Warning on house prices from Nationwide

One of the UK’s major lenders, the Nationwide Building Society, recently sent out a stark warning with regards to house prices in the UK, painting a bleak and gloomy picture of what homeowners and the housing market in general has to face over the coming couple of years. Officials from the building society are expecting things to get markedly worse before they get better in the housing market.

Predictions from the lender suggest that the fall in house prices could yet get significantly worse. After a year of house price falls following the peak of the housing boom last October, the lender predicts that house prices will continue to fall over the course of next year, and could even carry on falling in 2010. For many homeowners this could mean being plunged into negative equity.

Both the mortgage and the housing markets are still suffering. One lender, Halifax, recently suggested that the fall in house prices over the past year was now worse than that seen in the housing crash on the 1990s. In addition to this mortgage lending has become far more subdued, with many lenders, including the Nationwide, having slashed their lending levels over recent months.

Like many other lenders the Nationwide has been erring on the side of caution when it comes to lending, and has been concentrating on lending to those with good credit ratings who pose a lower risk.

One official from the building society said: “We understand borrowers’ concerns regarding the availability of affordable mortgages. Our principal focus at this time will be our existing members and in continuing to play our part in supporting the first time buyers’ market. We are committed to offering good value mortgages underpinned by a focus on prudent and sustainable lending.”