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House prices and multiples to rise

House prices could rocket by 10% in 2007 and 2008 and lenders will start to offer 8 x income to first-time buyers.

This prediction was made at the Mortgage Summit in Jerez by economist and PR guru John Wriglesworth. Closing the conference, Wriglesworth told delegates that 2007 will be a year of two halves, with the first half seeing people rushing to sell before the introduction of Home Information Packs and the second half seeing first-time buyers looking to buy properties.

He says: “First-time buyers are likely to wait until after June because they will not have to pay for HIPs, sellers will. First-timers will want to get as much information as they can about properties for free.”

The Council of Mortgage Lenders recently readjusted its economic forecast for 2007. It is now predicting a 7% rise in house prices over the year. Wriglesworth believes Nationwide and Halifax will also raise their economic forecasts in the next few weeks.

He adds that lenders will start to push up income multiples as demand increases.

Wriglesworth says: “Next year we will start to see 7 x and even 8 x income multiples across the board.”

He says that in 2004 it would have been shocking to see a lender doing 5 x or 6 x income multiples. But lenders are now offering 6 x multiples, which he says is a good thing as long as borrowers can afford it.

He adds that lenders should not constrict the market by being prudent about income multiples.

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