Halifax recently reported that the while prices for housing rose slightly in August – the second month in a row they had done so – the property market has stabilised and reached a level of equilibrium in the wake of the preceding rally.

The banking group recorded an increase of 0.2 per cent in regards to the average price of property last month, which actually contradicts the report issued by their rival Nationwide that claimed prices dropped 0.9 per cent over the same time period.

For the year, Halifax stated, housing prices had risen by 4.6 per cent. This is broadly in line with a similar rise in the number of mortgages for contractors available.

Housing market analysts say that these mixed messages emerging from the market are actually consistent with the emergence of a stagnation period.

Martin Ellis, housing economist for Halifax, stated that in combination with July’s rise, August’s higher figures have halted the slow decline in market price over the three months preceding, resulting in prices reaching a level that were highly analogous to what they were at the end of 2009.

Mr Ellis continued, detailing how since the start of 2010 market activity has been static for the most part, so the recent developments are suggestive of the market’s broader stability, especially in light of last year’s price inflation, which was driven by supply shortages, has begun to let off.

Mr Ellis concluded by stating that the housing market would continue to be static for the remainder of the year, indicating that there could be some minimal price drops by January, but the market has held relatively firm for most of the year, as the January average price of £169,484 has only fallen minimally to £167,953 where it stands now.

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An ever-increasing number of mortgage loan providers have been hiking the rates on their standard variable rate loans in spite of the historically low 0.5 per cent base rate set by the BoE’s Monetary Policy Committee.

Traditionally, mortgage lenders have applied the BoE-mandated base rate as a starting point for their own lending rates, but several banks and building societies have been increasing their SVR rates steadily, sometimes leaving unwary home owners with very unattractive monthly payments.

One such provider, Skipton Building Society, recently increased their SVR mortgage rates to 4.95 per cent, up from 3.5 per cent, in spite of the base rate being steady (which it has been for the past 18 months). While a representative for Skipton stated that their rates were still competitive with other lenders in the mortgage market, this rate hike can impact negatively for anyone currently repaying a Skipton mortgage.

There are many other financial institutions in the UK that are considering following in Skipton’s footsteps, which may create a snowball-like effect in the immediate future, as market pressures will begin to influence banks and building societies who have not yet increased their rates to do so as well.

Many mortgage holders have been beginning to refinance in an effort to escape such fluctuating SVR loans, transitioning to fixed rate financial instruments instead.

Fixed rate mortgages are typically more costly to repay in regards to the short term, but in a market where SVR mortgage rates are skyrocketing, the security of an interest rate that will not fluctuate can save home owners more over the full span of their loan.

There are fixed rate mortgages for contractors still currently available on the market with attractive rates of 3 per cent and under, but it may be difficult to locate them as it simply isn’t in the banks’ best interest to advertise products with poorer yields.

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David Jones, the former finance director at Northern Rock, is the third person to receive a hefty fine from the FSA following its investigations into data manipulation.

Jones was fined £320,000 after it was found that he was a key player in the misreporting of mortgage arrears prior to the collapse of the bank in 2008. He joins David Baker, the former deputy chief executive who has already been fined £504,000 and the former managing credit director, Richard Barclay, who was fined £140,000 for similar offences. Jones has also been banned from being involved in any activities that require authorisation from the FSA.

During the course of the investigation, the FSA found out that before the bank was nationalised, false mortgage arrears and possession figures were reported. This gave a misleading financial picture to the bank’s shareholders and analysts.

At its height, the Northern Rock was the fifth largest mortgage lending institution in the UK, but it became Britain’s first major credit crunch casualty and fears of its collapse caused customers to queue for hours to withdraw their savings.

The FSA has been flexing its muscles against people found guilty of financial reporting irregularities. More than £30 million pounds worth of fines were handed out and five people were jailed last year.

Meanwhile, figures recently released by the European Central Bank suggest that homebuyers are becoming more confident in the housing market. Annual mortgage borrowing growth, including mortgages for contractors, in the eurozone reached 3.4% in June, the highest rate since September 2008. Annual mortgage lending growth in the eurozone peaked at 12% early in 2006 before the collapse of the property markets in such countries as Spain and France.

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There are increasing concerns over who will finance freelancer and IT contractor mortgages in the wake of the FSA’s decision to clamp down on mortgage lending criteria.

The FSA last week decided to ban self certified mortgages which will come as a big blow to people who are self-employed, and could in fact stop many potential first time buyers from entering the housing market.

Self certification has been abused in the past with some people over inflating their income in order to obtain a mortgage that they then struggle to repay; however, many self-employed people do not have a constant stream of income even if they can predict their annual income.

Experts are also predicting that as many as 20% of mortgage and remortgage applications may be turned down due to the FSA’s new regulations.

But does penalising the majority really make sound economic sense? Mortgage companies must take action to minimise the risk of borrowers defaulting or else we are in danger of falling back into recession but the market will eventually find a way to support those people affected.

No doubt when the economy is fully back on its feet, risk aversion measures will decrease and some people think the days of “boom and bust” will return.

Meanwhile, mortgage companies are facing another threat; that of mortgage fraud. The situation is getting so bad that 20% of all reported fraud cases involve mortgages and this fraud costs the UK economy around £1bn a year.

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The CML believes that the UK’s net mortgage lending could fall below the forecasted figure of 15 billion pounds in 2010.

The Bank of England recently released figures for April which showed that net mortgage lending only rose by 490 million pounds as opposed to the 700 million previously forecasted. A total of 49,871 loans, including mortgages for contractors, were approved during the month, a rise of 863 on March. Whilst that was the highest number since last December, it was still below the six-month average of 53,098.

94% of all the UKs residential mortgage lenders are members of the CML and this year they have been experiencing a slowdown in the housing market which could be in some way attributable to the expiry at the end of last year of a tax-break on lower-valued properties. The CML intends to update its annual forecast later this summer.

A range of new mortgage products have been appearing on the market. Amongst them are complex prime mortgages from Investec’s Kensington division and General Electric’s GE Money unit. These products bear a striking resemblance to the sub-prime mortgages that sparked the financial crisis in the U.S. three years ago.
The 2 companies are now offering loans to customers who have been refused by the mainstream lenders but they say the mortgages are for less money and are going to customers who have better credit histories.

The marketing director for GE Money’s UK mortgage arm, Gerry Bell, said that their customers had clear credit records although they may have suffered minor blips. They will lend to borrowers who have defaulted on loans twice and have one CCJ against them.

Kensington launched Prime One in March which lends up to 89% of a property’s value to borrowers who have up to 2 CCJs totalling no more than $1,080.

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