%


-6 -5 -4 -3 -2 -1 0 1 2 3 4 5


2004


2005


2006


2007


2008


2009


2010 Market Analysis Spring 2011


GDP annual growth GDP quarter on quarter growth


Figure 2 UK key economic indicators


UK key economic indicators


GDP CPI RPI


Claimant unemployment (m) Bank rate at end of period


2007 2008 2009 2010 e* 2011 e* 2012 e*


3.1% 0.8% -4.8% 1.5% 1.8% 2.1% 2.1% 3.80% 2.9% 3.4% 3.6% 2.1% 4.1% 3.1% 2.4% 4.7% 4.5% 3.2% 0.85


1.05 1.63 1.48 1.58 1.54


5.58% 2.39% 0.50% 0.50% 1.00% 2.10% * average of latest independent forecasts


Those worried about future rate rises are still likely to be at the end of a two or three year deal taken now.


100 150 200 250


50 0


for uncomfortable reading with CPI now at 4.4% and RPI at 5.5% but before any rise is imposed the MPC will want the dust to settle after the budget announcement and it is unlikely rates will go up in April – one of the busiest periods of the year for the property market. As a result it will be at least May before we see any change to the base rate. (Figure 2)


Sales Appraisals Mortgages


their home. They will also pay the best part of £1,000 in fees to secure the deal. Anyone with less equity will have to pay a great deal more. For example, if you’re borrowing more than 75% of your property’s value the best rates will be closer to 6%.


Any decision to fix needs to be considered very carefully.


Prices Stabilising New Instructions to Sell


100 150 200


50 0


As inflation rises further and more MPC members vote for an increase in the base rate, many homeowners currently on an SVR mortgage are considering the pros and cons of fixing their deal ahead of the inevitable rate rise.


Many argue there is little point in taking any fixed deal shorter than five years. Those worried about future rate rises are still likely to be at the end of a two or three year deal taken now.


200


100 150


50 0


However, five-year fixes are not cheap. The cost of these mortgages has risen by a full percentage point in the past three months. The best five-year fixed rate currently available is from HSBC, which offers a loan at 4.39% for those with at least 40% equity in


Following a slowdown in average prices since last spring, most indicators, including the Halifax and Nationwide measures, point to a more-or- less stable picture in recent months.


Admittedly, the latest RICS survey still shows a significant net balance of surveyors reporting price falls rather than increases, but the underlying position is less negative than in recent months. Most respondents recording price falls did so in the 0-2% range and more than half of all surveyors reported unchanged prices. This is consistent with sales prices broadly stagnating or drifting very gently downwards over recent months.


Market Analysis Spring 2011


5


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Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11


Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11


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