Get together to help owners and FTBs

There is a growing fear in the industry that the Bank of England will raise the base rate again this Thursday, as it emerged that year-on-year mortgage approvals edged up only slightly in April.

Financial markets are betting that rates could rise as high as 6% this year as the BoE battles inflation. Such a rise could pile up trouble for debt-laden Brits. This worry is compounded by the fact the number of County Court judgments served for non-payment of consumer debt neared a 10-year high in Q1 2007.

In that period, 247,187 consumer debt-related CCJs were issued – up 9.5% on the total recorded in the same period last year. This represents the highest quarterly total since the summer of 1997, when the number of judgments hit 247,991, according to Registry Trust statistics.

This comes as it was revealed that the average price of a house in England and Wales edged closer to the 180,000 mark in April following a hike of 0.6% in the month, according to the Land Registry. The average house price in England and Wales now stands at 179,935 – more than 15,000 higher than the same period a year earlier.

The situation isn’t being made any easier by lenders continuing to increase their SVRs and pull their most competitive fixed rates. Swap rates have broken through the 6% barrier which means the money markets have factored in at least another 0.25% rise – possibly two.

And it seems borrowers are starting to realise it’s not always advisable to go for the highest income multiple available. Yorkshire Bank says 24% of borrowers are looking to avoid taking out maximum mortgages.

With minimal reserves to fall back on, even desperate first-time buyers are beginning to show more caution. Almost one-third intend to avoid stretching their finances from the outset for fear a further rate rise might tip them over the edge of affordability. Over three-quarters of those surveyed anticipate further rate rises over the next 12 months.

And despite seven out of 10 people expecting house prices to continue rising over the next 12 months, just one in six would be prepared to offer the full asking price immediately.

Since last September, fixed rate mortgages have grown to make up more than 60% of the market – up from 48% before the Monetary Policy Committee began its recent spate of rate hikes.

You can’t help but feel sorry for house buyers and sellers. One minute they need Home Information Packs, the next they don’t. They try to find a good fixed rate and they can’t.

When is the industry and the government finally going to take a coordinated approach to helping home owners and those struggling to get on the ladder?