House sales at record low
Updated on 11 November 2008
The mortgage drought is continuing to "stifle" the housing market, pushing sales down to a new record low, it has been warned.
The Royal Institution of Chartered Surveyors (RICS) said the average chartered surveyor estate agent sold just 10.9 homes during the three months to the end of October, the lowest level since its survey began in 1978.
The group blamed the slump in transactions on the current mortgage squeeze, saying the lack of mortgage finance continued to "stifle" the ability of buyers to access the market.
The group's comments came as figures from the Council of Mortgage Lenders (CML) showed that the number of mortgages taken out by people buying a home fell to a new record low during September.
At the same time Communities and Local Government said UK house prices lost 5.1% of their value during the year to the end of September, the biggest annual fall it has ever recorded.
But the situation shows little sign of improving, with new figures from the Bank of England showing that the average cost of a tracker mortgage soared to a seven-and-a-half-year high in October, despite interest rates falling during the month.
The increase, which was partly caused by turmoil in the money markets following the collapse of Lehman Brothers in September, saw the average cost of one of the loans for someone with a 25% deposit rise to 6.84% in October, up from 6.12% in September.
The average cost of most type of fixed rate mortgages also rose, while there are now too few 95% mortgages of any type for the Bank to quote figures on them.
Howard Archer, chief UK and European Economist at IHS Global Insight, said: "Overall, the latest plethora of data and survey evidence on the housing market does little to alleviate the belief that prices are set to fall markedly further over the coming months.
"Indeed, even though mortgage lenders are largely passing on last week's 150 basis point interest rate cut by the Bank of England, the fundamentals for the housing market remain largely unfavourable."
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