House Price Confusion

First Time Buyers have taken another battering this week as the Coventry Building Society scrapped the option for interest only mortgages for those getting on to the property ladder for the first time. Any First Time Buyer applying for a mortgage with this lender will now only be offered a repayment mortgage. This follows recent moves and changes of criteria for Interest Only mortgages from various lenders including Northern Rock and Lloyds Banking Group in reaction to the FSA’s Mortgage Market Review which includes commentary on this subject. I don’t think the days are numbered for this type of mortgage, however we are seeing many lenders urging and some would say ‘pushing’ customers to a repayment option from day one.

Despite the restrictive lending nature of the mortgage market over the past year or so, lenders are still reporting massive profits for their half year. £1.1bn here and £3.95bn there, the list goes on. Although I’m sure the profits would have been more, had some of the excessive bonuses not been paid. Although unknown currently, I’m sure we won’t be surprised to learn these will be in very high numbers too! Just think, if these vast numbers had been reinvested in to actual lending figures, I may not have anything to whinge about!

Finally, the confusion over house prices continues. The Royal Institute of Chartered Surveyors (RICS) reported that house prices dipped in July. RICS says difficulty in securing mortgages and increased uncertainty about the prospects for the economy may have contributed to caution from potential home buyers. Nationwide also reported a 0.5% fall in average property prices in July, the first drop in five months
However, Halifax disagrees in that their House Price index suggests that prices increased by 0.6% which was an upturn on the decrease reported in June. With such differing figures from various respected sources, it’s no wonder that the whole house buying process remains confusing for one and all, discouraging some from wanting to rush to market.