Mortgage, where can I get a mortgage? Which banks are lending? When will the mortgage market recover? How long will property prices continue to fall?
We are currently going through a period of readjustment where property prices are falling and few banks are willing to step back into the mortgage market with any eagerness or confidence. So where does this leave first time buyers, people with negative equity and or home owners who have a fixed term mortgage that is coming up for renewal?
Finding the best mortgage with the cheapest rate of interest is difficult enough. Finding a bank even willing to look at a mortgage application is nigh on impossible unless you are a mortgage broker who understands the markets.
To try and make life a little easier I have provided links to a mortgage quote form that is free to use and places you under no obligation to accept any mortgage offer the brokers using this service may supply you.
It's not so long ago that if you had a clean pair of shoes and could sign your own name; any bank would have been only too happy to grant you a mortgage on any kind of property no matter where it was or no matter what condition. Many banks were happy to lend 125% of the value of the property and in many cases, income played little part in their decision.
Buy to let landlords were able to borrow money against any property they wanted to buy and many were able to build up substantial portfolios as they re-mortgaged against properties that continued to spiral in price. It appeared to be the easiest possible way to make money and become a millionaire.
Savvy property investors stopped buying properties in late 2006 or early 2007 as they realised that the property market could not sustain continual growth and the really intelligent investors started to place properties back on the market to take their profits and sit back and wait.
Amateur investors most likely bought many of these properties and mortgaged themselves up to the hilt as they jumped on the bandwagon; and it is these buy to let landlords who are now having to hand the keys back, or are struggling to find tenants capable of paying rents high enough to cover their mortgages. Many are now bankrupt or teetering on the brink of bankruptcy.
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WHERE CAN I GET A MORTGAGE?
Where can I get a mortgage? The obvious answer to this question is to ask a mortgage broker and obtain a quote through the form provided. Where can I get a mortgage? Is a question on the lips of many first time buyers and home owners either caught up with a property with negative equity and or with a fixed term mortgage that is up for renewal.
Faced with a huge increase in their monthly mortgage replacements, many home owners are facing having their property repossessed as they realise they cannot afford their monthly repayments and cannot sell their properties. The reality is that the banks have had their fingers seriously burned and are in no hurry to get involved in the domestic mortgage market.
Anyone with negative equity has no option but to accept the terms their current bank are offering them if they have a fixed term mortgage that is up for renewal. No new bank is going to provide mortgage funds on a property that has negative equity and anyone in this position will be unable to sell their home and repay their mortgage. It is a matter of lump it or leave it and there are an estimated one million home owners in this situation.
WHICH BANKS ARE LENDING?
Which banks are lending? The answer to this question is virtually all of them but there lending criteria is much tighter now. 100% mortgages are a thing of the past; self-cert mortgages are likely to disappear and banks are refusing any appeals where the valuers downgrade the value of any property. Having had their heads stuck up their own backsides for the last decade; banks are now trying to climb out of their own stench and only looking at lending money to buyers with substantial deposits, with secure incomes and on properties that are sensibly valued.
Having helped push the property markets up way past their true value; banks are now licking their wounds and expecting buyers to suffer the consequences of their banks' own inept mismanagement. Having said this, some mortgage brokers do have limited access to funds and may be able to be of assistance to a number of people who find themselves caught in the mortgage trap.
Interest rates may have been cut by the Banks of England and America; but as I wrote several moths ago; the banks will not pass these reductions on to home buyers and as I said back then; in fact they have put their rates up. I have said it a hundred times before and I am quite prepared to say it again now. "A bank by its very nature cannot act in your interest." The banks are in business for one thing. It is not to lend you money when you need it; it's not to help you out of a financial predicament; they are in business for profit and that profit is derived from squeezing you.
WHEN WILL THE MORTGAGE MARKET RECOVER?
When will the mortgage market recover? Probably not for a generation or two is the simple answer. You only have to look at history to realise that mankind has never learned from its mistakes. Back in the late 1980' and early 1990's we all went through a property crash. Property prices were allowed to spiral out of control and having reached a peak, fell back with losses as high as 30% in some areas.
2008 was no different except that this time the banks got seriously scolded resulting in a global economic downturn and world governments having to bail the banks out with taxpayers having to shoulder the burden. So despite the fact that you have paid and will continue to have to pay for the disgusting behaviour of your bank, you cannot expect your bank to support you in any shape or form.
Thirty years ago, owning a home was the domain of the middle classes. People in secure, well paid jobs were able to save a deposit and buy a property. Working class people had to pay rent and stood little chance of ever saving enough for the deposit on a house.
Banks and building societies encouraged people to save and if you were lucky enough rake a deposit together, your bank would lend you up to a maximum of two and half times your income. This kept the demand and therefore the price of property down to a sensible level. The whole thing was manageable and people worked towards the day when they might sometime own their own home.
Relaxing the mortgage lending criteria and therefore placing owning a property within reach of almost everyone may have appeared to be a good thing; but without proper financial controls, it was always going to end in disaster; with the very people it was supposed to help falling victim and suffering the worst consequences.
HOW LONG WILL PROPERTY PRICES CONTINUE TO FALL?
This is not so easy to predict; but in my opinion property prices are going to continue to fall for some time. They are unlikely to bottom out before the end of 2010 and price increases are unlikely to even start to rise again before 2012. This will of course depend on whether the banks start to move back into the mortgage market with any serious intent.
Some areas of America have seen property prices fall by as much as 60%. Imagine buying a house for 200K with a mortgage of 150K only to learn that the value of the property is now 80K.
I don't expect UK property prices to fall by that much but I believe that a 30% adjustment is highly likely and as much as 35-40% is a possibility. The banks may be saying that property prices have fallen by 10 or 11% since the beginning of the year but the real figure is cloaked by the fact that most properties have not been sold. The banks base their figures on mortgages granted on properties that have been sold, not on the properties that are not selling. I looked a property yesterday that had been reduced from 305K down to 198K. That is s drop of 30% and if I make an offer and it is accepted, that will be a drop of nearly 40%. And I have viewed several properties of late that have been reduced by owners desperate to unload highly mortgaged properties.
The fact is; there are people desperate to sell; people desperate to buy but the banks are in no hurry to look at the domestic mortgage market and make any serious
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My guess is that the banks won't move back into the domestic mortgage market with any serious intent until they feel that property prices have bottomed out. My guess is; when they do, it will be with far stiffer lending criteria based on how they used to lend back in the sixties and seventies.
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