As lending relaxes property investment increases!
It’s what most of us have been waiting for, the small time frame between lenders relaxing their criteria and property prices increasing.
We all knew that lenders were going to need to increase their loan to value rates, and that when they did it would make a massive difference to the property investment market.
Over the past few months half decent rates had been reserved for investors with 40% deposits. Now i do not condone most no money down deals, i think they lead to more problems than they alleviate.
However! the case for the investor with a healthy 20% deposit should be heard, they have a large amount of equity in their property and should now be relatively safe from negative equity.
It seems the lenders now agree.
What are the new rates like?
Since the BOE base rate reached 0.5% products requiring a 15% deposit have risen from 169 to 231. And the number of products requiring just 10% upfront has gone up from 89 to 105 in the last month alone.
This is certainly a massive difference to a year or even 6 months ago.
Nationwide has already announced a new influx of deals, including some at 85% loan to value and they have also released some of their best rates at 70% ltv, from their previous at 60%.
They have even released a special 90% ltv rate for investors that hold one of their flexaccounts. These start at 4.63% for a 2 year tracker.
The Woolwich have also released details of their new 75% ltv rates, this is the first time the lender has made it to 75% for at least a year. The new mortgages include a lifetime tracker on 2.94% and 2 year fixed on 3.99%.
Abbey also have a new range out, these are exclusively for their current account customers. One of their best is a 90% ltv 3 year fixed rate at 5.99%, their cheapest mortgages are now available at 70% from 60%.
So why the sudden change?
It seems that lenders now believe that the worst is behind us, in short if they are offering 90% ltv mortgage they believe that property prices will not drop more than 10%, in fact they believe that prices will increase in the future, as now being reported in most news channels.
Just last month hsbc pledged to lend an extra £500m at 90% ltv by the end of this year!
Add this to the political pressure being put on lenders by the government, this was summed up by the governments own lending house northern rock as they released some of the best ltv rates seen for over a year!
So should i buy now?
If you are looking at getitng into property investment there has never been a better time to invest, there are still seller under pressure but now there is also the promise of some competitive rates. This means that not only can you buy cheap, you can also borrow cheaply!
We don’t expect this to remain the case for long so why not add or start your portfolio with some discounted property now!
Also check out our UK Buying Guide for handy hints and tips.
It’s all the NINJAs fault!
As we all sit around wondering why our shares are worth 50% of their initial value and our savings are returning a staggering 2% per annum, i think its time to blame NINJAs, or more importantly, the people that lend them money!
If your thinking, he’s finally lost it, hold on and let me explain.
I’m not talking about the type of NINJAs that wear black pyjamas and lurk in dark places! Im talking about “No Income, No Job, No Assets” N.I.N.J.A.s.
It’s because the lenders lent money to these massively high risk characters that we are in the poaition we are today.
There is a reason NINJAs do not own their own houses and it’s generally because they can’t afford both the deposit and the monthly mortgage payments. With 100% mortgages available many high risk applicants decided the time was ripe to take their first step onto the ladder.
Suddenly all the spare cash that was swilling around at the beginning of the century was quickly used up, much to the lenders delight.
Bankers then took all of these loans, mixed in some better ones and sold them to other banks who found the high interest rates attractive.
The problem arose when these “fixed rate” mortgages came to fruition!
Suddenly Joe Blogs went from paying an affordable rate to one miles outside his comfort zone, they default on their payments and the heavily traded loans that were made are found out to be be worth about the same as the paper they were printed on!
This may have been manageable if their hadn’t been over $1 trillion worth of these loans in the market!
Any lender with a high risk business model eventually came a cropper as banks bit the bullet and decided to stop lending to one another.
From there on i’m sure you all pretty much know the story, banks are “helped out” by the Government and we all eventually suffer.
One point worth noting is that the banks that took these massive gambles that eventually doomed us all were rewarded by being taken over by the Government!
Interesting seeing that if any small business owner made such a colossal cock up we would be on the street before we could say Northern Rock!
