The UK has experienced its longest post war recession, and the deepest since the Great Depression. In 2011, the recovery was disappointing, and prospects for the rest of 2012 are poor. However, the UK recovery is likely to be relatively better than the Eurozone, which retains even more serious problems. Therefore, despite the fact UK [...]
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Interest Rate Graphs
Base Interest Rates The Base rate is the rate set by the Central Bank. It is the most important interest rate in the economy because it influences all the other interest rates. If the Central Bank cuts its base rate, it means it is cheaper for commercial banks to borrow from the Central Bank, this [...]
Interest rates and Exchange rates
Interest rates influence the exchange rate. In the short-term changes in the interest rates are one of the most important factors influencing the exchange rate. Generally, an increase in interest rates in the UK would increase the value of Sterling. Why Higher Interest Rates Increase Value of Exchange Rate If UK increase interest rates relative [...]
Government Backed 95% Mortgages
The government have unveiled a new policy to give first time buyers a greater chance of buying a new house. The new 95% mortgages will be backed by the taxpayer and will help first time buyers struggling to raise a deposit to buy a new home. It is estimated the scheme could help 100,000 potential [...]
North v South House Prices
The UK housing market has many different aspects, and increasingly is fragmenting into different sectors which have quite different fortunes. In particular, house prices in the South, and London in particular have increased at a much faster rate than house prices in the north. This means houses in London are increasingly out of the reach [...]
Impact of Debt Crisis on UK
The Euro debt crisis threatens to cause serious economic problems for the UK, EU and global economy. There are a number of reasons to be concerned about the impact the current debt crisis will have on UK housing market and economy. This is a simple guide to how the EU debt crisis came about. Problems [...]
House Price Forecasts 2012
Given the economic uncertainty facing the UK, it may seem a little early to start making forecasts for house prices in 2012. However, Ernst & Young ITEM Club’s outlook for housing market is to see prices drop 5% in 2012. This follows on from the stagnation in prices since the 2010 peak. It means UK [...]
New Homes Built in UK
Statistics on the number of new homes built in the UK are produced by the ONS. Since the credit crunch of 2008, the number of homes built has fallen well below the level necessary to meet expected rising demand. Source: ONS The number of new houses built in the UK in 2010/11 was only 106,000. [...]
Forecast for UK Bond Yields
Bond yields on UK government securities have continued to fall in 2011 – despite having one of the largest budget deficits in the UK. This is in sharp contrast to peripheral members in the Eurozone. Greece, Ireland, Spain, Portugal and Italy have all seen a rapid rise in government bond yields as markets become worried [...]
Repayment of Mortgages
The housing market is very cyclical. It is not just prices that can be volatile, but also equity withdrawal and debt repayment. In the boom years, property owners were taking £50bn of equity withdrawal every year. Mortgage equity withdrawal was adding nearly 9% of consumers spending power. Mortgage equity withdrawal involved re-mortgaging house to gain [...]
