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House Prices Rise in UK while Foreclosures Fall

19-Feb-2012

 The Council of Mortgage Lenders (CML) has reported that repossessions in the UK are at their lowest level since 2007. The good news comes in tandem with an announcement by Halifax that prices for UK houses rose 0.6 percent in January..

T
he CML had expected 40,000 homes to be repossessed in 2011, so the 36,200 figure came as a surprise. The decline is being attributed to low interest levels and the restraint of lenders who are reluctant to foreclose. However, forecasts for 2012 remain high due to a greater unemployment rate.

Housing Minister Grant Shapps said the UK would offer extra aid to homeowners facing foreclosure. Interest-free loans up to £5,000 will be offered to hurting homeowners from a pool of £19 million. A fund to provide free legal aid for homeowners has also been established to ward off further repossessions. CML director general Paul Smee said there is still concern that more people will face dire economic circumstances in 2012. Even so, the 45,000 repossessions anticipated in 2012 is far better than the record-high 75,500 foreclosures in 1991.

Lenders have shown sympathy toward troubled homeowners. Buy-to-let homes are less likely to receive assistance because those properties have higher rates of turnovers. Defaults by landowners still left renters in a bad situation. Some 5,900 mortgaged buy-to-let properties were repossessed in 2011. That 0.42 percent compares to 0.32 percent of properties occupied by their owners.

According to Halifax, although foreclosures are predicted to increase, housing prices are expected to show little movement in 2012. In January, the average cost of a house was £160,907. Despite the rise in prices, the figures are still 1.8 percent less than one year ago. Developments in the Eurozone could have an impact on the UK's economy. If the UK manages to resist a recession, house prices should remain stable, thanks to the
low mortgage rates and fewer properties on the market. BDI Homefinders believes that home prices will be most affected where the economy is most unstable.

When compared to the same three-month period one year ago, house prices fell 0.9 percent. Nationwide said that the year to year comparison showed a 0.6 percent increase. Nationwide also said that house price dropped 0.2 percent from December 2011 to January 2012. Halifax compares the last three months with the equivalent period from the previous. That comparison is thought to be more accurate.

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