ROOF Blog

Housing minister John Healey has told a Common’s Treasury select committee that he would consider extending the homeowner mortgage rescue scheme beyond its current two-year limit, if the economy continues to struggle beyond 2010. He also rejected accusations that the government had been ‘complacent’ with its support for those at risk of repossession, although he warned that ‘a certain level of repossessions is inevitable’ in a recession.

Two of the UK’s largest house builders Redrow and Barratt Developments have said that the continuing lack of mortgage availability is hampering the recovery of the housing market. They said that while the market has stabilised too many would-be buyers are struggling to get the finance needed, and the drought in the mortgage market was ‘without doubt… a major obstacle to the recovery of the housing market’. Both companies are facing a big decrease in their average selling price.

Meanwhile, the Organisation for Economic Cooperation and Development said yesterday that financial service firms must make sure their customers understand what they are letting themselves in for when signing up for mortgages, consider loans and other products. The OECD has just released new guidelines designed to avoid a repeat of the sub-prime mortgage crisis and subsequent credit crunch that caused the worldwide recession.

New research from the National Housing Federation reveals north England’s rural population has been ‘overlooked’ by policy makers, while facing the dual challenge of ‘staggeringly’ high house prices and ‘crippling’ low incomes. The research found that 86 per cent of the north’s most expensive house price districts are predominantly rural and almost 66 per cent of England’s most deprived rural areas are in the north. The federation has called for the government to create a ‘northern rural way initiative’ to combat the current economic crisis.

The number of tenants struggling to pay their rent is rising, according to the Association of Residential Lettings Agents (ARLA). Around 65 per cent of agents have seen an increase in renters falling behind on their rent during the past six months, while 93 per cent said they had seen a rise in the number of tenants haggling with landlords about the level of rent. ARLA said the increases were not just about tenants experiencing financial problems, but were also likely to be due to people cashing in on falling rents.

The newest member of the Bank of England’s monetary policy committee David Miles has said the worst of the recession and housing slump is probably over. He said his ‘hunch’ was that expectations in the housing market look a bit better now than a few months ago and that we have seen most of the ‘overall aggregate’ house price falls. However, he added that Britain is set for an ‘anaemic’ recovery with little chance of returning to buoyant growth in the short term.

The number of people defaulting on loans has risen and are expected to increase in the coming months, a Bank of England survey has uncovered. A poll of banks and building societies found more people unable to repay mortgages and other debts because of rising unemployment. However, financial institutions expect the availability of credit to rise in the next three months, and households are likely to be offered and demand more secured credit. A rapid return to the pre-credit crunch lending levels remains extremely unlikely.

The government has announced that financial support to students will be frozen next year because of ‘difficult economic times’. The decision has been described as a ‘kick in the teeth’ for young people who argue the cap in grants and loans represented a real term cut and would increase student debt level.

A 0.9 per cent increase in house prices in June has fuelled hopes that the property market it stabilising. Figures from Nationwide Building Society show that the average house price has increased just below one per cent for the month in June, and by the same amount in the three months to June, compared to a 0.4 per cent fall in the quarter to May. The annual rate of decline stands at 9.3 per cent, down from 11.3 per cent in May.

House prices remained steady in June for the second month in a row, while demand from potential buyers outstripped the supply of homes on the market, analysis from Hometrack has found. The average cost of a property remained at £155,600 for the past two months, while the average rate at which house prices are declining in year on year figures has slowed, down 8.7 per cent in June from 9.6 per cent in May. Hometrack said that rising sales, a dwindling supply of homes on the market and increasing demand were ‘underpinning’ prices at the current level.