Tuesday, Sep 14, 2010
The banks are wary of the property market
Independent: House prices slide as banks reject first-time buyers
'First-time buyers were on average being asked for deposits of 24 per cent in July, up from 21 per cent in April and May. Overall, the CML said that mortgage volumes "still represent a very weak market". The situation last week prompted Steve Morgan, the chairman of housebuilder Redrow, to call on the Government to establish an insurance indemnity scheme to support first-time buyers, arguing that a lack of home loans was hampering the sector.'
Posted by quiet guy @ 08:33 AM (894 views) Add Comment
6 Comments
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1. techieman said...
"House prices fell to their lowest level for 15 months in August" deliberate slip up? is there a bear on the independent? :).
2. sibley's b'stard child said...
Surely that should read: 'house prices slide as FTBs reject lunacy'.
3. happy mondays said...
Or read,
LUNACY IN THE BANKS! Ftb's leaving the asylum, causing a fall in house prices but a rise in common sense!
& now for something completely useless...
4. str 2007 said...
I don't think the banks are benevolent enough to protect anyone from negative equity other than themselves.
It can therefore be assumed that banks were expecting falls in the region of 11% and are now expecting that to be 15% (giving them a 10% cushion to cover repossession).
FTB's you've waited this long - stand back a while and watch your deposit grow as prices fall.
The BTLers you're competing with are being advised to seek a 7-8% yield.
To put that into context a £150k flat should be returning at least £950 per month in gross rent.
If it's only returning £700 per month gross yield then it's value is about £110 k. Which would point to a 27% fall in value.
(My figures are based on 7% gross ield attained in an 11 month year, ie 1 void month).
5. sureseam said...
There are a few cracking comments to this article on the Independent web site.
To pick one:
>> "House prices slide as banks reject first-time buyers"
>> should read
>> Banks slide as first-time buyers reject House prices
My understanding is there is a reduced supply and a reduced demand in the mortgage market. Any illusion of balance and stability does not really mean that this ship isn't sinking. But of course it does grant the VI crowd a licence to witter.
6. mark wadsworth said...
It's all good :-)
A buyer's strike, that's what this country needs. If all FTBs and STRs exercised a bit of solidarity and flatly refused to buy for (say) a year, then house prices would fall by a quarter at least.