Skip to main content

2008 So far...

Are you a potential home buyer? Have you been scared to death by reports on the TV news and in the papers about the ‘Credit Crunch’? Or did you believe it was just a new biscuit or breakfast cereal?
My view is that you should be concerned, but not paralysed with fear. Having read and listened to the same news reports I decided to conduct some research with our mortgage brokers, Bright mortgage advice.
I asked them to tell me what percentage of the mortgages they arranged in 2006/2007 were for 125% of the purchase price. Answer : 2.5%
I asked what percentage were 100%. Answer: 5%
The balance were 95% mortgage or less.
OK, I’ll admit that the Nationwide have announced that they’ll only offer 90% or less from May 2008 but this really isn’t the end of the world. Let’s assume that we have to use Nationwide and let’s also assume that we really wanted 95% mortgage on the average local first time buyer purchase price of £150,000. This means that 5% is £7,500; so we need to raise another £7,500 from Mum & Dad, relatives or by any other means. Given that the opportunity is there now to negotiate the best deal in terms of purchase price that has been available for probably 5 years plus, then more people should be jumping at the opportunity.
Why am I saying this publicly! You might go and buy a property through someone else - how annoying would that be! Oh, by the way, Bright can still find you a 95% mortgage if you want one.
Looking back over the first 4 months of 2008 I’d like to let everyone know that we are selling more homes than 2007, at well above asking price. Most sales are being agreed in 24-48 hours with competition between, on average, 3-4 buyers. We desparately need more homes to sell to satisfy the demand from prospective buyers. Due to the effects of the Home Information Pack (HIP) contracts are being exchanged in 4-6 weeks, easily.
Did you absorb and believe every last word of that last paragraph? Why not? You’re probably reading it in a newspaper where you can read other stuff that, in our opinion, is just as unbelievable about the property and mortgage market. It’s never as good or as bad as the picture painted by the media. If you want to know about your local property market ask a recommended, local, independent estate agent. Most will tell you the absolute truth.
The whole property market and the stock market works on confidence. George Bush in the USA recently sent each household $600 (£300) to spend, in order to make the economy turn over. They were not able to pay their mortgage or loan interest with it – it had to be used to get the economy turning over by being spent with a retailer. A novel approach, but at least it injects cash right where it’s needed rather than giving Banks discretion as to how or when they pass it on. We are all currently waiting for Gordon Brown’s government injection of£50 billion to add ‘liquidity’ to the mortgage market to do its work.

Comments

Popular posts from this blog

It's July 2022!

 How many bloggers find that it's only something they do when they have found some time to fill, for whatever reason? I admit that there are companies and individuals who will write something for me on a regular basis, but my feeling is that it needs to be authentic and my 'voice'. When I get back to my keyboard to do this it makes me worry that the market may be changing and we'll need to start adapting again to new circumstances, new problems and constraints. The dreaded COVID has not gone away, just adapted itself. My wife Janet managed to pick it up from her 93 year old father after spending several hours with him coughing and sneezing on the way back from a trip to Wales. Her first time contracting it since the pandemic began and it's been 4 days now since she tested positive. My results are negative. I told my colleagues that's because I'm a 64 year old Teflon coated estate agent! But then, who knows when a variant particularly targeted at the property
Interest rates and inflation First of all, let’s get some basics together. Reproduced below is The Times ‘explainer’ with my numbering of reasons and highlighting of the players involved: The Bank of England has warned that it could peak at 13% this year when the energy price cap goes up again. But what is pushing up prices? Energy bills are by far one of the biggest contributors. (1) Gas prices rocketed as economies around the world reopened after the coronavirus lockdowns. (2) The war in Ukraine has exacerbated the problem. In April, average gas and electricity prices jumped by 53.5% and 95.5% respectively compared with a year ago. (3) Average energy bills are now forecast to hit £3,850 by January 2023 after Russia cut gas supplies further. Fuel remains at some of the highest levels seen on record, although pump prices are falling, slowly . Average petrol prices were 182.69p a litre in July . In early June you could expect to pay 186.59p. In May you could expect to pay 160.31p

House builders discuss 95% mortgages with lenders

So the house builders and the lenders have had a meeting to discuss how they can create 95% mortgages. Basically a good thing, as you would imagine most estate agents would say. But what proportion of the housing Market is represented by new homes sales to first time buyers? Also any first time buyer who purchases a new home is then a cost to the second hand Market of who knows how many sales! If I think back 30 years my wife and I as first time buyers were providing a deposit of 10%. To do this we sold her car, saved up by not going out as much and generally committed ourselves to the task of buying our first home together. Ah, you might say, but house prices were so much cheaper then. True but my salary was just under £2,000 per annum with the prospect of perhaps another £1,000 in commission from selling at lease 6 houses per month personally. The first 4 didn't count towards commission but were to cover my costs to my employer! I personally don't think 95% mortgages are