Swift Money

Towards the end of 2007, Northern Ireland had the fastest growing rate of house prices in the UK at 24.2% or £150 per day on average.

 Following a year of huge growth, the Northern Ireland housing market is starting to cool, according to the Royal Institute of Chartered Surveyors (RICS) in Northern Ireland. Sales will increase in 2008, however house sellers will have to be more realistic with asking prices.

Tom McClelland, housing spokesperson for the said:

“The market changed considerably during the course of 2007 and the new reality is a market where agents have to work harder to achieve sales and sellers have to be more realistic about asking prices”

The cooling of the market could help first time buyers, as according to McClelland there is:

“Less competition for properties in the sector of the market within the first time buyer’s range.”

A survey published by the Bank of England shows that nearly one million families are struggling to keep up with mortgages repayments with 1.8million people saying they have problems “at least occasionally”.  Figures show that rising interest rates have increased homeowners’ yearly mortgage payments by a total of £3.6 billion in the last year.

The poll in the Bank’s Quarterly Bulletin took place in September when the global financial crisis was in its early stages. Since then the situation has deteriorated and is expected to deteriorate significantly as the global credit crunch prompts banks to tighten their lending criteria.

Many households are cutting spending and borrowing as interest rates remain high.  Half of families who face increasing mortgages repayments plan to cut spending, while 10% have taken on more debt or extended their mortgages. On top of this, 10% of people have had to take on a second job or work overtime to make mortgage repayments.

The survey showed that those renting have more trouble repaying their debts compared to homeowners.  Around 28% of renters had trouble with debt repayments “at least occasionally”.

Chief economic adviser of The Confederation of British Industry said “while the slowdown may appear dramatic set against this year’s strong growth, the fundamentals of our economy remain sound and talk of a full blown recession is exaggerated”.

The Citizens Advice Bureau (CAB) has received a number of complaints about “aggressive tactics” being used by banks. Banks are allegedly targeting those in debt; repeatedly phoning customers, advising them to take out expensive loans to pay off their debts. The BBC discovered that customers who agreed a debt repayment plan with a debt charity were being pressured by to take out high interest loans in order consolidate their debts.

In one case, an HSBC customer rejected an offer of a “managed loan” with an interest rate of 13%. Despite this, he received numerous telephone calls from HSBC, urging him to change his mind and received letters from the bank, claiming they want to help customers in financial difficulty.

HSBC and the customer agreed an acceptable amount to be paid of monthly, but HSBC would only accept repayment if he took on a “managed loan”.  In response HSBC said:

“As a responsible lender HSBC only offers a managed loan to customers when all other options have been exhausted.”

The British Bankers’ Association (BBA) said that banks were happy to work alongside debt advice agencies. However, the CAB claimed that customers were still on the receiving end of bank’s aggressive tactics, even after the intervention of the CAB. The CAB said that they see many cases where customers have tried to arrange repayments with their banks, but have been asked for more than they can afford.

According to figures from Pricewaterhouse Coopers, British families are nearly in twice as much debt as seven years ago. Today the average Briton owes £33,000 compared to £17,000 in 2000. Rising house prices and subsequent mortgage repayments have contributed to the debt; however experts believe the global credit squeeze could mean hard times ahead.