Why there is a Housing Shortage in the UK

With falling house prices and a temporary collapse in house building, it may seem strange to be talking about a housing shortage. However, if we put aside the short term difficulties of the credit crunch and falling demand, there is an underlying problem that in the long term housing supply is forecast to fall well [...]

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[Source: Finance Blog]

What Should the Bank of England do to Interest Rates?

This is a question I sometimes ask my economics students. - If you were the Bank of England governor what would you do?To be fair, the MPC have quite a few difficult choice to make. The decade of low inflationary continuous growth seem to be over. The current economic situation includes the unwelcome development of [...]

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[Source: Finance Blog]

Changes in the UK Buy To Let Market

2008 has seen some of the biggest changes to Buy to Let mortgage criteria since they were introduced in 1994. The credit crunch has meant that lenders are more selective about whom they will lend to and the type of propositions they will lend on. If you havent been actively looking at funding for your [...]

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[Source: Finance Blog]

What is the Real Inflation Figure in the UK?

According to the government’s official statistics, inflation is currently 3%. But,many people in the UK, would probably say that they feel prices are rising much faster than this official figure. Is the government method wrong? Are people right to be sceptical of official figures. What is the real Rate of Inflation?CPI (Consumer Price Index).Firstly the [...]

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[Source: Finance Blog]

Flats For Sale, But Who want to Buy?

The Market for Flats in the UK.In 2003, Leeds city centre had 1,800 apartment flats. By 2007, that figure (planned or built) had risen to 21,000. It was a remarkable expansion in flat numbers Yet, now the housebuilders are left with a high % of flats either empty or being let to students at a [...]

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[Source: Finance Blog]

Finding Best Fixed Rate Mortgage

The rates on Fixed rate mortgages in the UK are continuing to increase. The average fixed rate deal is now 6.75% on 2 year mortgages. Fixed rate mortgages have now reached a 10 year high. Furthermore, continuing problems in the credit markets means that fixed rate mortgage rates are likely to rise even further. Mortgages, [...]

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[Source: Finance Blog]

Economists Predict House Price falls of 20%

According to a survey of 225 members of the Society of Business Economists (SBE) 60% of their members suggested house prices will not recover their peak level (July 2007) until 2012.56% of respondents thought house prices will fall by 20% from their July peak; some believed prices could fall by 30% in nominal terms.Meanwhile the [...]

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[Source: Finance Blog]

Snapshot of UK Economy

The Key Economic statistics:Inflation 3%Economic Growth 2.5%Unemployment 5.3%Interest Rates 5%Current Account deficit 4.2%Government borrowing 2.8%These statistics taken from National Statistics online. [link]Note many forecast a deterioration in economic growth. These statistics tend to be backward looking; i.e they reflect what has happened in the past.Snapshot of UK House PricesHalifax House Price Index May 08 [...]

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[Source: Finance Blog]

How to Avoid Excess Spending on Financial Products

There are a bewildering array of financial products on offer. Each one will help to improve our financial situation. But, some will be much more helpful than others. These are some suggestions about how to approach the market for personal finance.Don’t Buy Under PressureAlways be wary of being sold financial products and deals under pressure. [...]

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[Source: Finance Blog]

Bad News for Homeowners and Economy

Homeowners received two pieces of bad news.Demand for housing has evaporatedThe MPC hint they may actually increase interest rates to deal with the growing problem of inflation.The % of estate agents reporting house price falls has decline from 97% to 92%. But, there has been a sharp fall in the volume of houses being put [...]

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[Source: Finance Blog]

Interest Rate Predictions

Predictions for Interest rates in the UK. How the MPC is likely to set interest rates in the coming months.

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[Source: Finance Blog]

How Does the Bank of England Set Interest Rates?

Readers Question: How Does MPC set interest rates.Yesterday, the nine members of the MPC voted to keep base interest rates unchanged at 5%. What explains their decisions to change rates?The MPC have an inflation target of CPI 2% +/- 1 set by the Government. Therefore, predictions of future inflation are the most important factor in [...]

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[Source: Finance Blog]

Housing Market Crisis?

With news that house prices have fallen 3.3% since 12 months ago, the big question is how severe will be the market downturn and is this a real crisis or just a minor readjustment?There is plenty of Bad news on the Housing MarketHouse prices fell 2.5% in May according to Halifax, the nation’s biggest lender. [...]

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[Source: Finance Blog]

Problems in Buy to Let Housing Market

Recent data from the Bradford & Bingley suggested that arreas by buy to let landlords had risen by 50%. The fear is that a rise in arreas and falling house prices could encourage landlords to sell now and cash in on previous equity gains. The buy to let market has become more important with a [...]

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[Source: Finance Blog]