The slowing housing market could spell disaster for many homeowners

The slowing housing market could spell disaster for many homeowners already under pressure from increased utility bills and higher interest rates, according to the Council of Mortgage Lenders (CML)

It recently forecast that house prices would fall next year and that there would be a 50 per cent hike in repossessions.

The cooling of house prices will also affect homeowners who have depended on releasing equity in their home, or selling their property, to fund their spending.

David Stubbs, senior economist at the Royal Institution of Chartered Surveyors, says: “People have been able to offload their property into a strong market if they fall behind on their payments. As the market slows into 2008, we expect the numbers falling behind to increase.”

Consumers who hope to rely on securing credit to overcome their difficulties will have little joy either, as lenders tighten their criteria, making it harder to get loans and credit cards.

Neil Munroe, from credit-reference agency Equifax, says: “Credit rejections are increasing, and are hitting credit cards and personal loans as well as mortgages. In the midst of tightening lending criteria, it is likely that things will get bumpy for consumers.”

Chiltern’s Joanne Gill says: “People need to be aware that there are other options, which can offer temporary relief from difficulty such as debt management plans, payment holidays, extending the term of agreements and switching to an interest-only mortgage”.