The credit crunch means it is time to make offers in the UK property market says Lawrenson of lettingfocus.com
Ah, the credit crunch continues to spook the market!
The number of house buyers on estate agents’ books dropped from an average of 276 registered per agent in January to 243 in February 2008, the lowest recorded since the survey started. And the difference between asking and sales price has risen again this month – to 4.5%.
Today, if you want to buy a property either for yourself or to let out and you have not got a decent deposit to put down or you have a bad credit record things will be looking a bit bleak for you.
In fact, things have become quite a bit tighter for everyone.
Just 2 weeks ago Lloyds TSB, their C&G subsidiary and the Royal Bank of Scotland (RBS) reduced their maximum loan to value back down to 90%.
And Alliance & Leicester and the Britannia have pulled their 95% loan to value mortgages. These moves follow hard on the heels of the Halifax who have just raised their interest rates again.
Lenders are “pulling” mortgage offers suddenly and without warning proving how hard it is for them to get funds.
So, it seems the days of cheap money have disappeared for a while and we can see the back of six times income multiples at least for a year or two.
Does it matter –well, yes.
The problem is made worse because about 150,000 people in 2007 borrowed over 90% of their property’s value. So, this clampdown on loan to value really does have the potential to reduce demand for houses and could hit prices harder than we have seen so far.
Naturally, the best deals in the standard residential market are available to those borrowers who have to borrow the least. Nationwide has said its best mortgage rates would now only be available for borrowers who put in at least 25% of a property’s value!
So far, we have only seen a gentle tailing off in house prices. The Nationwide said that February marked the fourth month in a row of house price falls with annual growth down to just under 3% annually.
Mortgage approvals are also low - at 75,000 for January - which is the second lowest figure for 12 years.
Also, a lot of people - most estimates put it at 1.2 million - are coming off fixed and discounted deals taken out two to three years ago and are facing big increases in their mortgage rates this year.
Sounds bad?
Well, yes it does, but so far, whilst repossessions are going up, they are still only at about one third of their 1991 peak and less than they were at any time in the 1990s.
But it is possible that things will get worse and property values could fall more sharply. We will see!
It has also got tougher for buy to let borrowers. Moneyfacts.co.uk recently calculated that UK landlords need to find about £5,500 more of their own money to buy the average buy to let property than they would have had to one year ago.
Also, buy to let borrowers will now have to find at least 15% of the property value -the days of 10% have long since gone.
Woolwich, never the most gung ho of lenders, has just cut the amount it will lend landlords to 75% LTV.
Most other lenders are also now demanding 125% or 130% rental over interest and many brokers I spoke to think that this will soon be the norm (again)
A survey by Savills said that about a quarter of landlords would be unable to make further purchases because of this tightening in credit criteria.
Bt despite all this, recent Council of Mortgage lenders showed buy to let lending continuing to grow fast, no doubt chasing the increasing rental returns caused by so many would be homebuyers becoming tenants.
And what do I think?
Well, I viewed some properties during the Easter weekend and have put in one offer.
So, I’m not scared.
I figure that whatever happens over the next few months, we will still have a shortage of the right kind of housing.
The fact is that we simply don’t know what further bad credit crunch news awaits us.
And we may not know fort a long time yet.
So, sod it, I’m jumping back in and making offers.
If you need more advice on investment property or buy to let investments in general please ask me.
I’m David Lawrenson from property investment mentors www.lettingfocus.com
I’m the author of the buy to let book “Successful Property Letting - How to Make Money in Buy to Let” the UK’s top selling property title.
Buy the new edition here: http://www.amazon.co.uk/Successful-Property-Letting-Right-Plus/dp/0716030195/ref=sr_1_1?ie=UTF8&s=books&qid=1203933977&sr=1-1
It is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on buying below market value. I’m an expert on the UK property market and a well known property investment blogger and I contribute to newspapers and a host of property websites, write a property investment blog, a number of columns in the press and run a landlords advice service.
I also work as a consultant helping banks, building societies, housing associations and web portals with their buy to let and property products and services.You can read more of my property investment blog and details of my networking, advice, buy to let networking programme at my website www.lettingfocus.com.My next London property investors networking meeting is coming soon. Click here for details: Property Investment Advice
I am also speaking at the Property Investor show in Birmingham in April http://www.propertyinvestor.co.uk/birmingham/
What’s unique about lettingfocus.com is that we offer independent property mentoring because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.If a property investment is lousy – We’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.Copyright: David Lawrenson 2008. This blog is updated once a week. Permission must be sought before using the material in the blog.
The number of house buyers on estate agents’ books dropped from an average of 276 registered per agent in January to 243 in February 2008, the lowest recorded since the survey started. And the difference between asking and sales price has risen again this month – to 4.5%.
Today, if you want to buy a property either for yourself or to let out and you have not got a decent deposit to put down or you have a bad credit record things will be looking a bit bleak for you.
In fact, things have become quite a bit tighter for everyone.
Just 2 weeks ago Lloyds TSB, their C&G subsidiary and the Royal Bank of Scotland (RBS) reduced their maximum loan to value back down to 90%.
And Alliance & Leicester and the Britannia have pulled their 95% loan to value mortgages. These moves follow hard on the heels of the Halifax who have just raised their interest rates again.
Lenders are “pulling” mortgage offers suddenly and without warning proving how hard it is for them to get funds.
So, it seems the days of cheap money have disappeared for a while and we can see the back of six times income multiples at least for a year or two.
Does it matter –well, yes.
The problem is made worse because about 150,000 people in 2007 borrowed over 90% of their property’s value. So, this clampdown on loan to value really does have the potential to reduce demand for houses and could hit prices harder than we have seen so far.
Naturally, the best deals in the standard residential market are available to those borrowers who have to borrow the least. Nationwide has said its best mortgage rates would now only be available for borrowers who put in at least 25% of a property’s value!
So far, we have only seen a gentle tailing off in house prices. The Nationwide said that February marked the fourth month in a row of house price falls with annual growth down to just under 3% annually.
Mortgage approvals are also low - at 75,000 for January - which is the second lowest figure for 12 years.
Also, a lot of people - most estimates put it at 1.2 million - are coming off fixed and discounted deals taken out two to three years ago and are facing big increases in their mortgage rates this year.
Sounds bad?
Well, yes it does, but so far, whilst repossessions are going up, they are still only at about one third of their 1991 peak and less than they were at any time in the 1990s.
But it is possible that things will get worse and property values could fall more sharply. We will see!
It has also got tougher for buy to let borrowers. Moneyfacts.co.uk recently calculated that UK landlords need to find about £5,500 more of their own money to buy the average buy to let property than they would have had to one year ago.
Also, buy to let borrowers will now have to find at least 15% of the property value -the days of 10% have long since gone.
Woolwich, never the most gung ho of lenders, has just cut the amount it will lend landlords to 75% LTV.
Most other lenders are also now demanding 125% or 130% rental over interest and many brokers I spoke to think that this will soon be the norm (again)
A survey by Savills said that about a quarter of landlords would be unable to make further purchases because of this tightening in credit criteria.
Bt despite all this, recent Council of Mortgage lenders showed buy to let lending continuing to grow fast, no doubt chasing the increasing rental returns caused by so many would be homebuyers becoming tenants.
And what do I think?
Well, I viewed some properties during the Easter weekend and have put in one offer.
So, I’m not scared.
I figure that whatever happens over the next few months, we will still have a shortage of the right kind of housing.
The fact is that we simply don’t know what further bad credit crunch news awaits us.
And we may not know fort a long time yet.
So, sod it, I’m jumping back in and making offers.
If you need more advice on investment property or buy to let investments in general please ask me.
I’m David Lawrenson from property investment mentors www.lettingfocus.com
I’m the author of the buy to let book “Successful Property Letting - How to Make Money in Buy to Let” the UK’s top selling property title.
Buy the new edition here: http://www.amazon.co.uk/Successful-Property-Letting-Right-Plus/dp/0716030195/ref=sr_1_1?ie=UTF8&s=books&qid=1203933977&sr=1-1
It is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on buying below market value. I’m an expert on the UK property market and a well known property investment blogger and I contribute to newspapers and a host of property websites, write a property investment blog, a number of columns in the press and run a landlords advice service.
I also work as a consultant helping banks, building societies, housing associations and web portals with their buy to let and property products and services.You can read more of my property investment blog and details of my networking, advice, buy to let networking programme at my website www.lettingfocus.com.My next London property investors networking meeting is coming soon. Click here for details: Property Investment Advice
I am also speaking at the Property Investor show in Birmingham in April http://www.propertyinvestor.co.uk/birmingham/
What’s unique about lettingfocus.com is that we offer independent property mentoring because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.If a property investment is lousy – We’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.Copyright: David Lawrenson 2008. This blog is updated once a week. Permission must be sought before using the material in the blog.
This entry was posted by lettingfocus, on
Tuesday, March 25, 2008.
