Mortgages - here and across the Atlantic

What`s happening with mortgages and housing in the UK? How does it compare with the situation in the US? The latest `news & views` from the Council of Mortgage Lenders (CML) provides some interesting insights - and we`ve summarised a few of them here.

The short answer, as the CML puts it bluntly, is that the UK market has at least stabilised, even if it`s at `low levels of activity`. The situation in the US, on the other hand, is `considerably worse - by any measure`.

Property values

In some places in the US, including Las Vegas and Detroit, property values are actually below the level they were at way back in 2000, while in Washington DC, they`re 80% higher than they were back then.

To put that in perspective, look at some figures from Nationwide`s House Price Index. Last month, the average price of a house in the UK was £165,609. That`s quite a drop on the £186,044 we saw back at the peak of the housing market in October 2007, but it`s still more than twice as high as the average price back in April 2000 - £80,893.

So the average UK price is now 105% higher than it was in 2000, according to Nationwide. Of course, that`s an average and doesn`t show how different regions are faring, but even the average house in the UK has gone up in value far more than properties in the US - even in Washington DC.

And, as the CML stresses, while it`s `possible` that some types of property in the UK - in small pockets of the country - may be worth less than they were 11 years ago, the same certainly can`t be said of whole cities.

Repossessions

Last year, there were a million mortgage foreclosures in the US (the highest figure ever recorded), following 918,000 in 2009 - according to RealtyTrac, a property data firm.

Last year, there were 33,600 properties in the UK taken into possession, around 30% fewer than in 2009. The CML does expect this figure to grow to 40,000 this year, however.

Summing up.

The UK`s situation might be better than the US`, but it`s still weak and won`t recover quickly. A lack of mortgage availability is holding it back, but so are `the weakness of economic recovery, increasing pressures on household finances and low levels of consumer confidence`, as the CML points out.  

To read the rest of the analysis, just click here.

Tags: mortgage, housing prices, property market, Council of Mortgage Lenders, Nationwide, Nationwide`s House Price Index, repossession

Fees payable when continuing service is provided. Repaying debt over a longer period may increase the total amount to be repaid. Calls are recorded and are usually free from UK landlines. Mobile phone users may be charged and should check with their service provider. Cards are provided by third parties and are subject to eligibility, status and terms and conditions. Applicants must be UK residents aged 18 or over.