Better News on the Home Front.

After many months of pretty depressing news in respect of house values, mortgage costs and falling sales, householders suddenly received three bits of good news in as little as 48 hours. The first piece of news did not make many headlines – but possibly was actually the most encouraging of all. Not many homeowners will ever have had much to do with the LIBOR interest rate. This is the rate on which loans between banks are costed – and for the first time for many months this rate reduced significantly last week. This will make inter bank lending that bit cheaper and it has been the banks unwillingness to lend to each other which has been a main cause of the tightening of credit for the consumer. Secondly and following hard on the heels of the news the LIBOR reduction – mortgage rates started to drop of the consumer. First the Halifax, then a group of lenders including the Bank of Scotland and the Newcastle Building society all announced rate cuts on a range of products. Other lenders are expected to follow suit – prompting some observers to suggest that the “credit crunch” has at least peaked and a gradual return to more normal conditions has already started. Thirdly the National Housing Federation has just predicted a massive increase of 25% in house prices in England and Wales by 2013. The Federation bases its predictions on an increasing demand for households caused by social trends such as longevity, coupled with limited supply. All and all this information can only encourage householders, who have been a beleaguered species recently. David Borrowman Caesar and Howie managing partner comments “We have little doubt that housing assets will go up in value over the medium term. All the data we have, increased longevity, immigration, different family groupings point to increasing demand over time for houses. Perversely the current slow down in building units will simply fuel higher price rises in the future, once the current difficult market conditions start to improve”