Some factors that can cause House prices to Fall
Rising Interest Rates
Increased interest rates increase the cost of mortgage interest payments making it less attractive to buy. Some homeowners may not be able to afford rising mortgage payments so they have to sell.
Sometimes there is a time delay between increasing interest rates and affecting house prices.
For example, in the UK, interest rates rose 5 times since August 2007. However it is only now in 2008 that people are having to remortgage fixed rate deals. Therefore, people on a fixed rate mortgage deal are seeing the cost of mortgages increase significantly.
Even a small change in UK interest rates can have a big effect on prices. This is because mortgage payments are a high % of people’s income
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