Despite a small recovery in the housing market over the months prior to the general election, many industry experts are warning of a sharp halt to this as a result of a hung Parliament. A decisive result either way would have been a much better result for the property market as there would be more certainty over the future, where as a hung Parliament represents uncertainty and indecision. There is much to it, which is outlined below. But the overriding message is to fix mortgage rates now before it's too late.

Lack of clarity may result in fewer transactions

Buyers and sellers are likely to sit on their hands and wait for some clarity from whichever government is formed.  Key issues such as the price of stamp duty which were discussed prior to the election may be reviewed, so transactions may fall as people wait for more information on these issues before they make their move.

House prices set to fall

The mainstream property market is expected to see a fall in house prices. In April, prices fell by 0.1% after rising in March. Turnover in the housing markets will remain low throughout the period of uncertainty. Price growth will be suppressed, except for the prime London market, where foreign investors are expected to take advantage of the weak pound and plug some of the gap left by anxious buyers.

Mortgage approvals on the wane

Recent figures suggest that mortgage approvals were dipping even before the election, with figures released showing that the number of mortgages approved between January - March 2010 dropped by 30,000 as buyers waited to see how the election panned out. A hung Parliament would have done nothing to relieve their concerns and approval rates could drop further.

Rise of gilt prices

It is predicted that gilt prices (bonds issued by the government, which acts as government liability in sterling) will rise as a result of the hung Parliament. This means that if the hung parliament cannot cut the national debt, inflation and in turn gilt prices will rise, which in turn will directly affect mortgage rates.

Increased mortgage rates

It is estimated that gilt prices will rise by three quarters of a percent, the equivalent of rising income tax to 23% from 20%. In relation to mortgages, this means there could be a rise of 0.75% a month, equivalent to over £60 a month rise for those with homes worth around £150,000.

Fixed rate mortgages at five year low

With mortgage rates potentially rising now is a good time to switch to a fixed rate mortgage.

The housing market, like the government, is in limbo. The longer this goes on, the harder it could hit the housing market. It is important to follow events closely to see how mortgages and house prices react in this volatile environment but one thing is clear: now is the time to fix your mortgage rate because with deals as attractive as they are now, they are not going to get lower. Take independent mortgage advice without delay.

Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it.