Archive for October, 2009

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Mortgage tracker deals ending

October 13th, 2009

Two years ago many lenders were offering some incredible tracker deals with rates tracking the bank base rate very closely, and in some cases at a discount to the bank base rate.  The result has been many of those with base rate trackers from 2007 have been paying very low (in some cases zero) mortgage interest.  But all good things come to an end.

The question for many people as they exit these two year tracker deals is this; do they stay with their existing lender and their SVR, or look for a mortgage elsewhere?

There are many factors to consider here, one being whether you need the security of a fixed rate mortgage knowing what your monthly outgoings will be, or whether you want to go with a variable rate product.  Before making a decision it is best to read up on what the market thinks will happen with mortgage rates, and also take the advice of a good mortgage broker / financial advisor.

At this time the SVR for many lenders is below 4%, in some cases less than 3%.  If your view is that interest rates will remain low for years to come then maybe the SVR product is best for you.  If you think the interest rates will rise and soon be back to the 5% plus levels then maybe a fixed rate at sub 5% is good for you – it is a choice based on your circumstances. 

We do not offer mortgage advice on this blog but you will find much information relating the UK economy and views on where interest rates are heading. At the end of the day it is a personal choice as to which mortgage product you choose, but for me I like tracker mortgages, my own view is that it will be some time before base rates rise significantly, so for now I am keeping away from fixed rate products.

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Posted in Mortgages

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Low interest rates for years to come?

October 11th, 2009

Tomorrow the Centre for Economic and Business Research (CEBR) is expected to publish a report identifying low interest rates for years to come.  In particular the CEBR is expected to forecast that the bank base rate will remain at 0.5% until 2011, and that the base rate may not reach 2% until 2014.

The underlying basis for this research is a reduction in the budget deficit of £100bn over the term of the next parliament.  Such cuts in budget deficit will require a combination of reduced Government spending and tax increases, thus restricting economic growth, and hence the expectation that bank base rates will remain low to help prevent the economy going back into recession.

The scale and rate of cuts in the budget deficit is also expected to impact on currency exchange rates with the pound possibly sinking to $1.40 and potentially parity with the Euro.

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Posted in UK Economy

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Buyers of property portfolios, even in tough times

October 9th, 2009

Property portfolio buyers do exist, even in tough market conditions!

Some buy to let investors, particularly those with fixed rate mortgages of 5% or more, are struggling to make a profit and some are even making a loss due to the poor rental market conditions experienced over the last year.  But for those with property portfolios on higher fixed mortgages it maybe far tougher to survive.

It there was a reasonable market for selling property it would not be an issue for property portfolio owners, they could sell some or all of their properties and move on.  So what other options are there in a property market where it is hard to find property buyers and banks are seemingly unwilling to lend at reasonable rates?

The answer is really quite simple, if you are looking for property portfolio buyers then contact RM Properties (tel: 0800 8600 285) who are now actively seeking portfolios to purchase.  In some case RM Properties will even pay full or “above” market valuation depending on how a deal can be structured. 

Typically RM Properties will purchase a portfolio with a “delayed completion”, effectively they contract to run the portfolio, even if it is making a loss and then complete the purchase at a later date paying in full the agreed completion price.  It is too complex to go into all of the variations as to how a deal can be structured, but if you have a portfolio that you wish to divest of contact RM Properties for more information … and if you know of someone who wants to sell a portfolio RM Properties will even pay a referral commission.

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Posted in Property Portfolio Buyers

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Property prices, are economists coming to a consensus?

October 8th, 2009

After recent months of positive media reports suggesting that property prices are now on the rise and that the worst was behind us we are now seeing an increasing number of economists and industry experts painting a more pragmatic picture, one of uncertain times ahead, much the same as we have previously suggested in our blog.

Firstly the Chief Economist of Halifax, Martin Ellis, suggests that the recent increases in house prices have been largely due to an “increased demand with low level of properties available for sale” and “improvement in affordability”.

Carter Jones property consultancy, David Smith, said that “we have to expect more turbulence ahead, especially given rising unemployment and the fact that, at some point, interest rates will have to rise”.  Has he been reading our blog?

CBRE, Jennet Siebrits – head of residential research, commented that “the number of sellers has started to rise” and that this could re-dress the balance of demand-supply as the sellers start to outnumber the buyers, thus “leading to further house price falls”.

Overall there seems to be an increasing consensus, much as we have already reported, we are not yet into a period of sustainable growth in property prices.

Here is one of our posts from August outlining prosects for UK property prices ..http://www.repaymortgage.co.uk/blog/2009/08/16/uk-house-price-predictions/

You can browse more of our posts on property prices here … http://www.repaymortgage.co.uk/blog/category/ukhouseprices/

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Posted in UK House Prices

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Austerity and Property Prices

October 7th, 2009

This week we have heard the phrase “age of austerity” by George Osbourne at the Conservative Party Conference; in effect referring to a period of greater financial prudence as the UK reduces its budget deficit. So what will this mean for property prices?

Already announcements have been made to prune £7bn off the mountain of debt, but clearly there is much more to come. 

As yet no one has said that there will be job cuts in the public sector, but it seems impossible to achieve the savings required without job cuts.  Clearly higher unemployment is going to affect property prices.

Another subject not yet receiving much attention is tax increases.  The level of savings needed to reduce public debt are likely to require substantial increases in tax revenues, leaving us all with less money to spend.  Clearly such action is again going to impact on property prices.

Over the next few months each of the main political parties will unveil more details on how the budget deficit will be addressed, as they do it will become clearer on how we are all going to be affected, and in particular for this blog, how it will impact property prices.  

Visit our blog again later for further updates on the impact on UK property prices.

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Posted in UK Economy

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Why banks are restricting lending to property buyers

October 6th, 2009

Put simply the banks still do not have enough money to lend, something many property buyers may have realised or at least suspected, but why is this so?

As at September 2009 it is estimated that banks operating in the UK had a combined liquidity of £280bn, this is liquid assets, as defined by the FSA, that a bank could readily call upon.  The total of £280bn may seem a large figure and in some respects it is, but it has been determined that the banking industry may need a total of £620bn in qualifying liquid assets, and at the very least £390bn giving an effective shortfall of £110bn.

The result of the shortfall means that banks must take action to increase their liquidity, such action not only restricts the amount banks can lend but it also impacts on their profitability.

The potential danger of the liquidity targets effectively imposed by the FSA is that bank lending will be restrained, both in the amounts lent and the cost of lending, to enable banks to put in place the liquidity targets. 

Some analysts are concerned that the targets imposed could restrict support for economic growth at a time when reduced public spending and potential tax rises will also start to impact the economy from 2010.  Potentially the combination of cut backs in government spending and restricted bank lending could have a double blow for the property market; which may result in a more protracted and “bumpy” recovery.

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Posted in Property Buyers, UK Economy

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Is now the time for property buyers?

October 5th, 2009

The summer months has seen many reports of house prices easing upwards, after the big falls in 2008 and early 2009 maybe this is the turning point, may be this is the time for property buyers to rush in and pick up some bargain properties?

The facts are that it is still not clear where we are in the property market cycle, as of October 2009 it could be that we have seen the start of the move toward a stable property market with increasing prices, but can we be confident of this?

We have already blogged in many posts about the uncertainties that lie ahead of us and in particular rising unemployment and the need for the UK to cut public spending.  This last point could be very significant.  When Canada had a similar problem of unsustainable public spending they chose to slash the public sector payroll, if this happened in the UK the consequences could be dramatic.

It is estimated the employment in the public sector has grown by over 0.5 million since the late 1990s when Labour came into power. What if the Conservatives win the next election and reverse this, e.g. reduce employment in the public sector by 0.5 million?  Even if Labour remained in power after the next election they may still have to make significant cuts in public sector employment.

The problem is no major political party will announce such cuts prior to being elected, otherwise they may lose too many votes.  But, if there is a major cut in public sector employees it will mean a prolonged higher level of unemployment and this will impact the UK property market by holding back or depressing property prices.

No one knows for certain what the future will hold.  If you are an investment property buyer then the safest bet is to buy on yield, e.g. a property that will make a rental profit on “real” market rents and “real” expected interest rates, e.g. at least 5 to 6% as the low rates of today will not last forever.  Perhaps the most risky decision of any investment property buyer is to purchase today hoping to make a capital gain.

In summary, consider buying for investment cash flow, and not for capital gain.

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Posted in Property Buyers

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Property price increases reported by Nationwide

October 2nd, 2009

Nationwide have just reported a 0.9% increase in property prices for September 2009, the fifth month in a row that increases in property prices have been reported. Is it time for property buyers to move in?

Whilst it is comforting to many that the spiral of price falls seems to have abated and that maybe, just maybe, we are starting to see some upward movement there still needs to be caution applied by anyone looking to buy.

Firstly we have still to see further rises in unemployment, this will certainly have an effect on house prices, particularly in those areas that will be most affected by higher unemployment levels.

Secondly, we have some fairly significant budget cuts to feed through into the economy.  Whilst at the time of writing this blog there has not been any clear indication from the government on the severity of cuts, there seems to be almost a consensus amongst economists that significant cuts in spending will happen. The phasing and timing of these cuts will have an impact on property prices.

Thirdly, all of the data reported in 2009 on property price movements is based on an “abnormal market”, that is mortgage lending is over 50% down on the historical normal levels.  Until the market is more fluid we will not know the true effects of buyer and seller demand, and thus the impact on property prices. 

Overall there is no need for panic, but equally anyone who thinks prices are about to boom is very unlikely to realise this.  The facts are we are still in uncertain times, the property market has stabilised to some degree, but property prices are still vulnerable to many economic effects yet to unfold.

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Posted in Fast House Sales, UK House Prices

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1Vision Investment Properties – Charlene Heaney

October 1st, 2009

IVision Investment Properties is a company owned by Charlene Heaney which specialises in sourcing investment properties at below market value.

The company operates by sourcing properties from developers and motivated sellers, securing an option to buy, then passing on the investment property to other investors at a large discount to market value.

We will be publishing further information  on the services provided by 1Vision Investment Properties and their benefits for property investors …watch this space in the next 2 weeks.

Update 16 October 2009.  We have been trying to contact 1Vision Investment Properties but as yet no one answers the phone or returns calls. If you have any recommendations please let us know.

Update 24 December 2009. We received contact from Charlene Heaney of 1Vision Investment Properties Ltd who asked for comments to be deleted.  As a result the comments have now been deleted but we have left the contact details of individuals should you wish to contact them directly for feedback.

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Posted in Buy-to-Let

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How to sell London property quickly

October 1st, 2009

Whatever the property market is like it is always, always, possible to find a property buyer if you are selling in London.  It does not matter if the property is a studio flat, a huge mansion, or some land for development, within London there are property buyers for every type of property – at the right price of course.

There are many ways a property can be purchased, it may be a conventional transaction to a home buyer, or cash (or financed) purchase to a property investor, or a delayed completion purchase (more on this later).

Selling a property to someone buying as their home is usually going to achieve a higher price, not always, but usually.  The exceptions tend to be where a property has development potential. When an investor purchases they will be looking to make a profit, this may be by selling on the property, or developing the property.  That said much of this is irrelevant to the seller, they simply want the best possible price within the timescales they need to sell.

So, let’s assume you are selling a property within the M25, how much discount would you need to provide for a quick sale?   The answer may amaze you, it can be anything from 25% to +5%, yes, there are certain circumstances where an investment property buyer will pay a higher price than today’s valuation.  And no, we are not crazy, it is really true.

The way to achieve an above market price is to swell based on a delayed completion.  This is achieved by contracting the responsibility of your mortgage maintenance, insurance, etc, to a property investor for a period of time, for an above market sale price this may be 3 to 5 years.  The property buyer will pay all of the property’s associated costs, you can literally walk away from your property, move on with your life, and then collect the increased equity over your mortgage when the sale completes.

A delayed completion is ideal where the owner is emigrating overseas, wants to relocate and rent somewhere else, is divorcing, and generally does not have a lot of equity tied up in a property, so there are no real concerns about waiting for a delayed completion.

If this sounds like something your are interested in read more from “RM Properties” on our blog here …http://www.repaymortgage.co.uk/blog/sell-your-property-today/

That said if you want a straight sale, no delayed completion, and are prepared to sell at a discount, then RM Properties can make an offer for a quick property sale also.

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Posted in Fast House Sales, London Property

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