Raising interest rates is a premature measure

Recently announced by British Prime Minister and the Leadership of the Bank of England raising interest rates is a serious concern of the real estate market. The government also headed by the Chancellor of the exchequer John Osborne intends to give the Bank of England exclusive powers to influence the mortgage market, vetoing too risky operations in order to prevent too large unpaid debt.

However, Intermediary Organization of Mortgage Lenders said that the real estate market there is a disproportion in the supply of new homes and the pace of mortgage lending. Need more targeted scheme “help to buy” . It was also noted that the market already reacts to changes in legislation. So, the newly introduced stress tests on the mortgage market led to a significant reduction in the number of transactions in April and may, and in some regions even recorded falling house prices.

In addition, there are a number of regions in the UK such as Northern Ireland and North West England, which recharges very slowly and introduced measures to ruin the already weak sprouts of optimism in these markets.

Quite a strong market, which is represented in other regions of the UK, reflects the increase in the number of cash purchases. More than one third of purchases in the 1st quarter of 2014 was committed for cash, that is much better than the usual indicators for the 1st quarter. Against the backdrop of increasing cash purchases falling, the total size of outstanding mortgage loans. Varied and quality of debt. Significantly reduces the value of LTV – Loan to Value – the ratio of debt to the amount of the purchase. The mortgage debt is decreasing since 2010 – return borrowers in the banks around £10 billion each quarter.

A rapid and strict regulation of the market, according to the Organization of Mortgage Lenders, could have a negative impact on the market and suspend its restoration. The organization believes that an additional external intervention in the market at present is not justified. It is necessary to examine more carefully how the housing market and the mortgage market in order to find the imbalance and track current trends in both markets. The market is distorted by high prices where there is an acute shortage of housing. The availability of mortgages allows prices to overcome these price heights. You need fine control of the market so that the scheme “help to buy” was not the cause of soaring prices and not shifted the balance in the housing market in favor of the rich buyers.

® Helen Entree. 17.06.2014 g.

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