House Prices Look Set To Remain Steady In 2008

A recent report published by the CML (Council of Mortgage Lenders) says that house price inflation is likely to remain positive in 2008. It predicts that property transactions are likely to remain above 1 million, interest rates are likely to fall by three quarters of one percent, gross lending will decline but is still set to exceed 2005 levels.

The recent credit crunch has exacerbated the slow down in the property market that was making itself felt before the Northern Rock debacle and their will be fewer opportunities for home owners and property investors to re-mortgage as lenders tighten their lending criteria.

However, the CML expects the property market to remain robust. House prices will rise marginally, the number of sales will fall slightly, but remain above the 1 million level ( down to 1.01 million in 2008 compared to 1.17 million this year) and interest rates could fall to 5.0%. The number of repossessions will grow but will remain at low levels. Rising from 0.25% of all mortgages this year to 0.38% of all mortgages in 2008.

The CML expect a slower mortgage market next year, although by no means a stagnant one. Most borrowers will cope, but not everyone will escape unharmed from the effects of a slower market.