Mortgage market difficulties 'impacting on house prices'

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Mortgage market difficulties 'impacting on house prices'

Thu 29th May 2008

The Royal Institution of Chartered Surveyors (Rics) has warned that the current difficulties in the mortgage market, with providers tightening their lending criteria and raising rates, are "stretching accessibility" and could reduce transaction levels by 40 per cent this year.

Commenting on the latest Nationwide house price data, which recorded a drop in average prices of 2.5 per cent in May, the organisation noted that sellers are choosing to cut prices as buyers are unable to secure finance.

"The market will only stabilise once transaction volumes recover," it predicted.

Rics called on the government and the Bank of England to continue to implement measures to restore the health of the mortgage market, "before the drop in transactions and prices begins to really hurt the economy".

Nationwide reported that house prices were 4.4 per cent lower this month than they were in May last year, but five per cent higher then they were two years ago at £173,583.

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