What's The Real Price Of A New Set Of Keys?

More than two million Americans face the prospect of losing their homes over the next couple of years, according to the head of America’s Senate Banking Committee. Senator Christopher Dodd attributes this to the dramatic collapse of the ‘sub-prime’ mortgage market. Sub-prime mortgages, typically 2% to 3% higher than the average interest rate, are generally offered to home-buyers with a less than shiny credit history. The banks and finance companies that cater to the sub-prime market are being accused of exploiting those least able to afford the premium rates and additional charges associated with this form of borrowing.

Repossessions in the United States are now at a record high; in Detroit, Michigan many homes can presently be bought for less than the price of a car!!!

Meanwhile, on our side of the pond, according to James Daley in The Independent, selling your home is about to get more expensive. From 1 June all vendors must provide a Home Information Pack containing evidence of ownership, a range of legal searches, and an Energy Performance Certificate (so all this talk of ‘carbon footprints’ has far-flung implications). At an estimated cost of £300 to £400, the packs are an attempt to speed up transactions and protect multiple buyers from having to pay for surveys before deciding on whether to place an offer.

The astonishing thing is that the Government has decided to scrap the requirement for the vendor to provide a structural survey, probably the most critical pre-purchase information a buyer needs to know. Extraordinary! Nonetheless (despite some exceptions) the provision of a ‘Hip’ will be incumbent on the vendor. You can either compile one yourself or obtain one from an estate agent, a solicitor, or a specialist provider.

However, with no sign of prices abating as of yet, and mortgage providers seemingly doing whatever it takes to attract first-time buyers, many have an uneasy feeling about the UK property market. After all, this is all within the context of the recent news that inflation unexpectedly jumped to 3.1% on the consumer price index. Many feel that interest rates will have to rise to reflect this jump, whilst others look with alarm at the retail price index as it heads toward 5% – in the eyes of many a far more accurate measure of our economy than the CPI because it includes housing. Others observe that we are seeing price gains on everything from consumer goods to food and basic services, and want to see the Bank of England act fast. Whilst nobody anticipates an ‘Anglo-Detroit’ disaster, the less sanguine observer is already preparing for higher interest rates, perhaps as soon as May.