House prices could be rising by the end of the year, predict experts

House prices could begin rising again by the end of this year, ending a slump that will have wiped more than ?50,000 off the average property value.

Experts from Lloyds group, which owns 30 per cent of the mortgage market, and the brokers, John Charcol, believe the clouds covering the property market will begin to lift by the autumn.

There is already some evidence of a pick-up in the number of buyers and sales going through estate agents.

Separately, both the Bank of England and Council of Mortgage Lenders (CML) are seeing a rise in the number of mortgage approvals for home purchase.

To date, the levels involved are still well down on a year ago - around 50 per cent - and they have not been enough to halt the fall in house prices.

However, while prices are expected to show further falls over the summer, there are signs they will stabilise and even move upwards by Christmas.

The consensus is that the current bust will see house prices fall by around 25 per cent - more than than ?50,000 - from the peak of the summer of 2007 before any recovery.

According to the Nationwide, the fall has already been 18.4 per cent and it believes there is another 6 per cent to go.

He believes house prices will fall 8 per cent by the autumn, but will then rise by 3 per cent over the final three months of the year.
'Estate agents have been reporting increased interest from both first time buyers and movers since the beginning of the year and some of that interest is now translating into sales.

'The good news on the mortgage front is that over the last few weeks lenders have been increasing the availability of mortgages up to 80 per cent and 85 per cent Loan to Value.

'I expect the market to stabilise by the third quarter of this year and house prices to show a net fall of only 5 per cent in 2009.'

He stressed there would be no return of a boom, saying: 'House prices are unlikely to recover quickly… the prospect of increases in interest rates, plus lenders’ less generous affordability calculations, will inhibit house prices increasing too quickly.'

Fixed Interest Rates a “Mortgage Mistake”

Mortgage holders that took up banks’ fixed interest rate loan offers are losing thousands of euros annually, reports the regional daily Aamulehti.

The majority of fixed interest rate loans are in the neighbourhood of five percent. People carrying home loans pegged to fixed rates are losing thousands of euros annually in comparison to borrowers with home loans that are anchored to fluctuating reference rates, such as Euribor, according to the Financial Supervisory Authority.

The agency calculated that a four percent five-year fixed rate deal on a 150,000 euro loan will not beat out variable rates until interest rates reach 6.76 percent.

Mortgages linked to the fluctuating European inter-bank lending rate Euribor currently carry interest rates between 1.5 and 1.7 percent.

Between 2006 and 2008 up to a third of home buyers took out fixed rate loans. The popularity of these loans, some 160,000 which have been issued to date, has recently dwindled.