January 4, 2010
2010 Homeowners Look Forward After A Surprisingly Successful 2009
One of the biggest problems facing UK mortgage borrowers in 2009 was a lack of equity in their homes – but after a surprising end to the year that may not be such a problem in 2010.
Thanks to the credit crunch, mortgage lenders have tightened their belts and have all but stopped lending to anyone who doesn't own at least 10% of their home. This means many people have been stuck, unable to get a new mortgage because a falling housing market had left them with little or no equity.
But this might change in 2010 – house prices rose in all regions of England, Wales and Scotland during the fourth quarter of 2009 according to Nationwide. It has also found that, overall, house prices increased by 5.9% over 2009. This is a welcome surprise after a year touted to be the toughest for homeowners for a long time.
For the UK as a whole, prices rose by 1.6% in the fourth quarter of the year, leading to an increase in the annual rate of change from -3.0% in the third quarter to +3.4%. Only Northern Ireland failed to see an increase over the last quarter of the year.
Also, Nationwide says that despite the sharp house price falls seen in 2008 and the first half of 2009, the 2000s has generally been a very strong decade in terms of house price growth. In nominal terms, house prices in the UK rose 117% between the end of 1999 and the end of 2009. Taking into account overall retail price inflation over the period, prices have risen by 68% in real terms, the strongest decade on record.
Martin Gahbauer, Nationwide's chief economist, says: "The strong housing market performance of the 2000s is good news for homeowners."
But it's not all good news – the building society says that while affordability has improved since the peak in house prices in 2007, we will enter 2010 with house price to earnings ratios across the regions at a much higher level than the start of any other decade. So mortgages will still be expensive for some.
To know how expensive a new mortgage will be, and to find out your potential with regard to your increased equity, you need to speak to a mortgage professional – 2010 will be a successful mortgage year for more people, but only for those who heed the right professional advice.
SOURCE: Nationwide, 31/12/09
To keep up with the latest news and comments on the mortgage market please visit the Mortgage Broker Blog.
