As a result of the credit crunch in the financial markets, the number of available mortgages offered by banks and building societies has drastically decreased. Mortgage applicants are required to put down an increasing amount of deposit, which virtually makes it impossible for first-time buyers to get on the property ladder. Some lenders have cut their interest rates for new borrowers, but it is making hardly any difference.
The Land Registry has reported a national average of 1% fall in house prices from May to June. Falling house prices are discouraging home-owners to put their properties on the market, thus contributing to the slowdown.
The government is looking into stimulating the mortgage market by a controversial proposal. It may guarantee new better quality mortgage-backed securities to liven up the demand for these securities and ease liquidity.
The Liberal Democrats oppose the idea, arguing that it would reflate the bursting housing bubble and private companies would continue to make profits whilst tax-payers’ money is used to bail some of them out. The Council of Mortgage Lenders also disapproves the proposal and promotes the extension of the Bank’s Special Liquidity Scheme, which allows the market to make the adjustment itself.
Despite the slowdown not all is gloomy. A social housing group predicts a 25% increase in property prices by 2013. The National Housing Federation (NHF) anticipates the rise because demand outstrips the construction of new homes, as people live longer, delay marriage and get divorced. Prices are expected to recover by 2010 and rise by more than 9% by 2011 and 2013.
Vocabulary
- mortgage – lakáshitel
- credit crunch – beszűkült hitelpiac
- deposit – letét (itt lakáshitel önrésze)
- first-time buyers – első lakásukat vásárlók
- Land Registry – Földhivatal
- controversial – ellentmondásos
- reflate – a deflált árak kívánt szintre való visszaállítása
- disapprove – helytelenít
- extension – kiterjesztése vminek
- anticipate – számít vmire
- outstrip sg – túl tesz valamin (számban, méretben)
- prices recover – az árak visszaállnak
