First half of 2012 'will determine lenders' criteria'
15th Feb 2012
The performance of UK house prices in the first half 2012 will help to determine whether lenders will ease their mortgage criteria, it has been predicted.
That is the opinion of Gary Styles, strategy, risk and economics director at Hometrack, who said the real question mark at the moment is that a lot of mortgage decisions will depend very carefully on the outlook for house prices.
It comes after the Royal Institution of Chartered Surveyors (Rics) reported this week that property transactions edged up slightly during January as an increasing number of first-time buyers aimed to beat the stamp duty holiday.
Overall, 12 per cent more surveyors across the UK reported rises rather than falls in newly agreed sales since the beginning of the year.
Mr Styles explained: "We are expecting house prices to fall two or three per cent this year, but if we were to see falls that were much more severe than that then obviously we would see a reining in of lending criteria. A lot of this will depend on their outlook and then what we see."
He noted that the first five or six months of this year could determine whether lenders choose to ease back a little bit in terms of their lending criteria, particularly to first-time buyers.
However, for those that have substantial deposits or have already bought in the market, it is a "very different prospect", as it is primarily those that are borrowing substantial loan-to-values that will be constrained, the expert suggested.
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