Author Topic: House prices could be static for five years  (Read 2561 times)

0 Members and 1 Guest are viewing this topic.

The Prophet

  • Global Moderator
  • Senior Member
  • *****
  • Posts: 364
  • Country: england
  • Financial & Economics commentator
House prices could be static for five years
« on: October 26, 2011, 11:12:25 am »
With low interest rates and Quantitative Easing (QE) house prices could remain static for five years, in nominal terms and fall by 5% in real terms.
Unless the banks start lending and people start buying again.

Since the crisis £60bn worth of mortgages have become interest-only.
Surprisingly, there are now more interest-only mortgages than there were in 2007.

Interest rates are artificially low. With inflation at 5.2% interest rates should be 2% above that at 8%.
Mortgage rates would then be 9%. Those who have buy-to-let properties would struggle to cover their costs at these rates.