Financial News
House prices grind to near standstill
House prices grew by just 0.1% in July; the lowest rate of monthly growth since January 2006, according to the latest national housing market survey from Hometrack, the housing intelligence business.
Property Prices : House Price Slow-Down
Author: alltheseasons
Subject: House Price Slow-Down
Posted: 27Jul2007 at 1:39pm
House prices could slow down sharply over the coming six months, Britain's fifth-largest mortgage lender warned today.
Northern Rock said that house prices, which last month showed annual increases of just over 10%, could be rising at the same level as wages by the year-end, which would mean by as little as 4%.
'Because so many people now have fixed-rate mortgages generally running for two or three years the recent hikes in interest rates have so far only affected around a third of borrowers,' said chief executive Adam Applegarth.
'But during the second half they will begin to bite and household spending will be squeezed. That will dampen the home moving market but, conversely, boost the remortgage market as people search for the best deal.'
He added: 'If you take out the central London market, which continues to power ahead and so skews all the data, the rest of the country is almost certainly down about the 4% level of house price inflation.'
Northern, which issued a profits warning last month, boosted its dividend today by 30% to 14.2p for the first half and promised a similar increase for the final payout.
Headline first-half profits rose by 29% to £224m but the group repeated that for the full year and next year it expects growth of only about 15%. Unlike rival lenders such as HBOS which fund most of their mortgage lending from other customers' savings, Northern Rock borrows most of its funds from the wholesale markets.
That means its margins become squeezed as interest rates rise but most of its borrowers remain on lower fixed-rate mortgages for a time.
Applegarth said the group will ride out the cycle and with its ability to retain 85% of customers when their fixed-rate mortgages come up for renewal should see further growth well aheadSkipton gives help with HIPs
With three working days to go until the August 1st deadline, sellers of four or more bedroomed properties requiring a Home Information Pack (HIP), are being offered a helping hand by Skipton Building Society.
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Buy-to-let fills housing gap?
The buy-to-let sector has continued to enjoy steady growth in the first half of 2007, providing affordable accommodation for increasing numbers of households. So says specialist buy-to-let mortgage lender, Paragon.