The mortgage market is tightening what will happen to buy to let?
At this present time to say that the mortgage market is in a certain state of turmoil would be the understatement of the year. The situation has gone from one where whoever wanted a mortgage could get one to a situation where it is only the people who can afford not to need one will be considered.
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".
A considerable amount of the growth in the housing market over the last few years can be put down to buy to let. Indeed it is what has kept it buoyant. But this in turn has had a huge effect on the economy in general and the individual in particular. The crux of the problem has been that ordinary people have been having a go at the buy to let phenomenon.
Car auctions in the early part of the 1980s were deemed to be the bastion of the motor trade. Anyone that was not from the trade was seen as an outsider and indeed could quickly be spotted as a rube who was well out of his depth. But gradually the situation began to change and more and more people were trying their hand at spotting a bargain and tidying it up for a small profit. People from all sorts of backgrounds were giving it a go.
But all that happened is these people with their limited experience just got caught up in the moment and paid too much for the wrong cars and on a lot of occasions got stung. The reason I am telling this story is the exact same thing happened with buy to lets. Even though the sums of money are far greater than a couple of grand for a car the process was the same, inexperienced people playing in a market they knew nothing about. A lot of people paid too much for their properties. In some cases people with no experience were buying houses they hadn't even seen.
Personally, I have bought several properties professionally over the last 10 years, most of which have been bought as buy to lets. Even with the expertise and professional knowledge I have, I would never buy a property without first seeing and inspecting it, and I know of no self respecting professional who would. It baffles me why a non professional would step into an unknown market and think they are an instant expert.
Unfortunately what has happened is as the saying goes; they have ruined it for the rest of us. The irresponsible borrowing and buying has put the lenders at risk as they are finding themselves flooded with customers who can't repay their loans, and as such, the lenders now don't want to lend to anyone. Loan to value for buy to lets has dropped recently from 85% to 75% and it is estimated that with falling property prices, this will drop even further.
All this leaves an industry in great turmoil with very little prospect of recovery. What I suggest is, I would like to see forward thinking lenders come out with a professional buy to let product for landlords that have over ten properties. These landlords have already demonstrated they can fund purchases up to now and it would mean that they could get into a market that is quite beneficial for buyers in general. In addition this type of lending would have the result of producing some buyers in the market place which would at least keep the housing market moving at a trickle which is more than it is moving at the moment.
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".
A considerable amount of the growth in the housing market over the last few years can be put down to buy to let. Indeed it is what has kept it buoyant. But this in turn has had a huge effect on the economy in general and the individual in particular. The crux of the problem has been that ordinary people have been having a go at the buy to let phenomenon.
Car auctions in the early part of the 1980s were deemed to be the bastion of the motor trade. Anyone that was not from the trade was seen as an outsider and indeed could quickly be spotted as a rube who was well out of his depth. But gradually the situation began to change and more and more people were trying their hand at spotting a bargain and tidying it up for a small profit. People from all sorts of backgrounds were giving it a go.
But all that happened is these people with their limited experience just got caught up in the moment and paid too much for the wrong cars and on a lot of occasions got stung. The reason I am telling this story is the exact same thing happened with buy to lets. Even though the sums of money are far greater than a couple of grand for a car the process was the same, inexperienced people playing in a market they knew nothing about. A lot of people paid too much for their properties. In some cases people with no experience were buying houses they hadn't even seen.
Personally, I have bought several properties professionally over the last 10 years, most of which have been bought as buy to lets. Even with the expertise and professional knowledge I have, I would never buy a property without first seeing and inspecting it, and I know of no self respecting professional who would. It baffles me why a non professional would step into an unknown market and think they are an instant expert.
Unfortunately what has happened is as the saying goes; they have ruined it for the rest of us. The irresponsible borrowing and buying has put the lenders at risk as they are finding themselves flooded with customers who can't repay their loans, and as such, the lenders now don't want to lend to anyone. Loan to value for buy to lets has dropped recently from 85% to 75% and it is estimated that with falling property prices, this will drop even further.
All this leaves an industry in great turmoil with very little prospect of recovery. What I suggest is, I would like to see forward thinking lenders come out with a professional buy to let product for landlords that have over ten properties. These landlords have already demonstrated they can fund purchases up to now and it would mean that they could get into a market that is quite beneficial for buyers in general. In addition this type of lending would have the result of producing some buyers in the market place which would at least keep the housing market moving at a trickle which is more than it is moving at the moment.
About the Author:
Mortgage Route gives assistance help and advice on mortgages from fully trained mortgage brokers coupled with free mortgage calculators and sourcing tools.
posted by Debt Consolidation Loan at
3:51 AM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home