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According to the experts...
Property transactions throughout the UK in 2012 are likely to be flat with predictions ranging from a 2% increase to a 5% fall in property prices. As in 2011 there will be hotspots of activity where property will be in demand. The ongoing economic uncertainty in the UK and destabilising effect of the eurozone crises will continue to dampen confidence in the market. Mortgage lending is also expected to remain flat this year as the banks have been ordered by the Governor of the Bank of England to beef up their reserves with money earmarked for lending.
The latest credit conditions survey from the Bank of England suggests that although lenders plan to introduce more deals to help those with small deposits over the next 3 months, credit scoring criteria will get tougher limiting the number of borrowers able to secure loans. This approach has been evidenced by a slight fall in fixed rates for those with a 10% deposit with more lenders entering this market.
It is not all doom and gloom as those potential borrowers with a healthy deposit or equity in their home and with a good credit history should be able to secure some extremely competitive deals. For example a number of lenders are offering 5 year fixes under 4%.
One area expected to continue to grow this year is the Buy to Let market with banks and building societies keen to exploit the boom in the rental market. Rents which already stand at a record high in some locations are expected to rise by a further 5% this year. Tenants unable to secure a mortgage are having to compete for houses to let. With Buy to Let lending accounting for 10% of lending last year this figure is expected to increase this year with new entrants to the market. After a 3 year absence Santander have re-entered the market which sends out a positive message to the sector. Both rates and arrangement fees are falling as lenders bring out new deals to attract business. Other positive changes to the market have seen some lenders prepared to lend up to 80% loan to value which was unheard of two years ago. We have also seen a new two tier approach to products and prices for higher income earners earning over £50,000 a year looking to secure Buy to Let finance.
As always it pays to take advice for the most appropriate deal to fit your circumstances.
(Your home may be repossessed if you do not keep up repayments on your mortgage.)
For more information and independent expert advice you can contact Park Grove Mortgages Ltd on 0871 315 7203
