The Halifax house price index for March has shown the biggest monthly drop since September 1992. Prices are now only 1.1 per cent higher than a year ago. Analysts say that the weaker-than-expected figures from Halifax would raise expectations that the Bank of England would cut base interest rates to 5 per cent tomorrow. However, with the lack of liquidity on the Libor market (the intrabank exchange), a rate cut may not necessarily be passed on to mortgage holders.
Meanwhile, the Council of Mortgage Lenders (CML) said that the number of mortgages being lent for house purchase is at its lowest level for 16 years. Just 49,000 loans were made to buyers in February, 3.5 per cent lower than in January and 33 per cent lower than February last year. To make matters worse, Abbey National, the country’s third biggest lender, announced yesterday it too is scrapping its 100 per cent mortgage deals, the last lender to do so.
Analysis from Experian, the credit reference agency, indicates that 75,000 households could be plunged into negative equity this year. Areas of Manchester, south-east London and Birmingham are said to be potential ‘negative equity hot spots’ as the value of the average homes is only a small amount (around 20 per cent) above the mortgage on the property. The data shows that 47 of the 50 areas most at risk are Labour strongholds, and it is feared that banks and building societies are using the data to further refuse to lend people money.
The International Monetary Fund (IMF) has warned that potential losses from the credit crunch will reach $1 trillion (£500 billion) at least. The IMF says that losses are spreading from the sub-prime market in the US where there is a much ‘deeper and longer slowdown’ than expected, to other sectors such as commercial property and consumer credit. It also warns that tough measures and government intervention would be required if a house price crash was to be diverted. Gordon Brown moved to calm fears saying the situation was ‘containable’, and chancellor, Alistair Darling, said that the IMF had downgraded the UK by less than other major economies, and he was sticking to the economic forecast he made last month – that the UK economy would grow between 1.75 and 2.25 per cent in 2015.
But for first-time buyers, not all is lost. The government is to announce a new measure for getting first-time buyers and key workers on to the property ladder. The government has allocated £3 million, available in grants of £1,500, to help qualifying buyers with costs such as solicitors’ charges and furniture, for those who qualify to take part in the government’s Open Market Homebuy scheme.
And HSBC is bucking the trend by targeting more than one million mortgage customers who come off cheap fixed rate deals this year by offering to match existing deals for a further 2 years. The lender, which does not borrow from the money market to finance mortgages says ‘we’re in an incredibly strong position whilst others are stepping back’. HSBC borrowers will need to have at least 20 per cent equity in their property.
Efforts to cut carbon dioxide emissions and turn the UK ‘green’ are being undermined by the growing number of people living alone. A report from the Office for National Statistics entitled Social Trends, found that domestic energy consumption has soared by a third since 1970s because there are so many more homes to light. In 1971, 18 per cent of all homes were single-person households compared to today where 29 per cent of households are so defined.
There is no evidence that migrants were ‘first’ to council housing according to a report from the Equality and Human Rights Commission. New migrants, who make up 3 per cent of the population, account for less than 2 per cent of the number living in council housing. The report said that migrants tend to benefit from social housing after they have been here several years and become citizens.
And finally, a Canadian millionaire has left most of his fortune to a Devon seaside resort he visited on holiday. Keith Owen discovered that the only had weeks to live while on holiday in Sidmouth, and after falling in love with its quintessentially English qualities decided to hand over his pension fund and several homes, providing the town with an income of around £60,000 per annum. A committee is being established to decide how to spend the endowment.