Falling mortgage rates offer some hope to housing market
on: August 14, 2008, 4:27 am
Release Author: Think
Release Summary: Recent falls in fixed-rate mortgage rates have
given both homeowners and would-be homebuyers some reason to hope,
says financial solutions company ThinkMoney.com.
Release Body: As house prices continue dropping and transaction
levels reach a new low, financial solutions company ThinkMoney.com
welcomes the recent falls in fixed-rate mortgage rates.
falls in the cost of wholesale funding have allowed lenders such
as HBOS, HSBC, RBS and Woolwich to reduce their mortgage rates,
reports Times Online. These cuts may not be not enough to undo
the increases we’ve seen since the onset of the credit crunch,
but they could still indicate an important change of direction
that potentially places the peak in mortgage rates behind us.
“The criteria for mortgages may still be strict, but it’s
nonetheless encouraging to see mortgage rates coming down like
this,” said a spokesperson for ThinkMoney.com. “Essentially,
any move in this direction bodes well for the housing market,
implying a return of confidence among lenders which should translate
into greater confidence among would-be homeowners.”
the drops do not benefit all would-be buyers equally. “With
lenders determined to protect themselves against potential falls
in house prices, the biggest drops are aimed at those with the
largest deposits. Given the importance of confidence to the housing
market, however, it’s important not to underestimate the
potential impact of more attractive rates – even if they
are only available to some would-be homebuyers, they could provide
a much-needed boost to the market. The more lenders’ confidence
in the mortgage market increases, the sooner we should see more
significant drops in mortgage rates offered to those with smaller
the moment, of course, prices are dropping because of the problems
in the mortgages market – they’re dropping because
so many people simply can’t buy. Once mortgages become cheaper
and more readily available, there’s a high probability that
prices will level out or increase. Nevertheless, astute would-be
homebuyers are fully aware that any increase in prices can’t
take place overnight, and they’re saving up now to make
sure they can move as soon as mortgage rates descend to a level
they find acceptable – but before house prices start to
climb once more.”
homeowners, two groups in particular are watching the mortgage
news with great interest.
homeowner thinking of selling their property today faces an unpleasant
choice: sell now (if they can) for an average of 9% less than
their property would have fetched at the peak of the housing market
in October 2007, or wait and hope the market improves. For them,
any drop in mortgage rates is good news, as it might increase
the number of potential buyers – and the more buyers there
are, the more likely we are to see a recovery of some kind in
the housing market.
the same time, the rising cost of mortgages has hit anyone looking
to remortgage – because they’re coming off their existing
fixed-rate mortgage, for example, or consolidating their debts.
This news about falling mortgage rates may be particularly significant
for people in this group, as so many of them find themselves forced
to act within a certain timeframe. For them, ‘wait and see’
simply isn’t an option.”
are a financial solutions company based in Salford Quays, Manchester.
The company specialises in a range of financial services, including
mortgages, loans, debt help and advice (including debt management
plans, IVAs, and debt consolidation).
Details: Melanie Taylor