Sub Prime Crisis: Shop Around for the Best Mortgage Rate But Be Prepared to Pay More If You Need To Re-Mortgage says Letting Focus
For quite a while now we have known that all was not quite right across the pond in the US mortgage market.
Over zealous brokers and lenders have been recklessly advancing heavily discounted mortgages to people on low incomes and no assets.
These loans are known in the market as “sub-prime”.
Once the loans came to the end of their discounted period, many of the borrowers - who it is fair to say, were not among the most financially astute – couldn’t meet their new higher repayments and the lenders who advanced the loans look very shaky.
And it now appears that much of this lousy debt business has been repackaged and sold on as what’s called securitised debt and bought by lots of other financial institutions – cue big falls in the share prices of the banks on this side of the water and around the globe.
Unfortunately, even mainstream interest rates could be set to go up as the credit squeeze really starts to hit. This is because, as a result of the credit crunch, the banks have increased the cost of lending among themselves to the highest rate for nearly nine years. (You can see this from the 3 month LIBOR rate (The London Inter Bank Offer Rate - which is the rate at which banks lend among themselves.))
This now stands at 6.74%, almost 1% above the Bank of England Base rate.
Mortgage Lenders
Mortgage lenders with no branches and hence access to retail savings will likely be the most affected in the short term and the most likely to hike rates – indeed some alreay have.
Lenders who use funds from their own balance sheets rather than securitise their loans and sell them into the wholesale market will offer the better deals.
The message is - shop around for the best mortgage rate - and if you have ever missed a loan or card repayment before expect to pay more for your mortgage too because lenders will be tightening up their criteria now.
ABOUT US
We are LettingFocus.com and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
I have been a landlord and property investor myself for over 25 years.
At LettingFocus we offer independent unbiased information for buy to let investors and landlords as well as one to one advice covering all aspects of being a landlord and investing in property.
In a market place full of poor advice, unlike many in the still largely unregulated buy to let and property “advice” business I am not linked to a property company, developer, estate agency or bridging loan provider.
As such I am able to give unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price. I can also explain how to reduce the risk of getting a bad tenant.
OTHER PAGES AT OUR SITE LETTINGFOCUS.COM:
For our NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here: Landlords Seminar and Networking Event
We have GREAT OFFERS for landlords too, Click here: Services and Products for Landlords to see our Landlords Resources (Useful Links) page. (Selling services to landlords and property investors and have a national coverage? You could be a partner, please get in touch!)
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
ONE TO ONE CONSULTING click here: Property Consulting
CLIENT TESTIMONIALS from past customers click here: Testimonials
BUY THE BOOK click here: Buy the Book at Amazon
THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com - Please note we WILL NOT send spam or sell our mailing list to advertisers!
IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR OUR WEBSITE?
TO VIEW RELATED POSTS select a “Category” at the bottom of this page.
WANT TO ADD A COMMENT OR VIEW OLD COMMENTS?
To add a comment to this post, simply click on “link to this post” to add your comment and to view comments of other people.
Copyright: David Lawrenson 2007. This blog is updated at once a week
To read archived blogs select a date from the list at the right. To read recent ones, just page down.
Over zealous brokers and lenders have been recklessly advancing heavily discounted mortgages to people on low incomes and no assets.
These loans are known in the market as “sub-prime”.
Once the loans came to the end of their discounted period, many of the borrowers - who it is fair to say, were not among the most financially astute – couldn’t meet their new higher repayments and the lenders who advanced the loans look very shaky.
And it now appears that much of this lousy debt business has been repackaged and sold on as what’s called securitised debt and bought by lots of other financial institutions – cue big falls in the share prices of the banks on this side of the water and around the globe.
Unfortunately, even mainstream interest rates could be set to go up as the credit squeeze really starts to hit. This is because, as a result of the credit crunch, the banks have increased the cost of lending among themselves to the highest rate for nearly nine years. (You can see this from the 3 month LIBOR rate (The London Inter Bank Offer Rate - which is the rate at which banks lend among themselves.))
This now stands at 6.74%, almost 1% above the Bank of England Base rate.
Mortgage Lenders
Mortgage lenders with no branches and hence access to retail savings will likely be the most affected in the short term and the most likely to hike rates – indeed some alreay have.
Lenders who use funds from their own balance sheets rather than securitise their loans and sell them into the wholesale market will offer the better deals.
The message is - shop around for the best mortgage rate - and if you have ever missed a loan or card repayment before expect to pay more for your mortgage too because lenders will be tightening up their criteria now.
ABOUT US
We are LettingFocus.com and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
I have been a landlord and property investor myself for over 25 years.
At LettingFocus we offer independent unbiased information for buy to let investors and landlords as well as one to one advice covering all aspects of being a landlord and investing in property.
In a market place full of poor advice, unlike many in the still largely unregulated buy to let and property “advice” business I am not linked to a property company, developer, estate agency or bridging loan provider.
As such I am able to give unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price. I can also explain how to reduce the risk of getting a bad tenant.
OTHER PAGES AT OUR SITE LETTINGFOCUS.COM:
For our NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here: Landlords Seminar and Networking Event
We have GREAT OFFERS for landlords too, Click here: Services and Products for Landlords to see our Landlords Resources (Useful Links) page. (Selling services to landlords and property investors and have a national coverage? You could be a partner, please get in touch!)
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
ONE TO ONE CONSULTING click here: Property Consulting
CLIENT TESTIMONIALS from past customers click here: Testimonials
BUY THE BOOK click here: Buy the Book at Amazon
THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com - Please note we WILL NOT send spam or sell our mailing list to advertisers!
IF YOU HAVE A SITE WHY NOT LINK TO THIS BLOG OR OUR WEBSITE?
TO VIEW RELATED POSTS select a “Category” at the bottom of this page.
WANT TO ADD A COMMENT OR VIEW OLD COMMENTS?
To add a comment to this post, simply click on “link to this post” to add your comment and to view comments of other people.
Copyright: David Lawrenson 2007. This blog is updated at once a week
To read archived blogs select a date from the list at the right. To read recent ones, just page down.
Labels: buy to let, buy to let mortgage lending, buy to let mortgage rates, credit crunch, landlord advice, mortgages, sub prime
This entry was posted by lettingfocus, on
Tuesday, September 11, 2007.
