More People Choosing To Rent

Recent figures show the number of houses sold in the UK in the last five months has fallen by 32 percent compared to the same time last year. Figures by the HM Revenue and Customs which record the houses purchases of properties worth more than the initial forty thousand pound tax band, show that the number of properties sold between January and May 2008 was only 504,000 which is down from 743,000 last year.

It is now estimated that there are far more sellers than there are buyers in the market leading to speculation that the house market is still going to get worse before it gets better.

Some industry experts say that the mortgage industry has to take some responsibility for the state of the housing market. It was the mortgage industry which lent money to those people considered high risk and who only last year offered a huge range of products designed to tempt practically anyone into buying a property. Today the market is completely different with the number of mortgage products available down by 25 thousand from August last year. The reduction in mortgage choice is tremendous, and many people who were previously able to find a mortgage deal are no longer able to. For those who have brought this is bad news. It has resulted in less people coming into the market place and therefore the opportunity to sell has been decreased. People who are struggling to afford their mortgage have very few options about what to do next. In the past if your mortgage became unaffordable you had the option of selling to ease the pain, now that option is diminishing as buyers dry up.

However for one group of mortgage holder, things don't look that bad. People who have brought buy to let properties are feeling confident that there will be an increase in demand in the number of people wanting to rent. Research by Paragon Mortgages found that more than half of landlords were predicting an increase in the number of people wanting to rent over the next year. This is good reason to feel this way as the number of first time buyers getting onto the market has decreased due to the stricter mortgage lending criteria. People are suddenly more wary of the housing market. After years of boom and increasing profits from property, the current down turn is putting people off from getting on or moving up the property ladder, meaning more people want to rent. In addition there has been an increase in foreign students looking to come to the UK to study which is adding to the rental markets buoyancy.

However landlords are still subject to the same interest rate increases on their mortgages as everyone else, which could mean that there is an increase in the price of rents as demand increases. This may eventually lead more people to consider buying, but that is most likely to happen if interest rates go down and confidence in the UK property market goes up.

About The Author:
Danielle is an author of several articles pertaining to Mortgages. He is known for his expertise on the subject and on other Business and Finance related articles.