The condition of the housing market is one of struggle and slow recovery. Buyers are either shut out of the market due to cost or they cannot raise the capital to purchase. The number of buyers on the market has fallen and it will likely continue to fall as inflation increases, tax increases and many lose their jobs and public benefits due to government spending cuts. Without buyers, especially first time buyers to boost others upward on the property ladder, homes remain on the market without buyers and that further pushes house prices down.
Lower house prices, constricted lending, low demand from buyers, more houses coming to the market, and a possible interest rate hike by rate regulators on the way and it doesn’t look like there will be a boost in the housing market anytime soon. These same conditions are what will push the buy to let market upward. More and more investors are entering the buy to let market, even some are going to countries where prices are even farther down than in the UK.
Would be home buyers can only turn to living with others or to rental property when buying is out of reach. The demand on rental property has been tremendous of late. Supply has dwindled especially for quality rental properties and top money can be asked for those properties. Rental demand is expected to be high throughout the rest of 2011 and even into 2012.
There are however some down sides to the buy to let market. The financial crisis that has caused repossessions and an increase in mortgages going into arrears has also caused many landlords to do without expected rental income. Many landlords report a problem with renters being behind in their monthly rental fees.
Still there are many entering the buy to let market and it appears there will be plenty of demand to warrant more investors bringing rental properties in to fill demand. In fact homes that were hoped to find first time buyers are being purchased as a buy to let property. Many homeowners looking to upgrade into larger properties that have found it difficult to obtain buyers are finding interest in the buy to let market. It is a win-win situation for both the seller who finds a buyer and the investor who often gets an attractive deal on a rental property due to the seller becoming more aggressive to sell. The amount of properties on the market for sale has made it possible for investors to add quality properties to their portfolios that will presently bring in good renters and good income but later on will have a high return should the property be sold once the market recovers.
Lending in the buy to let market has been reported as being better in the last few months. This has allowed many more to either add to their portfolios or to invest in rental property. For those finding that the cost of investment properties is still out of their reach some have found good opportunities outside of the UK by taking advantage of the pricing and governmental programs in areas such as Spain and the US. It is definitely a good time for the buy to let market and if investors can take advantage now then analysts expect a long and prosperous outcome in the years ahead.
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The number of first time buyers coming into home ownership has fallen and recent data revealed that the average age of a first home buyer is 37 years of age. Without the influx of first time buyers to the market the property ladder has become stuck. There are no buyers for starter homes and homeowners wanting to find buyers so they can sell their current home and upgrade have found it difficult to do so with the supply of new buyers declining.
Recently the Housing Minister Grant Shapps held a summit meeting to discuss ways to bring new buyers into the market. He brought industry lenders together to offer explanation and possible solutions to the issue of first time buyers being shut out of the housing market and home ownership. It could be that the tides are shifting for first time buyers already as new mortgage products are coming to market.
Moneyfacts.co.uk has released recent information that shows some constriction in lending to first time buyers has been easing in recent months. Slowly lenders have been reintroducing higher loan-to-value (LTV) mortgages into the market which is exactly what is needed as high deposit requirements have been one issue that has been specifically holding first time buyers out.
The released data showed that there were 214 mortgage deals available at 90 per cent LTV, which would require a 10 per cent deposit. This is actually up from the number of 90 per cent LTVs that were offered in February 2010 which was 144. There are even more deals available at 85 per cent LTV which involves a 15 per cent deposit. There were 560 on the market and that is almost double the number of 85 per cent LTVs a year ago of 310.
Moneyfacts also reported that the rates on 90 per cent LTV mortgages were falling making them more attractive than in months past. The current average rate on a two year fixed rate mortgage deal at 90 per cent LTV is 6.09 per cent which is lower than the 6.48 per cent offered a year ago. On a 75 per cent LTV the average rate a year ago was 4.27 per cent and now the average is 4.03 per cent.
“Higher LTV mortgages are making a steady return to the mortgage market,” said Louise Holmes, spokesperson for Moneyfacts.co.uk.
“This will be welcome news to borrowers with small deposits, particularly first time buyers who have struggled to find products which meet their needs.”
“Over recent months some lenders have increased their rates and expanded their number of higher LTV deals, suggesting that the market could be returning to a competitive, rather than risk-based state.”
The fact that house prices have declined and mortgages with lower deposit levels are coming to market is a great sign for those hoping for home ownership. It is estimated that there are 1.4 million households wanting to own a home so there is a large market for those wanting to find borrowers. The housing market could use a boost and making mortgages obtainable is a good start in helping bring more first buyers to the property ladder.
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Wednesday, 23 February 2011
Buy To Let Mortgages | Mortage Deals | Mortgage Advice
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