JSMedia – Lenders predict that mortgage demand will continue to fall in the United Kingdom over the coming quarters. According to a recent survey by the Bank of England, mortgage lending fell a third in the last quarter of 2010, falling from 35.5 to 34.8. Lenders expect mortgage demand to fall to 28.5 in the next three months, indicating a further slowdown in the housing market. The decline in mortgage lending is largely due to the end of the stamp duty holiday, which had been intended to prop up the housing market. The three-month taper has now ended, and it is expected that the end of the holiday will result in further easing of the housing market.
The run on Northern Rock was largely the result of problems in the global credit markets, which will continue to have a negative impact on the UK housing market. In the United States, mortgage lenders were too willing to lend risky amounts to sub prime borrowers, which ultimately led to the collapse of the housing market.
A large number of mortgage companies went bankrupt in the US. As a result, banks and other financial institutions have been wary of providing support for mortgage lending. This means that risky unconventional mortgages will be more difficult to obtain. Additionally, a decline in demand for first time buyers is likely.
Mortgage Demand Will Fall Further, Say Lenders
Despite the upcoming rate hike, the Fed is still expected to act soon. The National Association of Realtors forecasts that national home prices will increase 5.7% annually in 2022. Despite these risks, the demand for mortgages is low now and will remain so until confidence in the housing market increases. The impact of this risk on the economy will depend on whether the Fed decides to move on this issue or not. There is a risk that the interest rates will stay historically low for the rest of the decade and then rise.
The Federal Reserve is positioning itself for removing its asset-purchase program and expressing a desire to raise the federal funds rate. Both of these policy moves will increase rates relative to where they would be otherwise. If rates rise, the Fed will raise interest rates further, and we’ll probably see an increase of 3.4% in the next year or so. For now, we’ll have a mild growth in home prices, which should provide relief to those who have been priced out of the market. The moderate growth will not cause an underwater mortgage situation in the near future.
But despite the decline in mortgage demand, it is still rising. The market is likely to rebound in the coming months, but this is largely a result of a lack of inventory and new construction. The government may also be able to help stabilize home prices, especially in the United States. With housing prices at an all-time high, a recovery is unlikely. Even if a buyer’s credit score is weak, they’ll still be able to qualify for the best loan for their needs.
The rising interest rates may mean that the affordability of homes has decreased significantly in the last three years. However, the lower-end of the market will continue to struggle, with the rising costs of living pushing out lower-income families. But if prices continue to rise, the price of houses will remain stable. In the end, the demand will remain steady, with prices rising by 3 percent nationally. A few factors will be the same as in the first quarter of the year.
The MBA also released a different study on the past week. The number of owners behind on their mortgage payments decreased by 3.25% in the past week. This shows that interest rates will remain low for some time. This is a sign that the housing market is still strong and that home values will continue to increase in the coming years. While the MBA isn’t predicting an increase in the number of home sales in the U.S., it predicts that they will continue to fall in the next two months.
A major concern for future housing is that the supply of available houses will increase. This could eventually cause the prices of houses to drop. A shortage of building materials will increase the cost of building materials and the labor force will cut back. In the meantime, rising house prices will affect the economy. And the lower supply will result in lower mortgage demand. The MBA’s latest forecasts indicate that the supply of houses will fall further in the next few years.