Lenders are being told they must assess the affordability of loans [...]]]> New rules to stop a resurgence in risky mortgage lending are likely to be imposed in 2013 by the Financial Services Authority (FSA).The regulator’s revised proposals still intend to bring in “common sense” standards that will stop home buyers borrowing more than they can afford.

Lenders are being told they must assess the affordability of loans better.  But some flexibility is being allowed for existing customers who might have been prevented from remortgaging.

Lord Turner, chairman of the FSA, said: “While the excesses of the pre-crisis period have largely disappeared from the current market, it is important to ensure that better practice endures in future when memories of the crisis recede and the dangers of poor practice return.”

The regulator wants to stop any possibility of a return to the early years of the past decade, in which some lenders handed out mortgages with only cursory checks on borrowers’ real ability to repay.

The most notorious examples were the “Together” mortgages offered by the Northern Rock bank, which granted loans worth 125% of the value of homes.

In some other extreme cases, lenders offered mortgages worth seven times a borrower’s income, or allowed them to exaggerate their real income, especially in the case of “self-certified” mortgages.

The thrust of the FSA’s proposals, which are now going out to a further round of public consultation, is still that lenders must judge properly the ability of individual borrowers to repay.

“The proposals will see prospective borrowers – whether they are first-time buyers, right-to-buy tenants or home movers – get the right information and advice, at the right time, and ensure mortgage lenders will be properly checking each applicant’s realistic ability to repay their mortgage,” the FSA said.

Specifically, when lenders assess a mortgage application, they will have to:

• assume interest rates may rise from their current low levels.
• not let borrowers rely on the possibility of rising house prices to claim they can eventually repay.
• assess interest-only mortgages as repayment ones, unless there is a “believable” source of money to pay off the loan.

Although lenders will still have to check income details in each mortgage application, the FSA is no longer proposing that a borrower undergoes a detailed check of how they spend their money, but only be given a broad assessment of their “committed and essential household expenditure” instead.

Under the proposed new rules, interest-only mortgages can still be offered if there is a “credible” plan to repay the loan, which does not involve a borrower assuming he or she can eventually cash in on the rising value of their home.

It says the programme, which costs £400 million a year, is unsustainable.

The Support for Mortgage Interest [...]]]> Mortgage lenders have raised concerns about potential changes to the way support is given to those struggling to pay their mortgage.The government is reviewing the Support for Mortgage Interest Scheme, where homeowners who lose their jobs may receive financial help.

It says the programme, which costs £400 million a year, is unsustainable.

The Support for Mortgage Interest (SMI) scheme, which helps people receiving some benefits, operates across the UK.

Under the SMI, those who lose their jobs receive financial help with mortgage interest payments. This comes 13 weeks after losing their job, a timescale previously cut from 39 weeks. However, the assistance only lasts for up to two years.

Chancellor George Osborne said in this year’s Budget that the scheme would operate until at least January 2013.

Support for Mortgage Interest is a UK scheme aimed at helping those with a sudden change of circumstances make mortgage payments rather than be thrown out of their home.

Some people on benefits are eligible and can receive help to make mortgage interest payments 13 weeks after losing their job.

Now Lord Freud, the minister for welfare reform, has launched a review of the scheme.

These changes could see a charge put on the property of anyone who receives the assistance, which is recovered when the house is sold.

The suggestion was welcomed by the Council of Mortgage Lenders (CML) and the Building Societies Association (BSA).

Two other proposals have raised worries from the CML, which represents those who give home loans.

The first is a plan to make the payment to the homeowners themselves, rather than straight from the government to the lender. Lord Freud said the current system did not encourage people to get on top of their own finances.

The CML is also concerned that the qualifying period may return to 39 weeks after somebody has lost their job.

The BSA is calling for the amount received in SMI payments to reflect the actual rate the borrower is paying, rather than a set standard rate.

The temporary exemption meant first time buyers were free from the [...]]]> First time buyers will no longer receive an exemption from stamp duty from March 2012 as the government says the relief is “ineffective”.Documents with Chancellor George Osborne’s Autumn Statement reveal the view that the tax relief failed to get more people on the property ladder.

The temporary exemption meant first time buyers were free from the 1% stamp duty on homes costing under £250,000.

A lenders’ group described the decision as “disappointing”.

The Council of Mortgage Lenders (CML) said first-time buyers’ purchases could be bunched up at the start of next year before the concession is scrapped on 24 March.

The documents show that the Office for Budget Responsibility (OBR) believes that the UK housing market will remain relatively stagnant.

It predicts that, even without the relief for first-time buyers, stamp duty land tax receipts will only grow marginally from £6bn in 2010-11 to £6.4bn in 2012-13, before rising more sharply to £7.5bn in 2013-14, and accelerating to £11.4bn in 2016-17.

Stamp duty thresholds

• 1%: Properties of £125,000 to £250,000, but first-time buyers are currently exempt
• 3%: £250,000 to £500,000
• 4%: More than £500,000
• 5%: More than £1m, residential property only

In the Autumn Statement documents, the government said: “The government is publishing analysis showing that the stamp duty land tax relief for first-time buyers has been ineffective in increasing the number of first time buyers entering the market.

The government’s housing strategy, announced earlier in the month, included a mortgage guarantee scheme to encourage lenders to offer 95% mortgages to buyers of new homes.

Paul Smee, director general of the CML, said: “While the stamp duty concession may not have stimulated additional demand, it was a significant help to home-owners entering the market and its removal runs counter to the themes of the new housing strategy.

“It is likely that we will see a bunching of eligible first-time buyer transactions early next March to beat the expiry date on the concession.”

Meanwhile, the number of mortgages [...]]]> UK house prices have remained “surprisingly resilient” in recent months with values rising again in November- the Nationwide has found.It said the average home rose in value by 0.4% in November to £165,798.  This was a 1.6% year on year increase, according to the figures based on Nationwide’s own mortgage data.

Meanwhile, the number of mortgages approved for house purchase but not yet completed  has risen slightly to its highest level for nearly two years.

The Bank of England said there were 52,743 approvals in October, up from 51,193 the previous month and the highest monthly total since December 2009.

The fact that approvals last month were higher than the average for the previous six months suggests that sales may pick up slightly in the coming months.

The Nationwide’s house price figures differ with those from the Land Registry published on Monday which showed that prices in England and Wales had slipped slightly in the past year.

The Nationwide predicted that prices would stay the same or fall in the next 12 months.

“House prices have remained surprisingly resilient in recent months, despite the deterioration in the economic outlook,” said Robert Gardner, the Nationwide’s chief economist.

“But, with the UK economic recovery expected to remain sluggish well into 2012, house price growth is likely to remain soft, with prices moving sideways or drifting modestly lower over the next twelve months.”

The best measure of current trends in house prices is to compare the average price of the past three months with the average price of the previous three months.

On the Nationwide’s data this three-month on three-month comparison shows a rise of 0.2%.

Mr Gardner said the apparent resilience of house prices reflected a lack of supply in the market.

He welcomed the latest announcement from the government on encouraging first-time buyer activity, but said that any action should also include measures to increase housing supply.

The government’s housing strategy, announced earlier in the month, included a mortgage guarantee scheme to encourage lenders to offer 95% mortgages to buyers of new homes.

The National Association of Estate Agents (NAEA) said [...]]]> First time buyers are “rarely seen”, estate agents warn with their share of the UK housing market having fallen to a three year low.Sales to those buying their first home fell from a 22% share of the market in September to a 16% share in October, figures suggest.

The National Association of Estate Agents (NAEA) said this was the lowest proportion since December 2008.

One economic research company has also scaled back its price growth forecast.

The level of sales and homes going on the market in the UK was little changed in October compared with September, according to the NAEA.

However, it said that first time buyers had suffered a “heavy blow” to their share of the overall housing market.

The association said that, despite some evidence of mortgages being approved by banks, there remained significant lending barriers for those trying to buy their first home.

“The first time buyer is rarely seen as they struggle to get mortgages and over-optimistic vendors with a lack of motivation continue to stifle certain areas of the market,” said Martyn Baum, who represents the NAEA in the Midlands.

It still believes that house prices will rise from next year.

The research company also said that the government’s housing strategy could initially push up prices slightly but would have no effect on values after the first year.

That figure represented a [...]]]> Mortgage lending in Scotland rose in the third quarter – but at a much lower rate than the UK as a whole, according to the latest data released by mortgage lenders.The Council of Mortgage Lenders (CML) Scotland said 12,400 loans were taken out, which was 900 more than in the previous quarter.

That figure represented a rise of 8% for the period.

In the UK as a whole, lending for house purchase increased by 16%.

Loans to first time buyers and home movers in Scotland increased in the third quarter.

A total of 4,600 loans worth £429 million were advanced to first time buyers, which was a rise of 7% by volume and 10% by value.

CML Scotland said there were “small improvements” in lending criteria for all Scottish house purchasers in the quarter.

First time buyers typically borrowed 80% of their property’s value, up from 79% in the second quarter – bringing the average loan-to-value ratio in Scotland in line with the UK average.

Home movers borrowed on average slightly less of their property’s value from July to September than April to June – 70% compared to 71% – but they spent 8.8% of their income on mortgage interest payments, the lowest since records began in 2005.

A total of 9,600 remortgage loans worth £900 million were taken out, a 5% increase on the previous quarter.

CML Scotland policy consultant Kennedy Foster said: “The mortgage market in Scotland is currently stable, albeit at a low level.

“We anticipate growth is likely to remain slow going forward, although welcome developments – such as smaller deposits – have emerged and a Scottish mortgage indemnity scheme for new-build properties is being introduced.

“The uncertain economic outlook and low levels of consumer confidence will likely result in a continuing constrained mortgage market in Scotland, as in the UK in general.”

The number of mortgages taken out for house purchases was 48,200 in September, down 2% from the month [...]]]> Economic uncertainty makes the future of the UK mortgage market “difficult to call”, a mortgage lenders’ group has said.Paul Smee, director general of the Council of Mortgage Lenders (CML), said the market for home loans was currently stable.

The number of mortgages taken out for house purchases was 48,200 in September, down 2% from the month before, the CML said.

First time buyers needed an average deposit of 20% of a home’s value.

The number of mortgages approved for house purchases was 3% higher than in September 2010.

However, mortgage lenders have suggested that the cost of loans has started to rise because banks are charging more to lend to each other.

The rising cost has resulted from banks’ confidence in lending to each other being knocked by the eurozone crisis, and Mr Smee said this made the future for the mortgage market more difficult to predict.

“Although both house purchase and remortgage loans experienced a small drop in September the overall market to date shows a stable picture,” said Mr Smee.

“However, the backdrop of global and domestic instability makes the future more difficult to call.”

Over the third quarter of the year, the number of home loans advanced for house purchases was up 16% compared with the previous quarter at 144,200.

This was 6% lower than the number in the same period in 2010.

The number of homeowners remortgaging in the third quarter was up 23% on the same three months in 2010.

However, the latest figures show the steam might have come out of the remortgaging market, with the number of remortgaging loans approved in September down slightly on the previous month.

The number of loans taken out by first-time buyers rose slightly in September from a low base.

The level of deposit required remained unchanged compared with August, but had eased compared with a year earlier.

This increase follows a rise in the rate at which banks lend to each other – Libor – which has been [...]]]> Mortgage interest rates could start to rise again as a result of the turmoil in the eurozone brokers are warning.Some lenders, including Woolwich, Halifax and Santander, have pushed up their tracker rates for new borrowers.

This increase follows a rise in the rate at which banks lend to each other – Libor – which has been inching higher amid worries over the eurozone crisis.

The increase in Libor indicates that banks are less confident about lending to each other.

Although the average tracker rate has hardly altered since the summer, there are straws in the wind which suggest that the direction could be shifting from down to up.

On Wednesday, the Chelsea Building Society put up the cost of some of its most competitive tracker mortgages by 0.2%.

In recent weeks, the Halifax raised its two-year tracker by 0.15% to 3.34%, while Woolwich increased the rate its trackers revert to after two years by 0.4%.

Santander pushed up its Abbey-branded lifetime tracker in two moves from 2.95% to 3.09%. Nationwide and ING have also raised some rates as well.

One indication of the pressure on lenders comes from Libor – the London Interbank Offered Rate – the short-term interest rate at which banks will provide funds to each other.

While some lenders draw mostly on their customers’ savings to fund mortgages, others have to borrow large amounts on the money markets, hence the importance of rates such as Libor.

Since August, three month sterling Libor has risen from 0.83% to 1%.

This is a significant change compared with the Bank of England’s key rate, which has been stuck firmly at 0.5% since March 2009. On Thursday, the Bank said it would keep rates on hold again following the latest meeting of the Monetary Policy Committee.

It said that the housing market had remained “highly resilient” despite weakness and a deteriorating [...]]]> UK house prices rose by 1.2% in October compared with September, but have fallen over the last year according to the Halifax.The lender, part of nationalised Lloyds Banking Group, said that values had fallen by 1.8% compared with a year ago.

It said that the housing market had remained “highly resilient” despite weakness and a deteriorating outlook for the UK economy.

The average home in the UK was valued at £163,311, the Halifax said.

Its house price survey is based on its own mortgage data.

The Halifax said that there was a 0.3% fall in prices in the three months to the end of October compared with the previous quarter. This was the first time this measure has recorded a fall since June.

Martin Ellis, Halifax’s housing economist, said that this was an indication of the general stability of prices, despite the month-on-month figures having shown some volatility during the year.

“The housing market has proved highly resilient in recent months, despite the weak economic recovery and the deterioration in the outlook for both the UK and global economies,” he said.

“The prospect of exceptionally low official interest rates over the foreseeable future is likely to continue to support the market in the face of a very difficult economic climate.

“Both prices and activity levels are expected to remain close to current levels over the coming few months.”

The survey’s findings are similar to the picture painted by the Nationwide Building Society. A week ago, it said that UK house prices were “treading water”.

The Nationwide said the annual change in October was a 0.8% rise.

However, the year-on-year comparison is calculated slightly differently by the two lenders. The Halifax compares the previous three months with the same three months a year earlier to give a smoother comparison, rather than a direct comparison of the equivalent months.

The figures suggest that this year’s modest revival in sales has ended and that mortgage [...]]]> The number of new mortgages approved for home buyers, but not yet lent, fell in September for the first time in five months.The Bank of England said approvals for home buyers were 50,967 in September, down 1,380 or 3% from August.

The figures suggest that this year’s modest revival in sales has ended and that mortgage related sales may fall again in the coming months.

In September, completed sales fell for the second month in a row, to 72,000.

The figures from HM Revenue & Customs (HMRC) showed that sales last month had fallen by 11,000 from the July peak of 83,000.

Prices are likely to trend down over the coming months in the face of very low consumer confidence amid persistently weak economic activity, markedly rising unemployment and muted earnings growth.

But over the third quarter of the year total lending was 15% higher than in the second quarter, [...]]]> Mortgage lending is still subdued according to the latest figures from the Council of Mortgage Lenders (CML).Total lending stood at £12.9 billion in September, which was 2% lower than in August but 4% up on September last year.

But over the third quarter of the year total lending was 15% higher than in the second quarter, while still 2% down on a year ago.

The CML warned that lending might turn down again in the coming months.

“The housing market is very sensitive to wider household confidence, and this seems likely to weaken over the coming months in response to the latest spike in consumer prices and headline unemployment figures,” said the CML’s chief economist Bob Pannell.

“What is becoming clear however, is that lenders are increasing their product pricing, in one case upping their standard variable rate, due to increases in funding costs,” he said.

“It therefore seems that we are now passing the nadir for mortgage rates which may spur some customers to take action before these historically low products disappear.”

The latest quarterly Bank of England publication Trends in Lending contains a warning that mortgages may become more expensive if banks continue to find it hard to raise fresh funds on the wholesale financial markets.

“Funding costs for wholesale debt had increased according to some major UK lenders, which they reported primarily reflected concerns about the vulnerabilities associated with the indebtedness of several euro-area governments and banks,” the Bank said.

“Lenders noted, however, that if current conditions in term wholesale funding markets did not improve then higher funding costs were likely to be passed through to loan pricing in the coming months.”

It said there had been a mixed pattern of monthly changes in prices, but [...]]]> House prices are “lacking genuine direction”, according to the Halifax, as it reported a 0.5% fall in values in September compared with August.Prices were down 2.3% from a year ago, leaving the average home in the UK worth £161,132, the lender said.

It said there had been a mixed pattern of monthly changes in prices, but broad stability overall.

And the lender said it expected little change in prices and activity during the rest of the year.

“Greater uncertainty about economic and personal financial circumstances, together with pressure on householders’ finances from weak earnings growth, higher inflation and increases in taxes, are likely to be constraining housing demand,” said Halifax housing economist Martin Ellis.

“Despite these pressures, low interest rates and a rise in employment over the past year, have been supporting the market.”

Prices in the three months to September were 0.1% higher than the previous three months.

The report of static house prices from the Halifax’s lending data chimes with the latest figures from the Nationwide. The building society said last week that prices were “treading water”.

However, the latest statistics on mortgage approvals from the Bank of England may suggest that sales funded by mortgage borrowing could pick up this autumn.

It said the number of new mortgages approved, but not yet lent, for home buyers rose to 52,410 in August – its highest monthly level since December 2009.

The monthly picture so far this year from the Halifax is one of with four rises, four falls and one month of no change in prices.

Recent data from the Land Registry showed that prices in London had risen by 2.1% in the year to August, compared with a 7.8% fall in the north-east of England.

Prices for the three months to September compared with the previous quarter were unchanged.

Market turmoil [...]]]> House prices continued to “tread water” in September – rising by 0.1% compared with the previous month the mortgage lender Nationwide said.This left the average price of a home 0.3% lower than a year earlier, at £166,256, the building society said.

Prices for the three months to September compared with the previous quarter were unchanged.

Market turmoil as a result of the eurozone debt crisis had hit confidence among buyers, Nationwide said.

“Sentiment towards major purchases is depressed, as a result of weak labour market conditions and ongoing pressure on household budgets from above-target inflation,” said Robert Gardner, Nationwide’s chief economist.

He predicted that property prices would remain fairly stable over the rest of 2011, although the outlook for the global economy had “darkened”.

The struggle for people to find new jobs has resulted in “sluggish demand” from potential buyers.

That, together with a gradual rise in the number of properties on the market, had led to the current market conditions.

Some of these issues are most acute in the north east of England.

Many of the properties coming onto the market were the result of repossessions. These included repossessed properties from landlords who had overstretched themselves.

This meant there were some two bedroom homes in need of some work that were on the market for £20,000.

Many properties were selling if prices were lowered, however dropping prices was not necessarily an option for some sellers though.

Those who bought at the peak of the market may well have borrowed more than the property is now worth with negative equity.

It was the third fall in the past four months and means the annual rate of house price decline has changed little [...]]]> House prices in England and Wales continue to stagnate, according to the latest figures from the Land Registry.Average prices fell by 0.3% in August to £162,347, leaving them 2.6% lower than a year ago.

It was the third fall in the past four months and means the annual rate of house price decline has changed little during that time.

With small fluctuations each month, house prices in England and Wales have hardly changed since the end of 2010.

The Land Registry said that prices in London continued to diverge strongly from the rest of the country.

They rose by another 0.5% last month and are now 2.1% higher than they were a year ago.

This makes London the only region to experience a rise in prices in the past year, with property prices now averaging £348,686.

By contrast, in that time prices have fallen by 7.8% in the North East of England and by 5.5% in Wales.

The continued stagnation of prices and sales has been mainly due to the rationing of mortgage funds by banks and building societies, which has been in force since the height of the banking crisis in 2008.

A report from the Bank of England – its latest quarterly Credit Conditions Survey – has found that lenders continue to find it difficult to raise funds in the financial markets, which they can then lend to customers.

Lenders told the Bank that there had been more demand for mortgages in the third quarter of this year.

And they expected to be able to offer a little more money to would-be borrowers in the coming months.

But the Bank warned that things might take a turn for the worse.

“In both the household and corporate surveys, lenders pointed to adverse wholesale funding conditions as a key factor which might constrain future lending,” the Bank said.

“More recent discussions with some of the major lenders suggested that although these factors had not yet led to reduced credit availability, a period of sustained tight funding conditions could act to constrain their ability to extend loans going forward,” it added.

More surveyors reported price falls than price [...]]]> Economic uncertainty and a lack of mortgage lending led to the sluggish housing market, the Royal Institution of Chartered Surveyors (Rics) said.Fourteen homes were sold per UK estate agent in the three months to August – the lowest total for more than two years, a survey has found.

More surveyors reported price falls than price rises in August, Rics said.

And an increasing proportion expected prices to drop further in the next three months.

“The risk is that the worsening economic picture will gradually begin to have a more material impact on sentiment and discourage potential house purchasers, even where mortgage finance is available,” said Alan Collett, housing spokesman for Rics.

The Rics report reported that surveyors regarded economic uncertainty as the biggest factor affecting activity in the housing market, followed by a lack of mortgage finance.

A smaller number considered that buyers and sellers were staying away from the market because of fears over further house price falls.

The Council of Mortgage Lenders said last week that first time buyers were typically having to find a deposit of 20% of the purchase price to get a home loan.
School effect

House prices in year to July

• Wales: down 0.1%
• England: down 1.5%
• Scotland: down 1.8%
• Northern Ireland: down 4.1%

Source: Department for Communities and Local Government

Often this was because they had bought at the height of the market, had found it easy to get a 100% mortgage, but now needed a bigger home having had children or found a partner.

Nationally, Rics said that prices continued to increase in London, with prices falling the most in East Anglia and the West Midlands. Scotland and Northern Ireland also recorded house price falls, the survey said.

In the last year, prices have fallen the most sharply in Northern Ireland (down by 4.1%), according to the government’s own house price survey.

Property prices fell by 1.8% in Scotland in the year to July, and dropped by 1.5% in England and 0.1% in Wales, the Department for Communities and Local Government (DCLG) said.

It said that UK house prices fell by 1.5% over the year to July.

However, it said prices rose by 0.3% compared with June, making the average home worth £207,690.

Prices paid by first-time buyers were 0.5% lower on average compared with a year earlier and prices paid by former owner occupiers decreased by 1.9% over the same period.

The number of first-time buyers, at 18,200, fell back by [...]]]> The number of mortgages lent in July was still much lower than a year ago, figures from the Council of Mortgage Lenders show.The number of new loans to house buyers was 48,400 in July, up 1,000 from June but still 6,900 lower than a year ago.

The number of first-time buyers, at 18,200, fell back by just 300 from June and was 1,300 down on a year ago.

First-time buyers are still having to put down deposits averaging 20% of their purchase price to obtain a loan.

“August saw global financial turmoil and unrest closer to home and recent Bank of England approvals figures do not necessarily suggest a continuing upturn in lending in coming months,” said the CML’s director general Paul Smee.

“However, it is likely that this reflects weak consumer appetite for borrowing, more than any additional constraints on the availability of mortgages,” he said.

Figures from the Bank of England showed that in July 49,239 new mortgages were approved, but not yet lent, to house buyers. That represented the third monthly increase in a row and would normally suggest an impending upturn in sales.

With house prices rising slightly so far this year, the average new mortgage has gone back up to £120,000, the CML said.

As a result, the total amount of money involved in the new loans in July rose to £7.3bn from £6.9bn in June, putting gross lending at its highest level since August last year.

Mortgage rationing in the past few years has led to home sales [...]]]> The number of mortgage deals available has returned to the level of early 2008, before the banking crisis reached its peak.Of the 2,557 mortgage types on offer, 64% require at least a 20% deposit and only 2% need a deposit of 5% or less.

Mortgage rationing in the past few years has led to home sales falling by more than half.

Moneyfacts, which compiled the figures, said lending to people with small deposits was still very restricted.

“While the number of deals for borrowers with a 5% deposit or less has increased, the majority require a guarantor to qualify or are from lenders which offer restricted lending,” said Michelle Slade of Moneyfacts.

“First-time buyers still really need at least a 10% deposit before they can find any real mortgage options.”

She said lenders were worried about borrowers defaulting if interest rates rose, and were concentrating their lending on people who could put down at least a 25% deposit.

Severe mortgage rationing has been in place since 2008, when banks and building societies decided to restrict their lending because of the financial crisis.

The knock-on effect has been that people who would normally be regarded as highly creditworthy have been having problems obtaining a loan to buy a home.

Despite a clean credit history, several lenders are rejecting home loan applications.

As a result the mortgage decision making  process is getting slower and slower. Previously mortgages were agreed in six days or so now the process can take up to three months.

The monthly drop was the first recorded by [...]]]> House prices fell by 1.2% in August compared with the previous month with property values expected to remain stable, Halifax said.The lender, now part of nationalised Lloyds Banking Group, said that the average home was 2.6% lower in value than a year ago at an average of £161,743.

The monthly drop was the first recorded by Halifax for four months.

It said low interest rates, coupled with a lack of demand, meant there would not be a pick-up in activity.

The month-on-month drop is similar to the drop recorded from July to August by the Nationwide Building Society a week ago.

Both lenders base their house price estimates on their own lending data.

The less volatile three-month on three-month measure showed that prices rose by 1% in the three months to the end of August compared with the previous quarter.

Prices remain slightly lower than the end of last year, the Halifax said, and – despite homes becoming more affordable – it saw little expectation of a strong lift in the market.

“A recent decline in average mortgage rates has further boosted home affordability for those able to raise a deposit to make a new purchase,” said Martin Ellis, Halifax’s housing economist.

“Low interest rates are likely to continue to support the market whilst increased uncertainty about the economic outlook and pressures on householders’ finances constrain demand.

“Overall, we expect broad stability in both prices and activity over the coming months.”

The typical home now costs £165,914, the lender [...]]]> House prices fell slightly in August with values expected to stay the same or drift modesty lower for the rest of 2011 Nationwide says.The building society said that property prices were 0.6% lower in August than in July, and 0.4% down on the same month a year ago.

The typical home now costs £165,914, the lender said.

It also warned that prices could be pushed down further if more workers were laid off.

“For some time now the residential property market has been moving sideways, as weak demand for homes co-existed with a situation where relatively few homes were coming on to the market,” said Nationwide’s chief economist Robert Gardner.

“A further fall in employment would be likely to upset the relatively delicate demand-supply balance and put downward pressure on prices.”

However, he said that threats to UK economic growth meant that interest rates were expected to remain on hold until well into 2012, providing support for homeowners and domestic spending.

The Nationwide data is based on a sample of the lender’s own loans during the month.

Other house price surveys include figures from the Land Registry which, although they lag behind the Nationwide data, provide a regional breakdown of prices.

The most recently published Land Registry figures showed that prices in the North East of England fell by 8.8% in the year to July. There was also an annual drop in prices in every area of England and Wales, except London.

The CML has predicted that a total of [...]]]> Low interest rates have kept the level of UK mortgage arrears and home repossessions steady according to the Council of Mortgage Lenders (CML).A total of 9,000 homes were repossessed in the second quarter of the year – 100 fewer than in the previous three months, the CML said.

The CML has predicted that a total of 40,000 people will lose their homes this year, up from 36,300 in 2010.

It said its view remained unchanged despite turbulence in the markets.

The Bank of England has held its Bank rate at 0.5% – a record low – for more than two years.

This has assisted mortgage holders who may have faced difficulty in keeping up with their monthly payments otherwise during a period out of work or as they face other financial pressures, such as rising energy bills.

The total number of mortgages in arrears was broadly unchanged in the second quarter of the year, the CML figures show.

The number of mortgages in arrears of between 1.5% and 2.5% of the outstanding balance edged up from 77,800 in the first three months of the year to 78,500 in the second quarter.

Those in arrears of more than 2.5% of the balance declined from 166,700 to 164,500 over the same period.

The number of householders who have lost their homes owing to mortgage payment difficulties was 7% lower in the first half of 2011 compared with the first half of 2010, and 28% down on the first half of 2009.

“Mortgage repayment problems have stabilised against a current backdrop of stable employment and low interest rates,” said CML director general Paul Smee.

The CML has predicted that the number of repossessed homes will rise to 45,000 in 2012.

“Despite current uncertainty in financial markets, we see no need to revise our forecasts. Anyone with debt worries should take advice and speak to their lender at the earliest opportunity, as most temporary financial problems can be resolved,” Mr Smee said.

Debt advisers said the continued willingness by banks to show leniency to people struggling to meet their mortgage payments had helped to keep the numbers of repossessions down.

And in June, Bank of England governor Sir Mervyn King said that when there was an increase in the Bank rate, there would be a delay in it feeding through to other borrowing costs.

Housing Minister Grant Shapps said: “The worst thing anyone struggling to pay their mortgage can do is bury their heads in the sand hoping the problem will go away. No one in financial difficulty should be embarrassed to seek help if they need it.”