Good mortgage deals are becoming harder and harder to come by with more and more lenders upping their fixed rates. The interest rates on fixed rate mortgages have now reached a ten year high and some experts believe they are going to continue to rise even further. Even if customers are able to find a deal they are happy with, whether or they will meet the banks eligibility criteria and secure the loan is a different matter.
The number of mortgages being lent was twenty percent less in May 2008, compared with the same month the year before. The majority of these deals were due to people remortgaging their existing properties onto better deals, with less first time buyers approaching lenders. This is a dramatic drop, and shows both that lenders have become considerably stricter in who they are prepared to lend to and first time buyers have been scared away from the market by the high rates and fears of a housing crash. It is not surprising therefore that the number of properties on the market outnumbers buyers at fifteen to one.
But it is not just mortgage costs that are stopping buyers from entering the market. There are all of the additional costs associated with buying and moving house that are putting people off. Stamp duty, conveyancing and moving costs all add to increasing price of moving home. In addition for sellers home information packs have now been introduced to all properties meaning another upfront cost that needs to be paid before the property can be marketed. With the threat of house prices decreasing even further many people are opting to ride out the current climate and not move homes.
However there are some changes being put into place. Something that may entice more buyers to the market would be the reduction in the costs of buying and selling a house. One big moving cost is the legal fees for conveyancing work. Previously high street solicitors were the best place to go to obtain conveyancing services, however now Tesco supermarkets are planning to launch their own service and provide competitive conveyancing to the general public. Industry analysts believe that Tesco will bring with it a call centre approach to conveyancing which will reduce the cost through a computerised service. Whilst most people might think that conveyancing is a fairly standardised process, Tesco’s entrance into the market could revolutionise this process. The Labour government has made changes to the legal systems which are due to be fully in place by 2011, and will allow legal advice to be given in booths located in supermarkets. This means that Tesco could become a one stop shop for all your grocery and legal needs.
Hopefully this will result in more competition amongst the traditional legal practices and result in cheaper conveyancing deals, which in turn might encourage more people back to the market. However it is still early days and for the moment it looks like the housing market is going to get worse before it gets better.
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