Look4aproperty’s Blog

Extra cash for mortgage-holders from last week’s interest rate cut will do almost nothing for the UK’s flagging economy.

Instead of stimulating spending, millions of borrowers will become savers not spenders as panic over job security sets in.

That’s according to Aaron Turner, housing market analyst and founder of www.look4aproperty.com.

“People aren’t taking the money they will save on their mortgages and spending it,” says Turner.

Turner says the UK is finally waking up to the importance of saving but this comes at the wrong time in the economic cycle. “What the UK needs is spending right now,” he says.

 “We have been speaking to borrowers all week and asking them for their take on rate movements. The overwhelming feeling is any cut will not lead to much needed spending to stimulate the flagging economy.”

Turner predicts despite the UK having the lowest interest rate for more than 50 years the struggling retailers will not feel any benefit – which means Christmas in the high street is heading for disaster.

And figures due out this week from the Royal Institution of Chartered Surveyors (RICS) and Council of Mortgage Lenders (CML) will show further doom and gloom in Britain’s plummeting economy.

“People are worried about their jobs and are putting any money they will save back into the banks. I think right now people won’t be spending a lot this Christmas.”

Turner adds interest rate cuts alone will not be enough to kick-start the economy, and that job security was the key to getting people to spend again.

“You only get people spending when they have got faith in their jobs. But you have only got to look at the high street and shops like Next and Marks & Spencer to see it’s a bloodbath out there.”

The hidden homeowners who’re next in line to feel a surge in the housing slump

Home repossessions will rocket in the run up to Christmas and the New Year – and it will be Britain’s middle classes who will feel the crunch as they default on their monthly payments.

This is despite calls for lenders to ‘go easy’ on struggling families in the current economic climate.

The ticking time-bomb of self-certification mortgages – those given to the self-employed – is the next to explode, according to property expert Aaron Turner.

“These mortgages – known as Alt A – are one up from sub-prime, the riskiest category” says Turner, who’s also the owner of www.look4aproperty.com, one of Britain’s top online property websites.

“These ‘self cert’ mortgages account for nearly three million loans in this country and we’re seeing the first signs that repossessions are beginning to affect professional people”.

The latest Land Registry figures due out tomorrow (Tuesday, 28^th October) are expected to show another significant fall in average house prices in England and Wales during September.

The previous month saw the average house price go down by 4.6% to £174,493.

Concern that ‘self cert’ was being used as a way for people to borrow beyond their means prompted the FSA – which regulates the mortgage lending business – to clamp down on their use in recent years.  However, for many home owners these measures may be too late.

Rising prices, vanishing bonuses, the threat of redundancy and a need to cut back on expenditure are all taking their toll on the more affluent sector of society.

“It means that some people who were relatively well off this time last year will inevitably be really struggling and the inflated salaries they said were earning to get their mortgages will come to haunt them in the form of home repossession” said Mr Turner.