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Will the bank holiday sun shine on mortgages?

by: Mike Jones
  • 19/04/2011
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Will the bank holiday sun shine on mortgages?
The Halifax house price index for March showed that prices continued to fall at a modest pace. It's been the same story throughout 2011 so far – a little movement here and there but no great changes.

When we release the house price index, we encourage people to look at the quarterly rate of change rather than the month-on-month figure. This is the best measure of the underlying trend in price movements.

With March’s data we can look back on the first quarter of this year. Prices in the first three months of 2011 were 0.6% lower than in the fourth quarter of 2010.

The overall decrease in prices in Q1 compared with the previous three months was a little lower than the falls recorded in the third and fourth quarters of 2010.

We do need to retain some perspective, we are quite some way from the falls that we were seeing at the back end of 2008.

Looking at the rest of the year, our forecast remains for a 2% decrease in house prices in 2011.

Uncertainty over the general economic outlook and individual financial circumstances are likely to constrain housing demand, resulting in some modest downward pressure on prices. We expect this decrease to correct itself throughout 2012.

House sales show signs of stabilising, but remain at a low level.

Conversely, at Halifax, our application levels are strong, showing that intermediaries are responding well to our recent price changes.

Despite the constrained demand, it will be interesting to see whether the sunshine and plethora of bank holidays encourage people into the market.

Mike Jones is sales director of mortgags at Lloyds Banking Group

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