The Financial Services Authority (FSA) issued a warning that the global credit crunch is likely to worsen and both UK banks and homebuyers will face ‘impossible financial stress’. The FSA believes that banks should draw up contingency plans, and fears that more banks could suffer the same fate as Northern Rock. For house buyers they predict a surge of home repossessions in line with the Council of Mortgage Lenders figures’ of a 75 per cent increase, to reach 30,000 this year alone. They also expect 1.5 million homeowners will struggle to find an affordable mortgage next year as fixed rate deals start coming to an end.
Two former members of the Bank of England’s monetary policy committee have urged the Bank to reduce the cost of borrowing tomorrow. They warn that unless the Bank reduces rates by a quarter percentage point it risks leaving the economy even weaker over the coming months. However they and the majority of City economists expect the rate to remain at 5.75 per cent.
All this pessimism comes on the back of the Halifax‘s November house price index which showed a fall of 1.1 per cent for the month, taking the annual rate of growth down to 6.3 per cent compared with 8.9 per cent in October. It is the first time that the Halifax figures have shown house prices falling for three consecutive months, as higher mortgage repayments and a fall in real earnings take their toll.
A new report out by the Joseph Rowntree Foundation has debunked some of the myths about immigration and social housing. Looking at recently arrived asylum seekers and migrant workers from Liberia, Pakistan, Poland and Somalia living in Sheffield, the report found that asylum seekers usually move into unsafe social housing that nobody else wants, resulting in a concentration of immigrants in particular sectors of the local housing market and neighbourhoods. However, restricted welfare rights of migrant workers meant the majority were reliant on the private rented sector.