Challenging times ahead for homeowners
June 28, 2008
Homeowners in the UK are set to face some of their most challenging times over the course of this year according to officials from a debt advisory group. This comes after the Council of Mortgage Lenders recently changed its house prices forecast for the year from a 1% rise to a 7% fall. Officials from the debt group have recommended that homeowners that are likely to struggle should seek advise from professionals in the industry.
One official from the debt agency said: “The CML anticipates a 7% year-on-year drop in house prices by the end of 2008. After a decade of rapid growth, this is clearly an unwelcome shock to homeowners. If they’re thinking of moving, they may feel compelled to accept a low offer if they wish to sell their property before prices drop further. And anyone seeking to consolidate their debts with a secured loan or remortgage may have less equity to draw on. They may wish to wait for conditions to improve before they consolidate their debts – and if they can’t wait, they may well have to consider alternative debt solutions, such as a debt management plan or IVA.”
The debt group also went on to state: “Naturally, people with high-LTV mortgages are particularly worried about negative equity: when a property’s value is less than the debt owed, the owner can be ‘tied in’ to their property, unable to sell it to clear their mortgage debt. Anyone in that situation should seek debt advice without delay.”
It added: “What’s more, the current lending squeeze means that many potential first-time buyers can’t take advantage of falling prices – so today’s tighter lending criteria are depriving the housing market of the demand that could help bolster those prices.”
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