UK Property Market Updates

08/11/2008 - UK Interest Rate

• 21st, october 2008: two weeks after the Monetary Policy Committee announced a 0.5 per cent cut to the base rate in unison with key central banks around the globe, more than three quarters of all UK lenders have yet to pass on this reduction to their standard variable rate mortgage customers.
  http://www.whatmortgage.co.uk/article/Rate-cut-not-passed-on-228616.html
• 06th, november 2008: the Bank of England’s Monetary Policy Committee today voted to reduce the official Bank Rate paid on commercial bank reserves by 1.5 percentage points to 3%.
  http://www.bankofengland.co.uk/publications/news/2008/076.htm

• Key points to remember:
  - The Bank of England recent rate cut doesn’t mean that mortgage rates inevitably go down
  - Bank’s mortgage rates go up and down according to their expectations of long-term inflation and growth.
  - 58% in November 2008 are on a fixed rate mortgages, so the latest cut will not make any difference to their monthly repayments.
  - the slowdown in the real economy is accelerating and so we should expect rates to fall towards 2%.
  - RBS forecasts that interest rates will go down until they bottom up in early 2010
  http://ukpropertyladder.com/download/rbsukmeu_nov_08.pdf
  
• If you cannot remortgage or cannot get a new mortgage get in touch with UK Property Ladder, we could help you rent to buy or let to sell.
  http://ukpropertyladder.com/about-us/

13/08/2008 - Stagflation and Geopolitical Risk (From Gold Investment Newsletter)

Stagflation has not disappeared simply because of a sharp correction in commodity markets and a rally in stock markets. The UK’s property market has ground to a halt amid what is being termed a ”mortgage drought” and this has happened as official figures confirmed that prices for UK-manufactured products last month rose by 10.2 per cent from a year earlier, marking their fastest annual pace of increase since 1986. Official inflation is set to reach 5% in the coming months as goods prices surge.

While oil has corrected sharply, it is important to remember that oil remains up more than 60% since this time last year and nearly 20% since the start of 2008. Stagflation is clearly affecting most major economies and this will likely result in gold rallying back as sharply as it has fallen in the coming weeks.

Also, geopolitical risk remains and the war in Georgia has the potential to degenerate into a more dangerous conflict. Russia, is clearly flexing its muscles in the Caspian region and this has implications for European and western energy security.

Calls for recompense of private landlords under ‘Rent First, Buy later’ scheme

Commenting on the Government’s proposed Rent First, Buy Later scheme, price comparison site Moneysupermarket.com has said that private landlords will want compensation.

Whilst the site agrees that at first glance the plans seem to be a “positive move” to help first-time-buyers onto the housing ladder, the scheme may simply be “spin without substance”.

Questioning the proposal, Louise Cuming, head of mortgages at moneysupermarket.com, said: “There are no details of the number of properties available under this scheme.

She continued: “Private landlords will want recompense from the Government up to their full 100 per cent and the number of Housing Association properties being built is small in comparison to the demand for rental properties.”

The proposed government measures would allow those households that earn under £60,000 annually to rent a property at a discounted rate first and buy it “at a discounted rate” two to three years later.

According to Landlordexpert.co.uk, the ailing housing market is at least good news for landlords as “the current uncertainty around house prices is driving record demand for rental property from tenants who are eager to pay for [a landlord’s investment].