Cracks Showing In Housing Market?
Posted by: Jenny Challenor
October 12th, 2007.
The Royal Institute of Chartered Surveyors announcement of a slowdown in the housing market will bring fresh concerns to homeowners; however, we don’t think it’s time to panic.
The arrival of HIPs, a period of rising interest rates and the uncertainty of financial markets in the summer have all played a part in creating uncertainty amongst those wanting to buy a property. The general consensus is that people are blinded by the confusion and are now fearful of making the wrong move, in case they are left financially disadvantaged.
Whilst we expect some level of price correction in the housing market, we don’t think we should be preparing for a sharp downturn. The economy remains relatively strong and this, coupled with a lack of affordable housing, is underpinning the market as a whole.
The biggest concern will be for borrowers who are mortgaged with high loan to value rates and/or have an impaired credit history. For those in this situation, any downturn in the value of their home is going to have an impact. The problem will surface when they come to remortgage to get a better rate. What many borrowers could find is they are trapped paying their lenders’ standard variable rate, which is typically much higher.
We have seen a number of lenders pull out of the adverse credit market because of the global credit crunch. There is now less choice for the adverse borrower than before. For those remaining lenders, their reaction has been to increase rates and tighten lending criteria. This may be an effective measure to deter those not in a strong financial position from buying, but doesn’t offer relief for those already in the market. We don’t think borrowers should bank on seeing any significant relaxation in criteria for some time yet.
The only way forward for worried adverse borrowers is to prepare. This means cutting back on spending, decreasing debts and speaking to an independent, whole of market, mortgage adviser as early as possible. To speak to a Torquil Clark Mortgages Independent Mortgage Adviser, call 0800 294 7134 or get in touch online.
This entry was posted on Friday, October 12th, 2007 at 11:51 am and is filed under Mortgages.
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