The US housing Market showed no further sign of recovery today when the US Census Bureau announced the lastest figures remaining to building Permits. It showed that only 1.4 million building permits had been granted down from a high in 2004 when 2.25 million were being issued. This massive drop shows that the US housing market has less demand on it now than in 2004.
The reasons for this are that the US just like the UK is going through a time when there is increased inflation and as a result interest rates have been raised. In the US however generous lending by mortgage providers in the years before the interest rate rise's meant people who couldn't normally get mortgages are now homeowners meaning that even the slightest increase in interest rates has put pressure on vast sections of the US population that are normally unaffected by these changes.
As a result the US has seen an increase in the number of repossession and property on the market for sale. Also the number of people buying houses has reduced due to increasing interest rates and the mortgage lenders making lending terms tougher. As a result house prices in many places have dropped.
The UK is going through a similar scenario now saved really only by the fact that our mortgage lenders did not take as great as risks as the US lenders. However repossessions are up and interest rates seem as though they may well go up again. How far do the interest rates need to go up in the UK until we see our housing crisis?
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