Mortgage Slump Could go on for 3 Years

Houses for sale but buyers can’t get mortgages

People looking to purchase a home were faced with more gloomy news recently, when some forecasters are predicting that the mortgage crisis could last for up to three years.

It’s certainly clear from the Bank of England figures that mortgage approvals dipped dramatically by almost 70 per cent in June to a record low. The figures are that only 36,000 new mortages were arranged for people moving house. And the overall net mortgage amount plunged to only £3.1 billion.

So people are still looking to get finance approval for buying a new property; it’s just that mortage lenders are being much more cautious about who they lend money to in the current economic climate.

A Government report indicated that there might not be a quick fix to remedy the home loan doldrums. Although to be frank, when did the government ever come up with a quick fix for anything?

Any offer of help from the government to ease the securities market quickly evaporated when the credit crunch hit. The banks and building societies are now waiting for the follow-up report to be published in the autumn for a clear way forward. And this has caused a backlash, because the mortgage lenders are calling for some decisive action to resolve the current mortgage crisis.

Property Prices Fall, Deposits Keep Going Up

So in spite of falling property prices, mortgage lenders continue to tighten their lending conditions. And the average deposit a home-buyer will need to buy a property keeps rising. In some parts of the country, deposits of 20% are being requested for purchasers to qualify for a home-loan.

A recent Hometrack survey found that the average property sale is going through at roughly 10 per cent below the asking price. Which is not good if you’re a seller looking to move up the property ladder. But - if you’re an investor looking to make the best of a bad situation, and you have some cash liquidity, you could move into this market in a very strong position. And one thing the ‘experts’ all seem to agree on, is that this situation is likely to last at least 3 years, before it moves back to more realistic levels.

If you’re looking to move into this property market, it might be wise to get some sound advice from someone who is familiar with the current property market, and can help steer you through the potential ups and downs.

Could You Benefit from a Free Property Investment Seminar?