Paula John: Market news

Antoni & Alison kick off London Fashion Week

It was an early start for the fashion set as the London Fashion Week action was jump started this mo...

CC kills more people than cervical cancer; why haven’t we heard about it?

There is a disease whose incidence is rising in the UK and most of the industrialised world. However...

Time for a new approach to alcohol

Ambulances were called and three drunk teenagers were brought to my care. One was so drunk we had to...

GOING UP...

The number of homeowners likely to find themselves in negative equity in the next 12 months. Ratings agency Standard & Poor's (S&P) warned last week that tumbling property prices could leave one in seven owners in homes that are worth less than their mortgage. Only 0.6 per cent of mortgage borrowers are currently in negative equity. However, S&P predicts that the average house price will drop by 17 per cent by this time next year, and calculates that such a fall would bring about a rise in negative equity cases from 70,000 to 1.7 million – or 14 per cent of the homeowning population.

GOING DOWN...

If S&P is correct about plunging property prices, they will have lost 25 per cent since their peak in August 2007. Some observers claim the decline will be even greater: Global Insight predicts a 30 per cent drop, while the gloom merchants at Capital Economics, who have been predicting the demise of the housing market for years, say a fall of 35 per cent is on the cards. Nationwide's latest figures record an annual decrease of 8.1 per cent (£15,000) in the average house price, although it claims that the rate of decline may slow as mortgage interest rates have started to fall.

GO FIGURE... 2.5

Minimum number of years of mortgage famine, according to Sir James Crosby. The former chief executive of HBOS's report on the UK mortgage market for the Treasury concludes that "a shortage of mortgage finance will persist throughout 2008, 2009 and 2010" and he suspects that already depressed forecasts for net new lending during this period will prove optimistic. While his final recommendations are not due until the autumn, the report suggests that there is little the Government could or should do. The inference is that there may be no disaster so great that Government intervention can't make it even worse.

Paula John is editor-in-chief of Your Mortgage