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Buy to let mortgage rates increasing while average rental prices continue to fall

[ Posted February 26th, 2011 ]

New research shows that the average price of a property rental continued to fall over the course of January as more investors are looking into the letting market due to the great buy to let mortgage rates that are hard to turn away.  This is the second month in a row in which the home rental market continued to take a dive which is great news for those considering letting but bad news for investors that want to make a high turn around on their properties.

The research was conducted by LSL Property Services which found that the average rent across Wales and England showed an average drop of about .3% over January weighing in on average at about £682 per month for a home rental.  The LSL group stated that this is a result of professional landlords trying to compensate for the supply and demand mismatch which has been helping buy to let individuals keep their rents up high as the demand has outweighed the supply for a great deal of time.  It is for this reason that buy to let mortgage rates have also remained reasonable for property investors.

Despite the drop in rents, the letting agency stated that rents are still almost 4% higher than they were during 2010 which placed property letters in a very good position.  Over in Shropshire Blafours letting head stated that the market demand is continuing to increase and the rental stocks are starting to dry up which is going to alter the rents as well even as it may appear that they are falling.  Tart added that last year they had a ratio of one available rental for every five prospective tenants, and now the ratio is looking to be closer to ten.

Tart attributes the lack of social housing and council properties as one reason for the increase in rental inquiries.  She also want on to mention that with mortgage rates increasing and many lenders being denied the mortgages they apply for they are forced to turn to rental properties as a solution which has helped keep the buy to let property market bustling with activity.    She added that many people simply do not want to move because they do not want to make any sudden changes such as buying a home instead of a rental until the economy is stable again.

Scotland housing market and mortgage rates showing signs of positive improvement

[ Posted February 24th, 2011 ]

Lloyds TSB Scotland reported this month that after watching the housing market of Scotland continue to fall over the last three years the market is starting to stabilize again with a very stable growth pattern observed over the last twelve months of about 5%.  Including the three months prior to January of this year, Lloyds stated that the residential property prices and their attached mortgage rate only dropped by about.3% which is a very marginal drop when compared to the large volatile drops that were seen and observed over the course of the recession.

During 2009 over the same three month period new home purchases dropped by almost 17% which Lloyds TSB said that when compared on a year on year average shows that the market is finally starting to stabilize.  Also starting to stabilize according to the bank was the number of mortgage transactions that were completed which it said were almost at half of the rate they were before the recession occurred.  Overall, when compared year  on year to December of last year new transactions increased by a total of 7% which is very encouraging for those who follow the property market and are looking for the best mortgage rates.

Chief Economist for Lloyds TSB Donald McRae stated that there was not much change during the first quarter of last year but the second quarter showed an improved by a little over one percent followed by another additional .5% of growth during the third quarter.  This is encouraging given that pricing for homes was very volatile for three years in a row along with a large drop in completed sales.  McRae added that now house prices are really starting to stabilize showing that the market is starting to consolidate with encouraging news for those who want to invest again.

The signs of the housing market starting to stabilize prove that the recession may be coming to a close in Scotland making property investment a viable option again, especially for those who want buy to let mortgage rates that are affordable and worth the investment. McRae added the encouraging thought that if the pattern of quarterly growth continues to grow as predicted by the end of the year static house prices and buy to let mortgage rates should continue to grow throughout the rest of the year of 2011.

How to negotiate through tough tracker mortgage rates

[ Posted February 18th, 2011 ]

The news that the Bank of England was going to keep its Base Rate down at .5% for at least the next month was worrisome for those on tracker mortgages as it raised concern over if the rate would increase after the month passes endangering their mortgage rates. The experts unfortunately do not have any words of encouragement as most believe that it is only a brief period of time before the increase heats and with news that inflation is up by 4% could mean that the interest hike is going to come sooner instead of later.

The rock and a hard place that those with tracker mortgages are now facing is the decision of if they should attempt to secure a fixed mortgage with set mortgage rates (although for some this will not even be a possibility), or if they should attempt to play the gamble and maintain their tracker mortgage status.

The best place to start is by looking at what exactly a tracker mortgage is, which essentially is a mortgage that has an interest rate that moves along with the interest base rate of the Bank of England.  Thus, when it goes down the mortgage rates are down, but when the Bank of England increases its rates then the mortgage interest rate goes up.  Thus, they are a huge gamble, but if you play the gamble right you sometimes can make out, although at other times you may be at dirt bottom.

Head of lending at the Mortgage Advice Bureau suggests that unless there is a great deal of room in your budget to maneuver now would be a good time to see if you can switch to a fixed rate.  Neil Baker, an IFA also stated that tracker mortgages are not a good choice for any first time buyer especially at this time because it makes it hard to maintain a budget that will effectively work.

For the next six months however, Baker believes that there will be still be a strong value to make those with flexible budgets interested in looking at tracker mortgages due to the fact that there is still some spread between most fixed mortgages and the tracker mortgages and predicts that there will be at least six months until a major change happens making them a good choice for those who want to sign into a one year mortgage and then reevaluate their mortgage interest options.

House prices likely to stay down as mortgage rates go up

[ Posted February 16th, 2011 ]

A new report from the Centre for Economics and Business Research reports that the housing market in the UK will once again stall during 2011 as worried consumers will refrain from moving into a new home and banks continue to restrict their criteria for lending, making it impossible for most home owners to secure the best mortgage rates needed to make a move viable.  The economists from the CEBR also stated that after seeing a yearly growth of 6.4% last year the recovery will drop off with a predicted drop in house prices of about 2% by the close of this year.

First time buyers can capitalize on the drop in house prices if they are able to afford the large down payment or deposit that most lenders now require before they will offer mortgage rates or lending at all that is feasible.  In fact, for those who have saved up, the CEBR believes that affordability will reach an eight year high for first time buyers due to the weakening house prices.  ON the down side, first time buyers will still be making a sacrifice to afford their home as it is predicted that in order to afford their home they will have to budget about 25% of their income on the house payments.

Douglas McWilliams, the chief executive for the CEBR stated that they believe house prices will creep up over the next few years due to the fact that bank lending practices in regards to mortgage rates and lending criteria do not seem to be changing any time soon.  He added that combined with the tight budgets for most householders and the market uncertainty that has made the recovery of the economy unpredictable many people are shying away from making large transactions such as purchasing a home.

The slow growth in pay and jump in unemployment will also keep housing prices low and lessen the housing demand, in particularly for those who live in Northern England with Governor of the Bank of England, Mervyn King warning that families are going to see their spending money drop the most since the Great Depression in the 1920s.

Crime maps may hurt the property market even more

[ Posted February 12th, 2011 ]

New statistics that show that there are specific crime areas in Wales and England is thought to hurt the respective property market even more as people who are concerned about the increase in mortgage rates, tightened lending, and increase in the VAT will now shy away from the property market fed up with all of the small details that make buying a home too stressful to even consider.  The new figures are up online for the public to see on the Police.uk website and show burglaries, robberies, and violent crime at street level serving as a quiet beacon of where not to purchase a home if safety is a concern.

Nigel Lewis a prominent analyst stated that at their core online crime maps are a great idea following in the vein of the creation of neighbourhood watch programs but they are very dangerous for the property market because they will skew property prices.  Lewis referenced how property markets were affected by school catchment areas bringing up the price for those homes that were located around good schools and conversely bringing down prices for homes by poor schools.  He remarked that in a time when fixed mortgages vs. variable mortgages already cause enough of a struggle, now areas of high property value will be dropping due to crime on the streets and a simple matter of post code.

It has already been seen that recorded crime will reduce almost 2% of the selling price of a home, but now with the public able to see firsthand what type of crime is in a neighbourhood they are likely to misconstrue the details.  For example, an area with only two graphic violent crimes may be deemed dangerous even if the events were isolated and related to something such as domestic violence which would not be a major threat to most homeowners outside of those affected.

The new website hopes to bring those who are online scouring for mortgage rates its way as it offers a different type of rate and shows the public detailed crime maps that can help them deem a property safe for their family.  In addition, it also offers details of any local neighbourhood crime watches and policing activities.

Splitting extremes of the commercial mortgage property market

[ Posted February 11th, 2011 ]

With commercial mortgage rates on the increase now it looks as if the commercial property market is starting to split into two very different sectors according to information put forth by Rael Levitt the Auction Alliance CEO.   Levitt explained that investors are tough to find returns that are not evident in the normal savings facilities and thus are looking for buy to let mortgage rates from commercial properties that will allow them to see returns that are closer to what they would traditionally expect to see.  In layman’s terms, due to poor savings returns investors are buying into property they can let for high quick returns that they can use now.

Levitt explained further that investors are now taking a closer look at the commercial properties because they hope to see quick yields that over time will lead to capital growth and now many investors are fighting hand and fist for their place in the trophy market.   This is due to the fact that if you own a property to let out with high end shops nearby the demand for these locations can be large bringing in very high competitive letting rates that will quickly pay back any investment on the property itself.

On the other side of the spectrum are commercial properties that hold very little hope as commercial mortgage hotspot as they are in locations that are impossible to let out and have little hope for attracting new tenants.  This includes properties that are located in areas that are already densely populated with merchants or in run down shopping complexes that most people have no reason to stop by.  When the market was more stable buyers would cling to these locations as great starter spots, but with a weak demand the interest is low and thus demand is lower creating very low letting prices and potential.

 
 
 
 
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