Musings of a London Property Search Agent

Last Thursday we posted a blog remarking on the volatile financial markets and our belief that bricks and mortar is the safest investment vehicle.  Further government intervention this week should spell good news for the property market because there is still demand, certainly in London and the South East.  The busy auction market in these areas bears witness to the fact that people are happy to invest in property at the right price.  One of the major reasons the property market has stalled is that those first time buyers who prop up the property ladder from the bottom, can’t enter the chain because they need a 15% deposit to get a good rate.  So in theory, the government’s demand this week that government funding came with it a requirement to maintain “the availability and active marketing of competitively priced lending to  homeowners and to small businesses at 2007 levels.”

This was initially met with concern from the Council of Mortgage Lenders (CML) whose members control 98% of UK mortgages, but it seems everyone just wants responsible lending to people who are likely to be able to repay their debt, not a return to the 125% mortgages given to 22 year olds with good prospects.  It will be interesting to see to what extent this is possible.  Mortgage lending dropped 63% in August 2008 versus 2007, although just over a third of lending was to first-time buyers.  This group needs to make up a similarly significant proportion of future borrowers, if we are going to see real movement in the property market.  Many people further up the chain, often with between 30 and 60% equity in their homes would love to move now, regardless of headlines but can’t because they can’t find a buyer.  We have spoken to dozens of people in this position this year and the options are rent-to-buy or stay put.

It’s certainly been a crazy week and month, but the government has acted decisively and if there is confidence to lend to first time buyers again, everyone else will be able to get moving.  Lets just hope the government can get the Libor rate down - as banks are only going to relax their lending criteria, if doing so doesn’t plunge them into debt.  There are good buys out there and this London Property Search Agent is ready to act.

Technorati Tags: First time buyers, government bail-out, government intervention, House Prices, libor rate, London Property Search Agent, property market, property market news

Tags: First time buyers, government bail-out, government intervention, House Prices, libor rate, London Property Search Agent, property market, property market news

Musings of a London Property Finder

The media coverage of the government nationalisation of the mortgage arm of the Bradford and Bingley has been surprisingly on the button, as far as we have heard today.

So why is this thought to be a relatively good deal for the government and ultimately the tax-payer? 

Firstly the government have sold off the retail arm of Bradford & Bingley for £612 million for c. £20 billion of deposits and the government has in effect become the mortgage lender for mortgagees.  Long-term this isn’t a bad strategy, as long-term, any properties repossessed should be able to be sold to cover any mortgage arears and some will make money.  This means that when the financial system stabilises, the government should be able to sell on this part of the business.

Unlike the US, in the UK we have limited supply and high demand.  The credit crunch has had an effect on house price less because of a lack of demand but because people can’t get mortgages at the rates to which we have become accustomed, particularly first-time buyers, at the bottom of the food-chain.  But I digress.

We read that 60% of Bradford & Bingley lending was to buy-to-let landlords.  Profit to the taxpayer will depend to an extent on the canniness of B& Bs mortgagees.  One would hope that buy-to-let landlords will have purchased with a tight grip on the purse-strings.  If not, at least there should be a good 15% margin of error in most cases, unlike the Northern Rock, renowned for the 125% mortgage. 

And the other benefit of lending to buy-to-let landlords?  At least there should be rent coming in every month!  Call this London Property Finder for help in buying the right house at the right price.

Technorati Tags: Building Societies, Buy-to-let, First time buyers, government bail-out, House Prices, house supply and demand, landlords, London Propeerty Finder, mortgages

Tags: Building Societies, Buy-to-let, First time buyers, government bail-out, House Prices, house supply and demand, landlords, London Propeerty Finder, mortgages