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IMF says UK could see housing market crash

The World Economic Outlook Report says it is more difficult to get on the property ladder in the UK than in other countries and states that while a slowdown in UK means house prices should remain manageable, the IMF could not rule out a collapse.

UK house prices have risen faster since 1997 than in any other industrial country except Ireland so the market is more susceptible to the risk of a sharp fall as interest rates rise.

And the IMF says the impact of rising interest rates would be particularly pronounced in the UK due to the popularity of floating mortgages such as variable, tracker and capped rate deals.

The report also shows that houses are 55% more expensive compared with disposable incomes than they were in 1985 and the gap between earnings and house prices is greater in the UK than in the US, Japan, France or Germany.

But Ernst & Young also published its Retail Financial Services Monitor last week which states that while it is becoming increasingly clear that the boom in the housing market is over, a crash is not likely.

The accountancy and advisory firm says there is more likely to be a steady deceleration in prices and a static period as homeowners choose to sit tight while affordability is restored.

Gross mortgage lending slowed to £25bn in August, reveals the latest monthly survey from the Council of Mortgage Lenders. The figure was 13% lower than in July and just 3% higher than in August 2003. The value of remortgaging also fell back in August but less dramatically, totalling £10.4bn, 6% lower than in July.

CML director-general Michael Coogan says: “This month&#39s figures suggest that the slowdown recorded by estate agents and reflected in recent approvals figures is beginning to work its way through the lending system.”


Cheval Property Finance receives full FSA authorisation

Benson Hersch, Cheval&#39s managing director, says: “Not all bridging loan lenders will continue to operate in the regulated domestic market, as they will be concentrating on unregulated loans in future. Cheval, on the other hand, took an early decision to apply for FSA authorisation inorder to take advantage of the increased business opportunities from November […]

70% of regions see landlord rental incomes rise

Rents increased in seven regions, with the largest rise in Wales, up 11.4% to £8,859, the East Midlands up 6.3% to £9,721, and the West Midlands up 5.5% to £9,499. Rental incomes in both the North-West and East Anglia rose by over 3% to £7,009 and £8,854 respectively, while smaller rises were seen in the […]

Nationwide on track to launch KFIs from mid-October

The society says intermediaries will be able to obtain its KFIs in three ways: directly from its website; from the Mortgage Trading Exchange; and via other sourcing systems. It says any KFIs sourced either from its site or from MTE will be guaranteed penny perfect. It adds it is co-operating with other sourcing systems to […]

AMI publishes new Guide to the T&C Scheme

The trade body says that the move to statutory regulation by the Financial Services Authority means that every regulated firm must assess its T&C arrangements.  It is important to note that the T&C scheme covers more than simply the gaining of qualifications.  From a firm&#39s senior managers to its advisers and back office staff, the […]


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