on the six month average and so perhaps there is cause for optimism. However, in the first quarter of 2011 there were only 174,000 house sales and this is the second lowest quarterly figure on record.

Over the last couple of years, many borrowers have seen their mortgage deals end. Thousands have seen their mortgage revert to their lender's 'standard variable rate' (SVR) which often resulted in an increase in their monthly repayments. So, it's no surprise that many people continue to scour the market for the best remortgage deals so they don't pay more than they have to.

Remortgages were often a way for people to release equity from their home and finance home improvements, however as lending criteria is far more strict now, many are unable to obtain the full amount of finance required for such projects.


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Timothy Frodsham writes for JustRemortgages.com one of the UK's top sites for the latest remortgage rates and best remortgage deals.