MORTGAGES, REAL ESTATE

A recent survey has shown that the number of mortgages approved for house purchase dived by 23% during June to hit a new record low in the UK. Only 21, 118 loans were approved for purchasers, 66.9% fewer than in June last year and the lowest figure since the British Bankers' Association began collecting the data in 1997. The key driver behind this fall in mortgage approvals is undoubtedly the disappearance of Buy to let investors from the market. Since March, when BTL criteria really tightened up, it has always been necessary for an investor to put in at least a 15% deposit into a BTL purchase. Before this point, professional investors could get away with putting in a 10% deposit or even a “No Money Down� deal under the right circumstances. Keeping the portfolio as highly leveraged as this meant that the ambitious could build huge portfolios in a short relatively short period of time. Look at the example of a purchase of a £100, 000 property which achieves £500 per month rent. Last year it would have been possible to purchase this property with a 10% deposit at a rate of c. 5.79%. Today it would be necessary to put in a deposit of a deposit of c £25, 000 and the best available rate would be somewhere around 6.09%. Looking at it from the investor’s point of view, would you put your money into an investment which could be worth considerably less in a few years time? Now, as the investors are not currently there to buy houses at the <£125, 000 level, these homeowners are not present to buy onwards at the higher price level, and so on. In the meantime, as there is now a shortage of cheap rental properties coming onto the market, demand in the rental sector is growing quickly. This is leading to rents growing across most of the UK. First Time Buyers are therefore getting squeezed in every direction. House prices may be coming down but the shortage of mortgages and an increase in rents mean that FTB’s are actually in a worse situation than ever! In “Mortgages, Money and Magic�, I reveal an easy to follow method that shows how a First Time Buyer can get a property without a deposit and go on to own the property outright within a decade without actually doing anything out of the ordinary! This plan is bang up to date ��" and fully Credit Crunch tested.