In recent events, the rates offered for mortgages have been increased in order to bring down the demand and therefore the price of housing however, the demand for housing is increasing at a much faster rate leading to perpetually increasing prices or housing and property. The mortgage industry therefore has a very prominent effect on the prices of the housing and property in the region.
In the future however with the imminent recession of the UK as well of the US economies, the housing prices are due to fall in 2008. This is because of the declining consumer spending. The losses faced by mortgaging companies, and the financial losses. “People who face higher mortgage payment will spend less, causing a fall in economic growth. With the economy close to recession, this could be a decisive factor.” (Pettinger, 2008) moreover, “It is not just mortgage companies who will lose out on mortgage defaults, many high street banks have bought ‘sub prime’ debt so they will also be affected. This will lead to a tightening of credit for the average consumer” (Pettinger, 2008). In the end as a result the consumer confidence in the housing market will be affected resulting in lowering of moral and lowering of the housing prices.
The haphazard activity in terms of mortgaging and lending for the housing sector in both theUKand theUSmarkets has affected the future prices of the housing. The future prices of the houses in theUKregion are expected to come down despite the increase in economic growth in the region in the event of the 2012 London Olympics.
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