Published: 12:02 PM, Apr 9, 2022
Photo by James Feaver on Unsplash
The rate in which house prices are growing in the UK is now at a level I was not sure I would see again.
14% in one year can only mean a bubble is forming and there must surely be a downside to come.
Accepted thinking is that interest rates are to be raised when house prices are increasing but did the Bank of England leave it too late? Certainly, the thinking was lower interest rates facilitated borrowing in order to sustain business during the pandemic but the lose economic policy may have resulted in extra borrowing for home purchases resulting in the price increase.
So the timing in raising rates was crucial, but when they claimed that house prices would be falling this year one has to look back at the decisions and reasonably claim that they have made a mistake, rates should have been increased 6 to 9 months ago.
The worry now is that home prices will fall, negative equity will again return, we will also see the ability of homeowners to raise capital in the form of second mortgages to disappear. This may mean that people no longer are able to consolidate loans, this may push them into financial hardship and ultimately insolvency on their unsecured lending.
With so many home improvement projects funded with second mortgages then builders will also be concerned that their work will dry up.
In the coming months we will be looking at home improvement projects that can be funded for smaller amounts, more bang for your buck.
Our aim is to get the UK house looking as good as it can, we will look at developers and what they are working on, we will look at what you can do around the home to improve your living environment.