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Lower Risk Areas Attracting Developers

[ Posted September 26th, 2010 ]

Lower risk development sites are beginning to prove more and more attractive to local and global property developers alike, with companies shifting more focus to rural areas than previously seen before and helping to improve supply in more urban settings. As this occurs greater availability of many lower priced housing is expected to be seen throughout the UK property market as a whole, though whether or not this will be enough to encourage many first-time buyers to take the plunge into the current unsteady real estate sector is still in question.

A primary concern for the majority of new buyers and current property holders alike is that, regardless of whatever low-risk housing may be available, individuals may not be able to secure any decent tracker or fixed-rate mortgages in the foreseeable future without considerable liquid funds at their disposal to do so. While it is true that lower priced properties in areas posing lower risk of price fluctuations will allow a larger number of individuals to enter into the market at the same time increasing mortgage regulations continue to make it more difficult to join in an already over-saturated economic sector – even with the continued Stamp Duty holiday for first-time purchasers looking to secure a low enough priced home.

While many individuals are content to sit and wait out another economic turn as well as greater market stability many fear that this is not going to be realizable in the short term and as such virtually an entire generation may be deprived of the right of owning their own home until their latter years of life. This in turn aids to stimulating the lettings market as more individuals and couples turn to a more affordable option for lodging yet at the same time fears of this generating an over abundance of demand for rooms or entire homes for rent could work against those seeking more affordable housing options as well.

Lloyds Sets Buy-to-Let Restrictions

[ Posted September 25th, 2010 ]

Latest restrictions set out by Lloyds places many buy-to-let investors ill at ease, with new mortgages being issued only for individuals with less than £2 million worth of lending currently being used or portfolios with less than three estates. While Lloyds claims that this move will affect relatively few individuals many people feel that, due to the relatively limited market for buy-to-let mortgages in today’s lending society along with various other economic factors, this decision may affect many people throughout the mortgage sector as a whole.

With restrictions on typical tracker and fixed-rate mortgages at an all-time high many feel that this latest move by Lloyds will further limit the overall effort of many individuals to purchase investments for use around the country. Additionally given the growing demand of many individuals and families alike to rent rather than own property this can potentially have a major impact upon the overall lettings market with demand far exceeding the overall supply of locations and thus drive up the market value of rentals – much as was seen earlier in the year with the supply and demand imbalance within the general property market.

Nevertheless lending institutions such as Lloyds are lauded by many experts for taking stronger restrictive moves such as this in recent months as well. They feel that, should lending become too out-of-hand and institutions dedicate too excessive amounts of money in speculative markets this could have a strong weakening effect on the overall recovery effort. Additionally should another recession take hold a more lenient attitude towards lending could result in major losses for both consumers and lending institutions alike, severely damaging the overall market conditions as a whole.

Mortgage Famine Striking Home

[ Posted September 24th, 2010 ]

As Britain as a whole moves closer towards what is being seen as a ‘mortgage famine’ by many experts prospective and current home owners alike are finding their concerns over a solvent future growing substantially. This is particularly the case in recent months as mortgage approvals for home purchases for the month of August dropped to what is reportedly a 16-month low of 31,767. House prices at the same time due to a derth of mortgage availability dropped to a country-wide relative low of roughly £166,000 – minor gains in some respects on an overall basis though showing a significantly lower pace than seen previously in the year.

As the lending famine strikes home on multiple fronts first-time buyers in particular are finding themselves edged further and further out of the market, being forced to have substantial deposits (generally in the range of 25% of the home’s equity) in order to take full advantage of the low interest rates still supported by the central banks. Nevertheless as lender speculation that this interest rate will not last for long fixed-rate mortgages are becoming less and less desirable, especially for purchasers looking to buy homes in areas known for fluctuating home prices that may suffer due to dropping home values in later months even if they do somehow find a way to afford a home at this stage.

Current speculations over the existing ‘mortgage famine’ place expectations for a recovery nowhere in the next 12 months, with banks and other lending institutions tending to take a more conservative approach in order to preserve their current financial standing and curb any negative backlashes a recurring economic downturn may cause. Nevertheless hopes are still high amongst many experts who feel that this change will actually work out for the best in the long run as individuals as well shift their focus away from incurring additional debt through a home purchase and instead work to pay off existing debt, generating a more stable financial foundation for future purchases while the housing market cools to more reasonable levels.

Mortgage Approvals Hit Low as Market Slows

[ Posted September 23rd, 2010 ]

Figures released recently from the British Bankers’ Association last Thursday indicate a new low in  terms of mortgage approvals on the market, with a mere 31,767 mortgages for buying a property finalized across the country. These latest figures put mortgage lending for property purchases at the lowest level seen since April 2009, with August being the third consecutive month in which approvals have fallen regardless of the fact that the summer months are usually seen as the most active time of year for property purchases.

On average lending institutions could have been expected to be approving approximately 36,000 home loans each month, a level generally seen to be in line with the declining market in many ways as consumer interest in the property market falls for a variety of reasons. The latest low, however, is a strong sign against recovery for a number of people – particularly first-time buyers and those requiring bad credit mortgages. This is due to the fact that, despite the continued low interest rates offered on all homes as set by the central Bank of England, lending regulations are proving tighter and tighter and as such have made it significantly more difficult to obtain funding.

Regardless some experts feel that this decline as of late is not unhealthy but in fact a sign that things are beginning to finally balance out. While earlier this year a large boom was seen in the property market thanks to a strong imbalance of supply and demand now things have shifted and although the result may not look too good statistically in the short-run it is generally considered to be a positive trend in the long-run.

Property Recovery Hinging on Two Factors

[ Posted September 22nd, 2010 ]

According to the London Central Portfolio (LCP) both the London property market and in many ways the UK property market as a whole may see some trouble in the near future due to economic difficulties. In fact, many feel that the overall recovery is dependent upon specific economic triggers that, though they not come, could result in yet another major downturn that would damage the market as a whole once more in a variety of ways.

One of the key figures, reported by the LCP, is the need for mortgage lenders to become more flexible with their lending policies. This has been seen by many to be the primary limiting factor in many recovery factors beyond simply those relating to purchasers requiring bad-credit mortgages for a purchase. Both tracker and fixed-rate mortgages based upon the continued low mortgage rates have proven to be difficult to obtain for a number of individuals lacking substantial funds to utilize as down-payments for purchases.

The economic recovery is also seen as a major factor in sustainable recovery, not from a matter of pure financial concerns but of overall job security. One primary limiting factor as seen as one of the major causes in preventing a large number of potential purchasers from securing a home or even pursuing a mortgage is the lack of job security currently present in most industries. This has caused the majority of prospective buyers that do not feel secure in their current job position to seek to differ their purchase until a later date at which point they would feel more capable of supporting a purchase without worrying over whether or not they would be capable of making payments on a regular basis.

Foreign Investment Gaining Attention

[ Posted September 19th, 2010 ]

As house prices begin to fall once more throughout the UK and individuals are worrying over the possible profitability of their homes more and more are turning to foreign countries for purchases – with sights set particularly on areas such as Spain, France, Portugal and even the US. While it is true that overseas mortgages, like all other mortgages, have become somewhat more difficult to obtain as of late the overall level of potential profitability makes the push for them much more appealing in many ways to some people than domestic versions. This goes the same for residential and commercial property alike, especially given recent trends in more rural areas outside of London.

While in the past areas such as France or Spain have been given primary interest due to their relative proximity to the UK and ease of travel between the two countries recently the US has worked to engender more and more interest from various individuals. This is particularly true for many "real estate turners" that operate by purchasing poor-quality homes for extremely low values, fixing them and then selling them once more on the market for a substantial profit. Some foreclosed homes throughout the US currently, for example, can be purchased for as little as $2000 USD and once repaired sold for as much as $60,000 USD (with generally $30,000 USD required for repairs and other costs associated with the endeavor).

This potential for high profitability in numerous areas has attracted many developers from domestic and international organizations alike, with even some first-time buyers looking at investing in foreign real estate over property in local markets simply due to the fact that domestic property is both on the decline and generally considered too highly priced to fit into most people’s price ranges. Even those with bad credit can attain funding for the purchase of some more affordable property overseas – something that may simply be a dream for many looking solely at the local property market.

House of Frasier Looking to Expand

[ Posted September 18th, 2010 ]

Typically only associated with well-developed downtown areas, retail chain House of Frasier is reportedly beginning to turn its gaze towards more rural settings instead of maintaining its urban traditions. This is being seen as a result of the poor commercial sector developments in many areas, including those in London in some districts, as less and less prime real estate is becoming available for their company’s utilization.

Focusing more on shopping center developments in smaller cities and less central establishments, House of Frasier is joining many other department store chains that have expanded to other zones over the past few decades in order to attempt and capitalize upon more effective commercial mortgages overall reduced costs over what they can typically find available in more metropolitan environments. This has become particularly poignant in recent months as an increased number of overseas investors have turned their focus to what they view as the most viable options for their own purposes and have been vying for development zones in places such as London and subsequently driving up base prices substantially.

Other cities and even counties in general throughout the country have thus far been able to avoid this large influx of foreign capital due to the fact that the majority of foreign investors simply are unfamiliar with more rural environments, helping to protect some key development zones that are showing high promise to many while at the same time allowing developers such as House of Frasier to consider them for expansion.

Marks and Spencer is another chain that has explored this business option since 1989 and has leveraged it to great success in many aspects, allowing it to expand into a variety of venues and catch a greater market share than it ever would have seen otherwise should it have maintained its old standards akin to House of Frasier.

As of yet no definitive location for the next “non-central” House of Frasier location has been set, though rumors indicate that DTZ is actively assisting them in locating the next area for their usage.

Brits Show Less Concern Over Mortgage Availability

[ Posted September 17th, 2010 ]

A recent poll of consumers throughout the nation recently concluded that the majority of the population is showing less and less concern over the overall availability of mortgages on the market, following a trend of declining home sales in various areas across the nation.

The recent decline is seen to be attributed less to the actual mortgage offering sector and more to the various factors affecting the housing market – particularly for first-time buyers. Despite the fact that mortgage rates have remained relatively low, for instance, house price increases coupled with continued economic stability and lack of job security have been primary de-motivating factors for both individuals looking to purchase a home of their own as well as lending institutions being willing to reduce the overall restrictions they have placed on mortgages themselves.

This has led to even re-mortgages being less and less common today, as more people currently owning their own property have turned farther from incurring additional debt and looked more towards paying off existing accrued funds owed to various lending institutions. This fact is substantiated by recent statistics that Britons throughout the country have shown a record low percentage of funds saved this year combined with substantially lower purchasing debt across the board with credit cards as well.

Many experts feel that the current trend leaning against mortgage pursuit will clear up once the economic situation as a whole has had a chance to quiet down and job expectations remain more stable. Whether that will occur in the near future, on the other hand, is still up in the air as the declining real estate market is seen to be a negative indicator of things to come.

Double Jeopardy for Home Owners Approaching

[ Posted September 16th, 2010 ]

As many home owners are painfully aware of house prices are on the fall, with an anticipated 10% drop in overall home value anticipated through the end of 2010 and continued into the first part of 2011. Most likely this will come in the form of a 3% drop over the next few months with a 5% drop during the winter months of early 2011.

At the same time what many current home owners are not aware of is that the declining house prices are one minor issue another major concern is the fact that mortgage lending regulations are becoming more and more strict in order to protecting lending institutions from financial strife should they be placed in difficult positions. This has created the best deals only being available to buyers looking at basic fixed-rate mortgages becoming available with a minimum of a 25% down payment, with anything less than that generally a triggering an APR increase of at least 1% form most lenders. Worse, this is expected to stay this high regardless of what the central banks are willing to set the standard interest rate at as lending companies grow increasingly concerned over their own financial security and solvency.

Another issue that many home owners are unaware of is that the lowering house prices may have a drastic impact upon them as well. A home purchased right now with a 25% down payment against the home’s equity may be enough for a decent loan in the near future, however should house prices drop by the anticipated 10% this would cause the equity value to only be worth approximately 17% – well below the threshold necessary for ensuring favourable rates. This is a major concern for residential and commercial mortgage holders alike as it could easily trigger widespread financial strife should loan holders be suddenly forced to make higher payments each month simply due to falling house prices.

House Prices Speeding Up Decline

[ Posted September 15th, 2010 ]

The Royal Institute of Chartered Surveyors’ latest reports indicate that the property market has begun its full-throttled push into declining numbers, with 32% new estate agents reporting that house prices have fallen rather than risen in August. This, coupled with the fact that the number of first-time buyers looking at purchasing homes recently is at an all-time low, is working to generate growing unease and uncertainty about the condition of the market going into 2011.

Old news to many by now, the growing number of first-time buyers unable to purchase homes despite the low interest rates still maintained by the central banks and other favourable fixed-rate mortgage options being available on the market – provided you are able to make a sizeable enough down payment – has had a lasting impact upon much of the real estate market as a whole. This has also worked to push down the overall value of homes in the lower end of the market, boding ill for many current property owners concerned about the overall value of their land.

The recent difficulties faced in obtaining funding by many people has actually worked against a large number of home owners throughout the country, with current over-supply in the market seen as contributing strongly to the price declines. In fact, recent RICS reports show that home owners are now forced to reduce the asking price of their homes by up to 10% in order to secure a sale, with many times this not even being enough to close some deals.

Many experts anticipate the situation to become more strained going into the latter months of the year, however at the same time optimism is being kept up for next spring when traditional market trends should help encourage another recovery as was seen earlier this year.

 
 
 
 
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