Mortgage lending levels low, house price slump

Mon, 05 Jan 2009

According to the House Price Index from Halifax, UK house prices slumped to 2004 levels by the end of 2008, with property reaching its most affordable level for the last five-year period. However, mortgage availability and levels of mortgage lending also plummeted during 2008.

Halifax pointed out that house prices to national earnings ratios are at their lowest for the last half a decade. According to the HPI, house prices fell by as much as 16 per cent during 2008.

However, the house price slump is not yet over. Expert economists at Halifax indicated that mortgage finance problems would further fuel a downturn. However, easing costs of living and falling inflation, not to mention further reduction in interest rate, could bring the housing market back into line.

Mortgage lending from both banks and building societies remains low.
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