Bad News For Homeowners, House Prices Continue Fall & Will Keep Falling

House prices are now 2.3 per cent lower than they were a year ago

. That's the latest finding from the Land Registry who also report that property prices in England and Wales fell by 1.1 per cent in March 2011 alone.

There has been much conjecture in the media about the direction of house prices over recent months with some experts arguing that prices have remained static whilst others painting a more gloomy picture. The mortgage industry has also come in for much criticism over the lack of finance available to borrowers.

Unlike some other house price indices, the Land Registry figures are based on completed sales in England and Wales. This means that the figures are pretty accurate and the latest report shows that property prices are continuing to fall. Indeed, since August 2010, only one month - January 2011 - has seen an increase in property prices with the remaining months showing a consistent decline.

The only area in the entire country that have seen an increase in property prices since the crash are properties in the capital of London, however this has always been a sought after area and is not hugely correlated to the rest of the country. Meanwhile, properties in North East England have seen a drop in prices of almost 10%.

This news is surprising many, as there has been news that lending is back on the increase for both new mortgages and remortgage deals, however this has not affected the property prices and they continue to fall.

There are signs that things are improving. According to HM Revenue and Customs, there were eleven thousand more house sales in England and Wales in March 2011 then there were in February as the number of sales rose to 66,000.

The Council of Mortgage Lenders also confirmed that the number of mortgage approvals in the first quarter of the year had increased. Economists believe that this is because of news released by the Monetary Policy Committee of the Bank of England in February, confirming that although the interest rates would not be increased immediately, it was inevitable for later in the year.

Of course, news of interest rate increases caused many homeowners to start looking for remortgage deals in order to take advantage of the low interest rates that are still available. Many are looking to obtain a new fixed rate remortgage in order to try and hedge against hikes in interest rates over the coming months and years. But this high demand has caused interest rates on fixed rate remortgage deals to shoot up prematurely.

Over the last couple of years, many borrowers have seen their mortgage deals end. Thousands have seen their mortgage revert to their lender's 'standard variable rate' (SVR) which often resulted in an increase in their monthly repayments. So, it's no surprise that many people continue to scour the market for the best remortgage deals so they don't pay more than they have to.

In previous years, remortgage deals a popular way for asset rich but cash poor homeowners to raise finances for essential home improvements or luxuries. In these tough economic times, however, this is far less common. Re-mortgages are generally completed as people try to find new ways of saving money on their monthly mortgage costs - the biggest household expense.

by: Howard Ogollegos

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