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House prices 'could drop 20% in 2008'

House prices will continue to fall in the UK, Fool.co.uk predicted today.

The comments come in the wake of new house price data from home loans lender Halifax - which tracked a 2.5 per cent drop over the past month.

According to the financial website, overall property prices could decrease in value by as much as 20 per cent by the end of 2008.

In turn, this would make securing a mortgage loan harder - and also cause big problems from homeowners looking to remortgage thanks to the increased likelihood of their suffering from negative equity.

Head of personal finance at Fool.co.uk, David Kuo, commented: "The value of your home is crucial when applying for your next mortgage deal. It is used to assess the loan-to-value, which is the size of the loan compared to the value of the property.

"The best mortgage deals are restricted to homeowners with small loans compared to the value the property; so, in a falling property market, it is important to reduce the loan quickly by overpaying your mortgage."

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