Chancellor wants shake-up of the housing market

Permalink: Chancellor wants shake-up of the housing market
by Kay Murchie

The Chancellor of the Exchequer, Alistair Darling, has declared that the lack of housing and increasing prices in housing has become a problem for the whole country. During 2006, 160,000 new houses were built in Britain but the Government estimates that 223,000 are required each year.

House prices in Britain have trebled in the last decade and today the average cost of a mortgage is £125,000. Arrangement fees for fixed-rate mortgages have nearly doubled in 3 years to more than £600. In addition, the base rate has been increased 5 times in less than 12 months and is at its highest since March 2001.

Mr Darling has promised a shake-up of the property market and is concerned that lenders are offering fixed-rate deals on a short-term basis for their own financial gain. Lenders urge homeowners to come back every 2 years, rather than every 10 or 20.

Many analysts believe that interest rates will increase further over the next few years so homeowners are looking to longer-term fixed-rate mortgages to achieve some financial stability. The Chancellor commented that it is common to have longer-term fixed rates around the rest of Europe.

Mr Darling remarked that the Government is determined to allow affordable housing to be built, on greenbelt land if necessary. He also commented that planning is a sensitive subject but if housing isn’t increased, the problem will deteriorate. Parents and grandparents are worrying about future generations not being able to purchase a house.