On Thursday 5th February 2009 the Bank of England brought the base rate down to an all-time low of just 1 per cent.
Landlords with interest only and tracker mortgage arrangements stand to benefit from the cut. And with some analysts predicted the bank rate may come down further, fixed rate loans are looking distinctly unattractive.
“While borrowers on tracker rates will welcome the rate cut, it is doubtful whether it will create the conditions to accomplish significantly more new lending”, said CML director general Michael Coogan.
“It will not be a surprise if banks and building societies try to prioritise savers in this very low interest rate environment. For borrowers who remain in employment, affordability is unlikely to be an issue at the moment.
“But, if the rate cut helps businesses, and therefore helps to keep people employed, this will at least help to cushion the impact of the recession on the housing and mortgage markets. In practice, rate cuts alone won’t achieve this objective as they’ve become a more blunt instrument - they are only one of the tools being used to try to help the UK weather the recession.”
For the Royal Institution of Chartered Surveyors, chief economist Simon Rubinsohn said the cut “might provide a small boost to the current weak levels of confidence in the economic outlook, but this decision urgently needs to be supported by other measures.
There’s still a real need to stabilise the economy and increase the supply of mortgage finance to ensure an orderly housing market. The various measures announced by the government should go some way to achieving this providing they’re introduced as swiftly as possible.”
Head of residential investment at Jones Lang LaSalle, James Thomas, said employment was now a key factor in determining homebuyer sentiment.
“Rising unemployment is stifling demand and we anticipate more home price falls in 2009. The main things to watch for in terms of stabilization in the market will be an unfreezing of the mortgage market and an improvement in the jobs market. Neither of these is likely any time soon. In the meantime, trading volumes will remain thin, though shrewd investors may be able to take advantage of current conditions and pick up bargains from distressed sellers.”
* Leading repossessions specialists Moore Blatch has warned residential landlords that they risk becoming ‘unmortgagable’ if they declare themselves bankrupt in 2009.
The company says it is increasingly seeing repossessions that have been compounded by a cavalier attitude towards credit with the popular misconception that it can all be written off through bankruptcy or IVAs.
However, Moore Blatch explains that the mortgage market for bankrupts has changed significantly, and the pre-credit crunch environment, where those individuals who had been declared bankrupt could easily secure a sub-prime mortgage, has changed.
According to mortgage data provider, Trigold, in January 2007 there were fifty six thousand mortgages available for people who had been declared bankrupt - in the two years since, this has dropped by an alarming 2,557 per cent.
Moore Blatch envisages that finding a mortgage at a reasonable interest rate is likely to be difficult for up to a decade and is advising that bankruptcy should be the very last resort.
Paul Walshe, head of lending services at Moore Blatch, stated: “Even though bankruptcy does not automatically signal that you are unmortgageable, it does leave a very visible scar on your credit history.
“Up until the credit crunch it was possible to find lenders that would provide mortgages to bankruptees, and this led to a popular misconception that you could borrow and forget about paying it back with no long-term consequences.”
About the Author
This and much more information for landlords, can be found at Residentiallandlord.co.uk. Other features include; document downloads including an assured shorthold tenancy agreement, buy to let mortgages and rates, landlords insurance suppliers, residential auctions and much more besides.
Article Source: Content for Reprint
[Source : Full text finance | investing articles - Content for Reprint]
Please take the time to visit original contents source to find out more about topic you are interested.
