by Mark Johnston
Mortgagerates.org.uk review of the year ahead continues with a look at what 2011 has instore for property prices. Falling property prices may be a concern for home owners looking to move or sell their homes but anyone with a sizeable mortgage will also be affected.
The steady decline in house prices has started to eat into home owners loan to value ratio. This means that when they come to remortgage their home they may well find that the rate they had to pay is a lot more than they expect. The current decline is expected to continue well into 2011 with only some areas such as London seeing modest recoveries.
Following the coalition governments spending cuts, would be home owners may well have started to understand how they will be personally effected. This in turn may result in a slight increase in confidence which would could have a positive effect on the housing market.
The main thing to take away is that any improvement will be very slow. If first time buyers are confident enough to start looking again this would but pressure on demand and could drive house prices up.
Experts are predicting further falls in the first part of the year followed by a net gain of around 2% depending on where abouts in the country you are and what kind of property is for sale. In ther last set of public spending cuts, it was announced that housing benefit would be reduced to cover the cost of renting a room rather than a one bedroom flat. This will in turn drive down the demand for these types of properties whilst at the same time reduce their rentable value due to their expected increased availability.
The expected net increase in the price of property will be welcomed news to many who are stuggling to refinance their borrowing. Any increase in the equity of homes could mean a better deal with lenders. This is certainly worth remembering for those borrowers who have found it difficultn to get a good deal, leaving it until the second part of 2011 may well mean they can secure a much better rate as their loan to value (LTV) rates would improve.
Those looking to remortgage at the moment should check out First Direct. WIth many lenders pulling their best offers, First Direct is still offering a 2 year tracker at 1.99%. The mortgage requires a 65% loan to valuie (LTV) and has a £999 fee attached to it. The Spanish Bank Santander is also offering a good deal on its tracker mortgage at 2.19% with a slightly higher fee of £1495 and a 60% loan to value ratio.
Those borrowers who dont have that much equity in their homes or who have been effected more by the fall in house prices should look at Leeds Building Society. They are offering a two year tracker mortgage with a loan to value of 75% for 3.45% and a fee of £999.
Story link - Property Prices in 2011
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