House prices will fall next year, according to the Bank of England, as home loans become harder to secure due to government spending cuts.
Huge job cuts in the public sector combined with increased pressure on household budgets announced by the Chancellor are set to make it even harder for buyers to secure finance.
The Bank of England announced in its Trend and Lettings report that house prices will “remain little changed or decline slightly in 2011”.
Mortgage lending saw it drop to a 10 year low last month, with no sign of a post summer bounce in mortgage activity. Overall gross spending dropped to £12 billion in September, down 1 per cent on the previous month and the lowest since the year 2000.
Unfortunatly there is little sign of the current financial market picking up, with banks refusing to loosen their lending criteria amid fears of unemployment increasing and home owners defaulting on their loans.
The Bank of England warned last month that lenders had “tightened credit scoring criteria” and were expect to tighten them even further as they adopted a more “cautious approach”.
There is now more reason than ever to sell your home privately. With the saving your make in commission fees you will have more collateral to put towards a new mortgage. This will mean you can borrow less, resulting in lower monthly repayments.