It would have to be the understatement of the decade to say that the mortgage market has seen somewhat of a change in the last few months. What was recently a rolling unstoppable machine has been well and truly stopped dead in its tracks, and now the business of giving and getting mortgages seems to have ground to a shuddering halt.
Because of the credit crisis restrictions on lending and borrowing have changed the whole lay of the land. Lending institutions are now giving far more careful consideration to whom they deem fit to lend their money to and as a result who they seem beyond consideration. Self certification is all but a thing of the past and where not long ago 100% mortgages were the norm in this present climate 80% loan to value mortgages are as far as the institutions are willing to go. And the main area that has suffered is Buy to Lets.
Buy to let, it has to be said, has fueled a large proportion of the housing growth over the last 5 years. It has been this market that has kept the property market running. That said it has not come without a great cost to both the economy and ordinary people. I say ordinary people because it has been ordinary people buying buy to let and maybe that has been the fundamental problem.
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 experience (or inexperience) started to show and the so called bargains were sometimes nothing more than the proverbial pig in a poke. And the outcome was that these guys would get fleeced. It is an uncannily familiar situation to the one that people had found themselves in with regards to the buy to let market. Okay, the amounts of money that were changing hands were different but the point is that people were participating in a market in which they had no prior knowledge, and were buying houses that were way overpriced, in some cases without even seeing what they were buying.
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. - 15224
Because of the credit crisis restrictions on lending and borrowing have changed the whole lay of the land. Lending institutions are now giving far more careful consideration to whom they deem fit to lend their money to and as a result who they seem beyond consideration. Self certification is all but a thing of the past and where not long ago 100% mortgages were the norm in this present climate 80% loan to value mortgages are as far as the institutions are willing to go. And the main area that has suffered is Buy to Lets.
Buy to let, it has to be said, has fueled a large proportion of the housing growth over the last 5 years. It has been this market that has kept the property market running. That said it has not come without a great cost to both the economy and ordinary people. I say ordinary people because it has been ordinary people buying buy to let and maybe that has been the fundamental problem.
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 experience (or inexperience) started to show and the so called bargains were sometimes nothing more than the proverbial pig in a poke. And the outcome was that these guys would get fleeced. It is an uncannily familiar situation to the one that people had found themselves in with regards to the buy to let market. Okay, the amounts of money that were changing hands were different but the point is that people were participating in a market in which they had no prior knowledge, and were buying houses that were way overpriced, in some cases without even seeing what they were buying.
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. - 15224
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Mortgage Route offers information help and advice on mortgages from fully trained mortgage brokers along with free mortgage calculators and sourcing tools.
