The latest Halifax house price report showed a slide of 1.7 percent for the month of July, taking the overall decrease for the year to date to 8.8 percent.
A Halifax spokesman said that increasing demands on consumers income as well as much tighter mortgage lending criteria is making it very difficult for people to get into the market, with a natural decline in prices to try and stimulate interest.
On the topic of mortgage approvals, which really drive the housing market, they are down by almost 70 percent compared with the same time last year according to Halifax figures. This leads to the real market, that is those who can finance a move, shrinking considerably and in many cases almost cutting off completely the first time buyer.
The fact that Northern Rock is making repayments back to the Bank of England for the bail out loan it received seems, on the face of it, to be good news, though it could prove to be detrimental to the mortgage market as a whole.
It has been suggested that Northern Rock is only able to have overpaid on what it owes to date because it has effectively withdrawn from the mortgage market and has received significant sums of money by calling in the home loans. In the very short term it allows Northern Rock to get ahead on their payments, but in the future this means there is less money available in the mortgage market.
If there is less money available to borrow for mortgage customers then the cost of borrowing can rise further, fuelled by demand outstripping supply. Northern Rock mortgages may well come back into the market in the future but at the moment these are worrying times.
Abbey National mortgage customers facing difficulties on the back of the credit crunch are being asked to consider taking in lodgers to make ends meet.
Across the country there are currently over 18 million households with an unused bedroom that could be offered out for rent. The average rental price paid for a bedroom in a house is just under GBP290 per month according the Abbey National figures and represents extra money that the homeowner could find very useful.
Anyone considering this option should ensure the terms of the mortgage are not being breached in any way and also that any insurance cover is still valid for the homeowners property. Abbey National expect there to be few problems but ask homeowners to check before going ahead.
