Both the Nationwide and the Halifax reported last week that average UK house prices are now lower than they were this time last year (but around one per cent), although separate figures for Scotland are not available.  The news prompted a slew of comments from industry experts explaining why most of us seem surprisingly unaffected by the change in the market.

The Nationwide released a range of figures showing that the great majority of homeowners have been unaffected by the credit crunch so far.  Fionnuala Earley, Nationwide's Chief Economist said that: "Most mortgage borrowers have either not been affected by recent market events or have directly benefited from cuts in the Bank Rate".

Britain's biggest building society calculates that around half of all mortgages are fixed rate, which means that 5.5 million borrowers will not yet have seen an impact on their mortgage rate.  In addition, tracker loans account for another 27 per cent of all mortgages and the 3.1 million borrowers on this type of loan will have benefited from the cumulative 0.75 per cent cut in base rates over recent months.  "Overall" says Earley "around 85% of borrowers will be seeing no impact or will benefit directly from reductions in the Bank Rate this year".

In fact, the group that is most likely to be affected are those who are coming off fixed rate deals set two or more years earlier.  But even here, the Council of Mortgage Lenders (CML) says borrowers are coping well.  Director General, Michael Coogan, told the ‘Debt and Personal Finance All Party Parliamentary Group' that: "Customers coming out of fixed rates in 2007 and 2008 appear to be managing the adjustment well so far".  The CML also said that repossessions rates were lower than forecast.  It expects repossessions this year to reach 45,000, representing around 0.38 per cent of all mortgages.  To put that in context, repossessions peaked in the early 1990s at more than double that rate: 0.77 per cent.

And the RICS also weighed in with a surprisingly upbeat reaction to the news.  Chief economist, Simon Rubinsohn, acknowledged that the fall in mortgage lending was having an impact on the market, saying: "The scaling back of loan to value ratio by lenders is depressing turnover in the market and is making it particularly difficult for first time buyers to take their first step on to the property ladder". 

But he added an unexpectedly positive footnote, commenting that: "The level of buyer enquiries is still more consistent with the 2004/ 2005 experience [when interest rates rose from 3.5 per cent in 2003 to 4.75 per cent in 2004] rather than the collapse in the market in the early 1990s. This suggests that any easing in the credit crunch perhaps linked to the Bank of England Special Liquidity Scheme could provoke a modest pick up in activity in the market in the second half of the year".