Property sales continue to slump

As most people are aware the sale of properties in the UK has really fallen over recent months, and estate agents have reported amongst their poorest sales figures of properties for decades. A recent report has shown that property sales have now fallen by 40%. In the last three months estate agents have average around five property sales a month each, as property transactions continue to plummet, and homeowners looking to sell their homes are finding things very difficult, with many feeling pressured to reduce the price and sell to predatory buyers looking to take advantage of the slow market by offering desperate selling ridiculously low prices. Read more

Tags: stamp duty, everything, slow market, property sales, selling, mortgage drought

First-timer buyers ’should listen to Bank’s warning’

First-time buyers who have taken out interest-only mortgages should reduce their loans following the Bank of England’s (BoE’s) prediction of economic depression, one financial expert has claimed.

According to Fool.co.uk, those who have taken out interest-free mortgages to get a first foot on the property ladder could face bleak financial times ahead, as lenders tighten their financial belts.

David Kuo, head of personal finance with Fool.co.uk, said that the BoE’s Inflation report should set “alarms ringing” in the ears of first-time buyers.

“In future, lenders may tighten the credit-scoring criteria and choose to reduce the maximum loan to value (LTV),” he warned

Mr Kuo added that: “This will put borrowers who have taken out 90 per cent mortgages at risk, especially if the value of their homes decline sharply when they remortgage.”

Fool recommended that making overpayments as, according to its calculations, every £1,000 of those will reduce the loan by the same amount and reduced the interest bill by £1,500 over 25 years.

Meanwhile, according to the Royal Institute of Chartered Surveyors, house prices have reached their lowest point since the crash during the 1990s.

Tags: crash, Business Finance, GBP, inflation, lenders, foot, financial belts

Mortgage lending ‘drops to lowest levels for 2 years’

Mortgage lending dropped to its lowest level for over two years last month, according to figures from the Council of Mortgage Lenders (CML).

The statistics show a 25 per cent drop on gross mortgage lending compared with November and 21 per cent fall from the same figure recorded for the month last year.

Gross lending only reached £22.5 billion, the lowest amount since May 2005 and down from the £29.9 billion recorded in November.

Simon Rubinsohn, senior economist at the Royal Institution of Chartered Surveyors, said: “2007 may have been a banner year for the mortgage market as the CML data suggests, but the most timely indicators point to a sharp slowdown in demand for property-related loans.”

However, despite the effects of the credit crunch gross mortgage lending during 2007 reached an estimated £362 billion, an increase of five per cent from the £345 billion in 2006.

Meanwhile, mortgage lenders are putting increasing pressure on the Bank of England to help them raise funds to provide potential homeowners with loans reports the Financial Times.

Tags: data, crunch, gross mortgage lending, mortgage market, Chartered

Bankruptcy is a solution to debt

Despite the “stigma” attached to it, declaring yourself bankrupt is a “financial solution” to debt, according to financial experts.

The Consumer Credit Counselling Service (CCCS) said that most debtors are expected to opt for bankruptcy as an option to clearing debt over Individual Voluntary Arrangements (IVAs).

As the number of insolvencies is expected to rise in 2008, James Ketchell, spokesperson for the CCCS, said: “Bankruptcy seems to have a very bad stigma attached to it, and people for that reason do not go through with it.”

“However we view it as a solution, another way of sorting out one’s financial situation.”

Chartered accountancy firm Grant Thornton recently predicted that 10,000 individuals a month likely to become insolvent in 2008.

Due to Christmas debt 28,000 individuals are facing insolvency in the first quarter of 2008 alone.

In addition a Guardian ICM poll held at the end of December 2007 found that 55 per cent of consumers remained confident about their personal finances.

Tags: financial solution, Chartered, consumer credit counselling, solution, firm grant thornton, insolvency, business, financial situation."Chartered accountancy

AHIPP: Hips will benefit first-time buyers

The advent of home information packs (Hips) will offer many benefits to first-time buyers, according to the Association of Home Information Pack Providers (AHIPP).

Recently the Royal Institution of Chartered Surveyors claimed that Hips would end up making things more difficult for first-time buyers.

But AHIPPS has maintained that actually Hips and the Energy Performance Certificate included in it, will save first-time buyers time and money.

Paul Broadhead, the deputy director general of AHIPP, said: “The latest Hips allegations from RICS appear to have disregarded the many benefits that the packs will offer first time buyers – the most vulnerable of buying groups.

“With more information upfront and the costs incurred in gathering and providing information such as searches transferred to the seller, first time buyers will find their first step onto the housing ladder a more affordable.”

Because it is the seller of the house that must pay for the Hip, many expenses for the actual buyer will be discounted, Mr Broadhead added.

Hips became required for homes with three bedrooms or more on September 10th this year.

Tags: director, house, advent, Home Information Pack, Chartered, paul broadhead, gathering, AHIPP

Buy-to-let ‘out of reach’

The buy-to-let market is now out of reach of the ordinary investor, due to spiralling prices, it was claimed this week.

The Royal Institution of Chartered Surveyors (RICS) has found that the average deposit a would-be landlord needs to put down to get hold of a rental property is £65,000, or 30 per cent of the property’s value.

In early 2002, this figure was just £10,100.

The increase has been brought about by factors common across all parts of the housing market, such as high interest rates and contracting supply, but also by factors specific to buy-to-let.

In particular, rental cover ratios for mortgages are high, with most landlords being asked to ensure that rental yields on their properties will cover 125 per cent of the mortgage before a lender will consider handing the money over.

Senior economist at RICS David Stubbs said: “It takes more capital than ever to set up a buy-to-let investment. Would-be investors who have missed out on the impressive returns of previous years are now finding the hurdles to property investment are higher than they imagined.

“However, existing landlords should be able to use the equity in their past investment properties to fund the deposit needed for new ones, and this should ensure that demand from the buy-to-let sector does not dry up entirely.”

Tags: Chartered, surveyors, David Stubbs, investor, royal, equity