It would have to be the understatement of the decade to say that the mortgage market has seen somewhat of a change in the last few months. What was recently a rolling unstoppable machine has been well and truly stopped dead in its tracks, and now the business of giving and getting mortgages seems to have ground to a shuddering halt.
Because of the credit crunch, lenders are being very choosy about the sort of customers they want to lend to, and in particular of the sort of customers they want for the future. The act of self certification is well and truly a thing of the past, and the highest loan to value rate at the moment is considered to be around 80%. The days of lending 100% and more against the value of property are becoming the stuff of legend. As such, the main area to suffer in the business, and it is suffering badly, is that of the "buy to lets".
The area of buy to let has undoubtedly been one of the driving forces in pushing the housing market to its peak in recent years. Nevertheless, it has proven to be detrimental to both the economy and Joe Public. The reason why I say Joe Public is because it has been ordinary folk who have bought buy to lets in an effort to make an extra income, which may be the root of the problem.
I remember back in the very early 80s car auctions were the main preserve of the motor trade. Ordinary people did not go to car auctions and when they did they looked like ducks out of water. However during this time it became fashionable for a lot of ordinary folk to go and try and pick up a bit of a bargain and polish it and sell it on for a small profit. So we had milkmen, firemen, postmen and just about anyone getting in on the game.
What really happened is that a lot of ill informed people ended up paying too much money for a heap of junk which they could do absolutely nothing with, and they ultimately lost their money which they thought they had so wisely spent. The reason for this analogy is that the same situation has arisen in the housing market. People with no real knowledge have been playing entrepreneur in the housing market, with a lot more money than it takes to buy a second hand car. Many people have paid far too much for properties, some without even seeing the house in question.
Now I have had ten years professional experience with regards to purchasing property and obviously I don't mean the house that I live in. I have been involved in the buy to let market and in all that time I have never, nor would I consider, buying a property that I had not viewed. And I would say that this would be applicable to any landlord. So what baffles me is why someone without any previous experience would deem it a sensible thing to do.
The effect of this careless disregard for common sense is that the market is now in the state that it is. And because these people borrowed money from institutions who would end up having to acknowledge the fact that they had taken on risky borrowers, the institutions in turn put severe lending restrictions in place. Even over the last few months loan to value mortgages have tumbled from 85% to 75%. And things may still get worse before they get better as house prices continue to drop.
What we are left with is a stagnant market in a state of utter chaos. What I would propose is that the lending institutions get together to create a buy to let product that would be applicable to landlords with ten or more properties. They would then already have the assurance that these landlords are in a position to honour the loans. It would also reap benefits for the public in general in that it would at least breathe some life into the bloated corpse of today's property market. - 16036
Because of the credit crunch, lenders are being very choosy about the sort of customers they want to lend to, and in particular of the sort of customers they want for the future. The act of self certification is well and truly a thing of the past, and the highest loan to value rate at the moment is considered to be around 80%. The days of lending 100% and more against the value of property are becoming the stuff of legend. As such, the main area to suffer in the business, and it is suffering badly, is that of the "buy to lets".
The area of buy to let has undoubtedly been one of the driving forces in pushing the housing market to its peak in recent years. Nevertheless, it has proven to be detrimental to both the economy and Joe Public. The reason why I say Joe Public is because it has been ordinary folk who have bought buy to lets in an effort to make an extra income, which may be the root of the problem.
I remember back in the very early 80s car auctions were the main preserve of the motor trade. Ordinary people did not go to car auctions and when they did they looked like ducks out of water. However during this time it became fashionable for a lot of ordinary folk to go and try and pick up a bit of a bargain and polish it and sell it on for a small profit. So we had milkmen, firemen, postmen and just about anyone getting in on the game.
What really happened is that a lot of ill informed people ended up paying too much money for a heap of junk which they could do absolutely nothing with, and they ultimately lost their money which they thought they had so wisely spent. The reason for this analogy is that the same situation has arisen in the housing market. People with no real knowledge have been playing entrepreneur in the housing market, with a lot more money than it takes to buy a second hand car. Many people have paid far too much for properties, some without even seeing the house in question.
Now I have had ten years professional experience with regards to purchasing property and obviously I don't mean the house that I live in. I have been involved in the buy to let market and in all that time I have never, nor would I consider, buying a property that I had not viewed. And I would say that this would be applicable to any landlord. So what baffles me is why someone without any previous experience would deem it a sensible thing to do.
The effect of this careless disregard for common sense is that the market is now in the state that it is. And because these people borrowed money from institutions who would end up having to acknowledge the fact that they had taken on risky borrowers, the institutions in turn put severe lending restrictions in place. Even over the last few months loan to value mortgages have tumbled from 85% to 75%. And things may still get worse before they get better as house prices continue to drop.
What we are left with is a stagnant market in a state of utter chaos. What I would propose is that the lending institutions get together to create a buy to let product that would be applicable to landlords with ten or more properties. They would then already have the assurance that these landlords are in a position to honour the loans. It would also reap benefits for the public in general in that it would at least breathe some life into the bloated corpse of today's property market. - 16036
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Mortgage Route gives assistance help and advice on mortgages from fully trained mortgage brokers coupled with no obligation mortgage calculators and sourcing tools.
