While a leading forecaster predicts modest house-price rises this year and next, we look at simple ways to cut your housing costs.
According to the Council of Mortgage Lenders (CML), a trade association which represents 98% of residential mortgage lending, house prices are set to rise 2% in 2006 and 2007.As it has a vested interest in the housing market, I'm suspect the CML would prefer to be much more optimistic. Alas, falling affordability, record consumer debt, and rising unemployment and housing costs are hitting us where it hurts -- in our wallets and purses.Nevertheless, the Fool audience seems equally optimistic: our recent house-price poll showed that four in nine readers (45%) expect house prices to rise this year, compared to almost a fifth (19%) who predict falls, while two in seven (28%) expect prices to stay unmoved.Without a doubt, the housing market has certainly cooled since hitting the heights in 2002 and 2003. For example, 1.3m properties changed hands in 2002, compared to 1.0m last year, a fall of almost a quarter (23%). The CML predicts a further slowdown, with only 970,000 transactions pencilled in for 2006, and the same for 2007.In addition, the CML expects the role of first-time buyers to increase, representing almost four in ten purchases in 2006 (38%) and 2007 (39%). This surprises me, given the huge financial stretch that most first-time buyers face throughout the UK, even when buying a modest home!Anyway, one piece of good news (for mortgage lenders, at least) is that overall lending levels are expected to hold up, thanks to the increasing role played by remortgaging. Last year, remortgages accounted for more than two-fifths (41%) of gross lending, which the CML expects to climb to 44% by 2007.On the other hand, net lending (new lending after repayments are taken into account) is diving, down from £101 billion in 2003 and 2004 to £91 billion last year, and estimated at £80 billion next year and £75 billion in 2007. When you throw in the fact that repossessions and arrears are soaring (admittedly, from a low base), the future looks a lot less inviting than the recent past!Of course, whatever happens to house prices (and I freely admit that, personally, I expect them to fall), it makes sense to keep your housing costs to a minimum. Obviously, the best way to make a big gain without pain is to shop around for a cheaper home loan, which can reduce your interest bill by thousands of pounds. If you try to shop around yourself, you'll be confronted by over 8,500 different mortgages! My advice is to use a no-fee mortgage broker, such as award-winning Fool partner London & Country Mortgages.While you're hunting down a cheaper mortgage deal, do take a knife to your other household bills. Aim to cut the cost of:your other debts with a 0% credit card;a home-improvement loan;overpriced life and health insurance;expensive buildings & contents insurance;rip-off mortgage payment protection insurance; andyour energy bills.Finally, check out the tips in Ten Ways To Be A Smarter Homeowner, then get to work killing your bills today!More: Get help choosing a home loan here | Prune your premiums in our Insurance centre!