During recent weeks and months, much has been said about the overall state of the economy. But banks are beginning to lend again and at much more attractive rates as a result of interest rate cuts over the last 6 months.
The criteria for lending has seen dramatic changes instigated by the lenders. Just 12 months ago some lenders were offering 95% - 100% mortgages.
Now, however, obtaining mortgage finance is becoming increasingly difficult, unless the applicants have deposits of at least 25% or equal percentage in equity for those looking to re-mortgage. First time buyers (FTB's), as well as buy to let owners who bought in the last few years, are most likely to be affected by this.
Many FTB’s are not in the position to afford a 25% deposit unless the property values continue to fall – a point that some analysts are still making thereby believing the bottom of the market is yet to arrive.
However, according to the NAEA, the proportion of FTB’s looking to put a foot on the property ladder more than doubled in the first two weeks of 2009. 22.5 per cent of registered buyers were FTB’s, up from 10 per cent in December.
But are there deals there to be had? Many owners of properties sub £200,000 looking to sell their properties are potentially facing losing capital especially if they have bought in the last 2 years. Many, therefore, make the decision to stay unless their move is essential.
The lack of affordable properties for FTB’s has led to a continued buoyant lettings market, particularly in properties up to £1000 pcm. However, many tenants are only securing their AST’s for up to 6 months, clearly believing the end is in sight.
During the end of 2008, many agents have received fewer and fewer enquiries from vendors considering selling their properties, with many opting to 'improve not move'.
As we get nearer the spring however, many of the Fisher German offices have noticed a definite upturn in the numbers of enquiries to provide market appraisals. This is backed up the NAEA who state 'agents across the UK reported a slight increase in activity at the end of 2008 early 2009'.
Property prices remain depressed and are predicted by some to drop a little further. However, with money being cheap to borrow (if you find yourself with a 25% deposit) then some may consider buying just before the bottom of the market, assuming you are looking long term, to be a very shrewd move.
With a slight increase in enquires from people looking to buy in the first week of February – is this the start of the property revival?
For further information, contact Richard Hutcheon 01905 459427 email richard.hutcheon@fishergerman.co.uk
