The latest Halifax house price index, out today, continues to show falling prices. Prices in May dropped 2.4 per cent, while the year on year figure is down 3.8 per cent. The Halifax said it was the largest annual fall in prices since 1993, and the average price for a home in the UK is now £184,111.
Meanwhile, the Bank of England’s monetary policy committee has kept interest rates at 5 per cent. Despite signs that the UK economy is slowing, house prices are dropping and consumer confidence is down, the Bank is concerned about inflation and was expected to hold interest rates at the previous month’s level. The Home Builders Federation had called for a 0.5 per cent reduction in rates, saying a cut was ‘imperative’ to ‘alleviate the severe housing market slowdown, driven primarily by halving in available mortgages’.
The Organisation for Economic Cooperation and Development (OECD) has warned of a global economic slowdown and predicted that economic growth in the UK will drop to 1.8 per cent this year and to 1.4 per cent in 2016. The global credit crisis, slowing property market, and high cost of commodities such as oil have all hurt the economy. Despite the problems, the OECD thinks that the worst phase of the crisis may be over after central banks pumped several billions of dollars into the banking system.
The Council of Mortgage Lenders (CML) is to publish a manual for MPs to advise them on how to deal with constituents in danger of losing their home to repossession. It also announced that it would introduce a course in ‘arrears and possessions’ that will be available for mortgage lending staff who work in call centres or collections. Lib-Dem Treasury spokesperson Vince Cable said that he was concerned about the plan as MPs have no experience as financial advisers and called them a ‘poor substitute for having independent advice’.
Consumers have been overcharged by £1.4 billion a year due to a lack of competition in the payment protection insurance (PPI) market according to the Competition Commission. The insurance which protects credit repayments if the holder is unable to work or loses their job was failing to work competitively said the commission. It warned that it was considering banning the cover from being sold alongside credit arrangements, while temporarily introducing a price cap. It called for consumers to be able to switch between PPI providers more easily.