Homeowners braced for price falls of 9%
Halifax has forecast house price falls of up to 9% in 2008 as the number of transactions falls by 45%.
In a trading update, the HBOS group – which includes Halifax and Bank of Scotland – warned that falls in house prices will result in more people missing their mortgage repayments and falling into arrears. The banking group, which is the largest mortgage lender in the UK - writing one in every five new products, says it has already seen its arrears levels increase.
HBOS predicts the UK will slow further in 2008, with house price falls of 9%.
The announcement comes as mortgage lenders report a 19% annual fall in the amount of lending in May. The figures, compiled by the Council of Mortgage Lenders (CML), show gross lending totalled £25.5 billion in May 2008, a fall of 2% from the previous month and a 19% fall from the same month in 2007.
The CML says that, despite lending levels currently well below their position last year, they remain at “good historic levels”.
“Arrears” tend to be associated with debt. If you fall behind and miss payments on any outstanding debt, the amount you failed to pay is an arrear – the amount accrued from the date on which the first missed payment was due.