Average house prices, as measured by the Halifax House price index, have fallen this month by 1.4% compared to last month’s average house price. All figures were seasonally adjusted and also showed a quarterly decline in average house price of 1.2% as compared to the three months before that.

Housing economist, Martin Ellis, commented:

\”The latest figures show that the underlying trend in house prices continues to be one of modest decline.”

However, when comparing house prices during the first quarter of this year with last year over the same period, the Halifax house price index showed that there was a 3.7% reduction in the price of an average home.

He added:

\”Weak confidence amongst households, partly due to uncertainty over the economic outlook, is constraining housing demand and resulting in some downward movement in prices. Signs of a modest tightening in housing market conditions, a relatively low burden of servicing mortgage debt and an increase in the number of people in employment are all likely to be providing support for house prices, curbing the pace of decline. There are signs that house sales are stabilising albeit at a level lower than the historical average.\”

The housing market, despite a somewhat unstable outlook at times, has remained relatively stable, and the plethora of good contractor mortgage rates has continued to attract people back to the market and this looks likely to continue.

The monthly Nationwide House price index has shown a 0.2% drop in the average price of a house in April. The seasonally adjusted month on month figures may have fallen but the report also shows a quarter on quarter rise of 0.6%. This is good news as even when adjusted monthly figures can be erratic, however, three monthly figures are often used to determine underlying trends.

The Nationwide report went on to predict what might happen in the next few months:

“Together with continued low interest rates, a gradual improvement in the labour market should help to provide support for housing demand, while limiting the number of forced sales. Nevertheless, a strong rebound in the market remains unlikely as the recovery is still expected to remain modest by historic standards. In our view, the most likely outcome is that house prices will continue to move sideways or drift modestly lower through 2011.”

The facts do not allow an accurate prediction of house prices and, therefore, the housing market as a whole. With the current pent up demand, I believe many lenders are expecting a slow creep up in activity, which may lead to a house prise rise again, sometime in the future. Contractor mortgage rates are drifting gently downwards and we may see differentiating products being released.

The 85% loan to value (LTV) deal is now available on a five year fixed rate deal at 5.69%. Whilst not generally a contractor friendly lender, this product release by Abbey will hopefully create enough demand so that others will follow suit.

We have seen this kind of pressure filter down before and most mortgage lenders will seek to broaden their product range if new opportunities are found. It may make sense to offer long term fixed rate deals as estimates for the base rate rise become later.

They themselves claim that this product is market leading, and we may find that where they lead others will follow. If this is the case contractors looking for, a competitive, long term fixed rate deal will find that they have a lot more contractor mortgages to choose from.

Author Bio: Article written by Taj Kang, Associate Director at Contractor Mortgages Made EasyTo contact us regarding this article e-mail: media@contractormortgagesuk.com

Category: Finances
Keywords: Contractor Mortgage, Contractor, Mortgage, Contractors, Mortgages