UK Property Price Volatility Term Paper Example | Topics and Well Written Essays - 7000 words

UK quality Price Volatility - Term Paper ExampleIn the Interim Report no. 91 of the Miles review, The bank borrowers consider the bank mortgage bet treasures, mostly short-term interest rates, when applying for bank loans. This is the flat coat why short-term interest rates have higher volatility rates than long-term loans. commencement thirty years ago, the unify Kingdom housing market has been very volatile. The factors affecting the volatility of the erect prices are the level of bank loans and the related loan interests and the sudden increasing trend of housing transactions. at that place is now a move to transit the variable rate mortgage basis in housing loans tot eh fixed rate mortgage basis.The volatility of the housing market can be change magnitude if longer term, fixed rate mortgages will be implemented to replace the more delicately untoughened current variable charge housing mortgage rates.The short-term or variable mortgage interest rate basis, according to th e findings of Meen(2002) has resulted to short-term sensitivity analysis of fellowship prices of six times the elasticity of United Kingdom market as compared to the housing price industry of the United States.The structure of the housing finance industry has contributed to the macroeconomic volatility.Based on Chart 6.1, The house prices are affected by the common Domestic Product and the Consumption in the United Kingdom. This only proves that when consumption increases and the gross domestic products increase, the house prices will follow behind as the house prices also increase and decrease to keep in step with the two variables mentioned. The three variables (GDP, consumption and house prices) in turn act as a major push on the United Kingdom economy.The Oxford economical Forecasting and the National Institute of Economic and Social Research did a study on housing prices.Chart 6.2 shows that as the growth rate increases, house prices also increase to keep in step thereby con tributing to the macroeconomic volatility.