House prices are falling as quickly today as they did in the crash of the early nineties and only further cuts in interest rates will avoid a property meltdown, according to the Royal Institution of Chartered Surveyors (RICS). Its statistics show that nearly two-thirds of surveyors saw prices falling in December and virtually none say they are rising. The crunch has hit almost every part of England and Wales, while the West Midlands is suffering its fastest fall in history. However, the RICS says market conditions are better than before the 1990s crash. The coming months will be of great importance and many would-be-buyers (as well as homeowners on tracker rates) will be watching the Bank of England’s interest rate decisions while lenders remain reluctant to part with finance.
Archive for the ‘Property’ Category
Rate of house price falls not seen since 1992
Wednesday, January 16th, 2008Lenders raise deposits on buying homes
Tuesday, January 15th, 2008Eleven mortgage lenders have reduced the amount of money they will lend to home-buyers by cutting their maximum loan-to-value (LTV) on at least some of their products. Some have stopped offering 100% mortgages, while others including Newcastle Building Society, will now only offer such loans when the borrower has a guarantor. Meanwhile, others including Alliance & Leicester have cut the maximum amount they will lend to 90% of a property’s value instead of the usual 95% on at least some products so far. The big lenders like Halifax, Abbey and Nationwide continue to offer 95% loans but the interest rates they charge may move higher as competition diminishes.
London & the South East - boom predicted
Sunday, January 13th, 2008Studies carried out show that most investors regard London and the South East as potential boom areas over the next 12 months. Improved transport links, wealth, foreign buyers, the introduction of Crossrail, the expansion of the east London railway and regeneration across the area will all prove beneficial in the longer-term. The imbalance of supply and demand will also encourage growth for 2008, however these two regions have historically been the top UK property performers, often regardless of the overall national house price trend.
The debt storm is brewing for 2008
Sunday, December 16th, 2007With 1.4 million borrowers coming off their cheap 2-year fixed rate deals in 2008, they would be in for a shock with higher mortgage costs and tightened lending criteria. Borrowers with poor credit history looking for a new deal would find it even harder; Lenders are now asking for 25% equity as opposed to 15% before the credit crisis hit the financial markets. To ensure you get a good deal, first talk to your existing lender so you have something to compare other offers against. Also be sure to take into account the cost of switching lenders; valuation and solicitor’s fees. The easiest comparisons are with deals from other lenders that would pay these costs for you or just obviously much lower rate without extended tie in.
House prices to stagnate in 2008
Saturday, December 8th, 2007Britain’s number one mortgage lender, the Halifax is predicting that the property market will stagnate in 2008 even if the Bank of England cuts the base rate to 5%. This is good news for home owners in comparison to other predictions of falls of 10 to 15 percent next year. But not so good for people still struggling to get on the property ladder. A report for the global finance monitor said that house prices in the UK have soared in relation to incomes and now stands at about 9x annual average earnings. Up from about 5x in 2001.
Make money from falling house prices
Saturday, December 8th, 2007The UK Residential Index fund will be launched in January 2008. What is this and how does it work? Its a complex investment fund that uses derivatives to bet on the extent to which the property market will fall over various time periods. One of the predictions at the moment is that house prices could fall by 10% next year and would carry on into the next year. So two years of house price falls or as they say, “correct” may be on the cards because it is believed that British property is overvalued by an astonishing 40%.
How to make millions from property!
Friday, December 7th, 2007I recently read an article on how two brothers built their £9bn property empire with a £6,000 loan from their grandmother in 1995. They have definitely accomplished a tremendous amount in a space of 12 years. But why is it that most of these multi-million pound property fortune I read about are from people who started out in the 1990s? Maybe I’m just jealous but surely a monkey could do almost the same thing since property prices have tripled in the last 10 years? We need more articles on newer successful property developers that we can aspire to.
Hope for US property market
Thursday, December 6th, 2007Reports on the US mortgage applications for last week showed a surge of 22.5% on the back of plunging interest rates. Let hope that the US economy may not go into recession after all. I’m a possitive thinker. As the say, when America sneeze, the UK catches a cold. Let hope that does happen.
Long-term remortgaging could be the solution
Wednesday, December 5th, 2007The devastating impact of the credit crunch on rates plus rising arrangement fees mean that for many borrowers, longer-term deals are now their best bet. For example, if you purchased your property within the last year with little or no equity, my recommendations would be to get a good 5 year fixed rate so you avoid paying these ridiculously high arrangement fees every couple of year. And most importantly you don’t have to worry about falling housing price or negative equity till your next rate change. Alternative, you could go for a good lifetime tracker as most have no penalties and you can make as much over payments and redeem your mortgage whenever you want. This is especially handy as economists are predicting that the Bank of England is very likely to reduce rates from 5.75% currently to 5% by the end of 2008. But be sure to get advice from a good mortgage broker.
Future looks bright for buy-to-let
Tuesday, December 4th, 2007There is a lot of doom and gloom about the property market at the moment and will probably continue for a while. But this is good news! It means that it is a buyers’ market and should be taken advantage of - only if you can bag yourself a bargain. Even Halifax bank have started marketing their first ever buy-to-let mortgages. Surely this must be a sign? With students and immigrants who cannot afford to buy and those waiting till they are more certain about the condition of the property market, now is the time to find the right property at the right price. Do your homework before making any commitments and read the 10 tips for buy-to-let.
