Housing Crisis.

Amidst the economic mayhem  is the issue of house prices. The problem owes something to continued interest rate rises encourage by the Bank of England Monetary Policy Committee and the effects of the housing crash in the USA.  Looking at banks and finance houses here in the UK, it is a puzzle why so many mortgage providers are tightening up on new applications or remortgaging. After all given the interest rates imposed by them it is of some profit to encourage borrowers. The reason why house prices are falling is largely due to too few buyers as many buyers cannot obtain mortgage deals; the fact that so many providers are doing this makes one wonder what happened to competition or is there a kartel at work whereby mortgage providers are deliberately holding back finance so as to force house prices down – if so this would be unacceptable behaviour.  The decision by Tesco to set up a banking house and provide mortgages is welcome and brave, hopefully Tesco will shake up the market, but it wasn’t long ago that Tesco announced it had set up an estate agency which of course collapsed. 

If we are to return to normailty in our economy we need and must have a substantially reduced Bank of England interest rate and mortgage providers need to relax their lending policies: there remains a serious shortage of housing, we need to stimulate house building and many people are frustrated that they cannot move until the market relaxes.

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