The new MPC member, David Miles, has said today that the worst of the slump in house prices is now over. Miles joined the Bank’s Monetary Policy Committee last month and is a former top adviser to the Treasury on the mortgage market.
This will come as welcome relief to many homeowners, who over the last 12 months have been unsure and nervous over house prices. Miles has warned however that the recovery will not be a swift one and although we are through the downward spiral of prices, homeowners should not expect them to jump back up to what they once were.
“The prospect of a rapid return to strong growth does not seem to be a highly probable outcome, but there are reasons for thinking that the period of the most rapid declines in output may be behind us.”
Professor Miles also commented on the continued lending drought affecting the once abundant market, adding as the credit crunch persists this could be a critical factor hampering any recovery.
“One of the problems for the economy remains that the banking sector is essentially on life support and the ability of the banks to lend is curtailed,” he said.
The top name banks were found to have modestly increased availability of secured loans to both companies and individuals in the second quarter, and indicated that they planned to continue to do so.
At the same time, the Bank also reported that lenders continue to restrict availability of unsecured loans, which will be reflected in the present quarter.
So although a glimmer of light for homeowners and a sign that the recession has now dipped at it’s lowest point, a warning that we will not return to economic prosperity overnight.
With the bank’s still struggling and lending highly restricted it is a case of wait and see, in what is now, a highly fractious and uncertain market.
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