Mortgages
· The FSA announced this week that there will be tough new standards to ensure responsible lending. Mortgage applicants’ incomes will in all cases be verified and an affordability test carried out.
· 43% of mortgages approved in 2009 and the first quarter of 2010 were self certifications. Mortgages without income checks would not be agreed under the new proposals.
· Those with interest only mortgages will need to show a plan for repayment rather than assuming that rising house prices will cover them.
· The Council of Mortgage Lenders has responded by recognising the inevitability of change but that there will be side affects for consumers in the process – it will be harder for households to obtain a mortgage and higher administrative costs to process applications will no doubt occur.
· They note most cases of mortgage arrears and repossession are not attributed to failures in the affordability assessment in the original lending decision but in changes to the borrowers’ circumstances with 40% due to loss of job and only 10% due to over commitment.
· They request consideration for consumers who want to transfer to interest only mortgages for short periods of time to manage financial difficulty.
House Prices
· Public sector job losses, spending cuts and mortgage credit unlikely to improve look likely to squeeze household incomes with resulting downward pressure on house prices. Furthermore rumours of a second crunch and a double dip recession do little to build confidence in the market.
· There are numerous theories on how long interest rates will stay at 0.5% but it seems there is a consensus they will stay low until the end of 2011, which should support property prices in the short term. RICS report in June that in Scotland the net price balance picked up markedly in the last 3 months.
· The summer season is traditionally slow on the number of transactions and there is no change to the trend this year.
Advice for Buyers
· We advise that in this climate is it more important than ever to research the area and property, and carry out thorough due diligence before completing on a purchase.
· There is increasingly room for negotiation.
· Ensure you purchase the right house at the right price to suit your personal reasons. Those buying somewhere to live remember you are purchasing a home.
· For those looking to move in the near future consider moving sooner rather than later prior to mortgages becoming even harder to obtain. Do the maths so you know how your finances will be affected in the event of a series of interest rate rises prior to committing.
Prime Property
· Research for Santander Mortgages has shown a five fold increase in residential homes worth over £1 million in the UK as a whole since 2000.
· Despite a 29% reduction in properties valued over £1 million in the UK in 2008 & 9 this end of the market, particularly in London and the South, is nearly back to its peak of early 2008.
· 78% of homes in this range are in Greater London but Edinburgh is the first non-South East City in the league coming in 11th place with 1,165 properties valued over £1 million in 2010 compared with only 16 in 2000 an increase of 10,306%!
· The property analyst at Prime Location.com says that the number of properties for sale at this level has increased considerably in the last year but so to has the number of people looking to buy helping the recovery of the prime market.
Saint Property
· Saint Property helps buyers looking to purchase property in Scotland offering property search services as well as advice on due diligence and negotiation.
· We cover both residential & rural property ensuring a property purchase decision is made with sound advice.
· We offer a pre-property purchase consultancy service for those who have found a property but need a second on opinion. We evaluate all aspects of a property on the purchaser’s behalf and report with an unbiased view of our findings.
· Please forward this to anyone who may be interested in the Scottish property market.
· Contact us for advice on +44 (0)131 478 4533 if you are considering purchasing a Scottish Property.
Tags: advice for buyers, House Prices, Matthew Sinclair, mortgages, prime property, Saint Property, £1 million homes
