Whilst it is recognised that a chief reason for the huge increase in the value of houses over the past year is a reduction in mortgage rates coinciding with a rise in wage levels, it is less widely known that the boom has also been fuelled partly by a limited supply of housing stock.
There are some parts of Edinburgh, for example, where a good quality bungalow is in fact less valuable than the land upon which it is built. With no significant rise in mortgage rates imminent, there seems little evidence to suggest that a slump in the housing market is forthcoming. what’s more on the off chance that you have as of now gotten a couple of quotes from property valuers, you may be thinking about whether you require an expert, or in the event that you can escape with the “free” form from a land operators. Given that interest rate levels throughout Europe are generally lower than in Britain, and given that the USA is reducing its interest rates, Japan has 0% interest rates and we are presently enjoying a stable economic environment, there seems little prospect of interest rates rising to a significant extent.
Should mortgage rates start to rise, however, then those homeowners who have over borrowed will undoubtedly find themselves in some difficulties but, even so, any repeat of the housing slump of 1989/90 that saw high levels of repossessions should be avoided through the low levels of unemployment that presently prevail.
Where home owners can afford to spend, for instance, 50% of their monthly income on housing, then if mortgage rates drop and incomes go up, they can afford to buy a better house. The cost of many items, such as electrical goods, have fallen over recent years and, given the British public’s partiality for bricks and mortar, any money saved from expenditure on other items is often ploughed back into purchasing property.