QCFP Questions Who Can Afford the Mortgages in the Present Scenario
In this property report, QCFP looks at the highly spoken about new buy scheme which was supposed to make available homes and mortgages at extremely affordable rates to prospective home buyers. The project was announced with much fanfare by a person no less than the Prime Minister David Cameron. Details provided when making the announcement said that people who wanted to purchase homes would be able to get mortgages with just 5% down payment. Prices of properties were in the region of £125,000-£ 250,000. When making the announcement the Prime Minister did not read into the fine print of the details which were not disclosed to the gullible public. They were not told about the new lending criteria which were being considered by mortgage lenders. People had their hopes raised when listening to the announcement only to realise later that they were being asked to obtain mortgages which they could not afford.
QCFP Looks at the Reasons Why the 95% Mortgage Has Become Unaffordable
There is no shortage of mortgage lenders who are willing to offer mortgages with just 5% down payment. While one set of mortgage lenders are looking forward to charging higher rates of interest when making available such mortgages the others are reading out the fine print which was not disclosed earlier. They are telling people that they will have to provide a guarantor who can provide further collateral against the mortgage to safeguard themselves from losses in the event of a default. Lending institutions have also brought in new criteria, which require people to have impeccable credit scores before they can even think about applying for a mortgage. These factors have combined together to make the availability of the 95% mortgage unaffordable.
QCFP Asks How Things Can Change for the Future
People in the country have been facing a problem with wage cuts over the last two years. They have not seen any increase in the wages they were paid and are also left grappling with the problems that inflation has brought in. People are barely able to save money for the 5% deposit that was promised to them against a mortgage. Now they are being asked to do more, which is cutting away a large section of prospective home buyers from considering a purchase. Under the circumstances, it can be said that the properties being constructed will soon end up in the hands of commercial investors who may look forward to taking advantage of the situation. Things cannot change in the property market unless the government stands true to its word and scraps the fine print which they did not disclose earlier.
QCFP Looks at the Problems People Face in the Country
In this property report QCFP takes a look at the kind of problems, which are being faced by the people in this country. People had already been grappling with a number of issues, which had made life difficult for them. They have been hearing about the economic crisis and the recession for the last four years while being told that a turnaround is just around the corner. They have believed their elected representatives and hoped that things would change for the better. Unfortunately, no relief is in sight as the difficulties only seem to be increasing. Figures of the unemployed are shooting higher while people with jobs are getting paid lesser. Inflation is rising along with interest rates for mortgages and taking away whatever people earn. People without a home and not liable for mortgage repayments have another issue to contend with as they are being asked to pay high prices for rented accommodation. The problems that people face look almost endless even as the authorities seem to be doing nothing to improve the situation.
QCFP Talks about the Property Market in General
There was a sense of optimism among people that the property market would see a turn for the better this year. A slight increase in the prices of properties was seen in March, which could perhaps have fuelled such thinking. However, with the end of the stamp duty holiday on March 24, prices of properties have begun to slide all over again. No improvement is being predicted, which means that people will have to witness the erosion of any equity they have in their homes. With the increase in interest rates announced by mortgage bankers it is certain that more people will be facing the prospect of repossession over the next few months.
QCFP Reports Government Wants People to Do More
Some elected representatives have made statements that people will have to do more in order to improve the economy of the country. The question about what people can do in a situation where they see no positives for themselves must be asked as people would have done everything possible within their means. Asking them to do more at a time when the government is not in a position to make any contributions would be frustrating them further. Interest rates for mortgages have risen even as prices of properties are dropping. The new buy scheme which was proposed by the government has turned into a damp squib taking away any hopes that people had about the property market. No efforts are being seen from the government to bring back thousands of jobs, which have been outsourced to other countries. Under the circumstances, it can be said that the outlook for the rest of 2012 will continue to remain negative in the minds of people in the country.
QCFP-Recession Not Allowing People to Accumulate Savings
This investigative report from QCFP talks about the recession in the country which is playing a large role in determining the way people use the money they earn. Things have come to a stage where savings are dropping constantly while no change has been seen in the numbers of homeless in the country. People are still hoping that they will be able to climb up the housing ladder sometime soon but are not in a position to accumulate the savings required for the down payment. Average wages in the country are said to be in the region of £ 25,000 while the cost of a home is around £ 160,000. Banks are demanding around 15 to 25% as a down payment before a mortgage can be approved for the purchase of a property. This means that people will have to accumulate around £ 25-£ 40,000 before they can even think about looking at a property. People are not in a position to save £ 5000 in the conditions that are prevailing. In these circumstances how will people think about climbing up the housing ladder?
QCFP Says Saving Money in Banks Not an Option
People always believed that the only option they had when trying to save money was to deposit it in a bank. This is no longer a viable option because banks have taken away the benefit which they earlier offered. While they are willing to accept money from people as savings, they show a marked reluctance to pay a higher rate of interest or allow people to withdraw the money when required without a penalty. It is circumstances like these which are forcing people to look elsewhere while trying to save whatever they can in an attempt to climb up the property ladder.
QCFP Mentions First Timers Are Reluctant to Invest in Properties
First-time home buyers are showing a reluctance to purchase homes for themselves even at the cost of paying high rental values to commercial landlords. They are concerned that they might be made redundant and will face difficulties if they make investments in the property in the present conditions. The fact that it will take them a long time to accumulate the money required for the purchase of a home is also something that concerns them. Prices of properties have dropped below the £160,000 mark but there is a lack of interest among people to make purchases. Mortgage lenders are making it no easier by charging higher interest rates while not being ready to pay higher interest rates on savings. In the conditions that are prevailing on it is likely that the property market will remain in the doldrums that it presently is in.
QCFP Talks about Price Falls along with Interest Rate Hikes
In this property report, QCFP looks at the price fall which has been noticed throughout the country in April 2012. The property market has continued to slide with the fall in April being 0.2%, which is the fourth time that prices have fallen in the past five months. The prices of properties in April 2012 are estimated to be down by 0.9% in the corresponding period last year. A warning has today been issued by Nationwide that property prices will continue to stagnate at the current levels for the rest of the year because of a lack of confidence among households. People in the country are worried that the chances of an economic recovery taking place are receding. The fall in the property market is being seen at a time when mortgage lenders have decided to increase interest rates making homeowners pay more for the mortgage borrowed. The happenings in the last two weeks can only mean more trouble for homeowners and prospective buyers throughout the country.
QCFP Says People Will Find It Difficult to Purchase Properties in the Future.
The Bank of England has today confirmed that the rise seen in mortgage lending at the beginning of the year has now ended. Availability of mortgages is going to be tightened in the coming months as lenders impose strict criteria upon people who want to purchase a home. While a number of mortgage bankers have already made it difficult for people to obtain interest-only mortgages, the Co-operative bank yesterday withdrew from making such offers altogether. This leaves prospective buyers with little choice but to accumulate a large amount of money before they can even think about purchasing a home.
QCFP Asks What This Means for the New Buy Scheme
People had been hoping that the new buy scheme which is being promoted by the government will provide them some relief from the problems being faced and give them an opportunity to purchase a home for themselves. While they will certainly get a mortgage by making an upfront payment of only 5% of the value of the property, they will have to contend with higher interest rates and falling prices of properties. They could soon be trapped into a situation from which it will be difficult for them to get out. The situation as it currently stands can only mean more trouble for existing homeowners and prospective investors who are looking forward to purchasing a home.
QCFP Points at Interest Rate Hike Effective Today
QCFP talks about the interest rate hike which is being made effective by mortgage lenders across the country from today 1 May 2012. Mortgage bankers across the country will be increasing the standard variable rates of interest by a margin which will affect homeowners to the tune of £ 180-£ 200 a year. Borrowers from Halifax are supposed to be the worst affected as they outnumber the others by far. 850,000 borrowers from Halifax will be required to spend an additional £ 200 a year towards the mortgage they borrowed. Mortgage bankers had been proposing interest rate hikes over the last two or three weeks and have decided that they will be effective from 1 May. For millions of borrowers who are already going through a difficult phase it is going to be a time when they have to start worrying about additional repayments even as they may or may not have managed to meet the commitments of the past month. The interest rate hike proposed by mortgage bankers is going to leave a large section of the population with a bad taste in the mouth from the very beginning of the month.
QCFP Asks for the Justification for the Interest Rate Hike
Mortgage bankers could perhaps have considered the economic conditions in the country before deciding that they had to make changes to the interest rates which were being charged. The Bank of England has made no changes to the base rate of 0.5% and there is certainly no shortage of cash in the vaults of banks that are flush with funds provided by the government. Under the circumstances, they must be questioned as to why they have decided to increase the interest rates at this juncture. Could they not have waited for some time before going ahead and heaping more trouble upon people?
QCFP Wonders How People Will React
People in the country are already facing plenty of trouble because of inflation and lower wages, which is making it difficult for them to manage household expenditure. Asking these people to spend an addition of £ 15-£ 25 a month towards additional mortgage repayments is definite to bring about reactions, which will not be pleasant for the economy. A large number of people will remain trapped in the home they purchased because they would today be holding on to negative equity. Unable to move from their property and being restricted from switching over to cheaper deal, which may be available, will leave these people frustrated. It can be said with a degree of certainty that people would perhaps hold the opinion that nothing more can be expected from the authorities in command and resign to the fact that they could soon be made homeless. Mortgage bankers have definitely made May 2012 one that people will not forget for a long time to come.
QCFP Points out That Buyers Are Still Investing in London
This property report from QCFP talks about the effects that the property market was supposed to face after the end of the stamp duty holiday. Property dealers and agents had reported that the withdrawal of the stamp duty holiday would have a drastic effect on the property market. However, it is now being reported that no drop in Property Sales has been noticed in the city of London where buyers are still enthusiastic about purchasing properties with a value of £ 2 million or over. Agents dealing with buyers have commented that they are not even renegotiating prices or asking the sellers to share a part of the stamp duty which is now being imposed. The report is certain to lead people into believing that the property market is finally making a recovery because of the confidence imposed by buyers in London.
QCFP Takes a Look at Investors in London
Taking a close look at investors who are making a beeline for properties in London it must be mentioned that a major portion of the investors is coming from Southeast Asia and the Middle East. These are people who are looking forward to bringing in investments into the country. They are not looking forward to purchasing flats or homes, which are at the lower end to the value. They are only making investments in properties that are worth £ 2 million or more. These are not the people that will approach lending institutions for a mortgage before concluding a deal. They have the finances available with them and are capable of making the investment required without having to go through any kind of hassles.
QCFP Asks Whether This Is the Situation around the Country
The situation around the country would certainly be different as people are still unable to arrange the finances required for the purchase of a property. Sellers are facing a breakdown in discussions because buyers are trying to renegotiate prices. Mortgages are still difficult to obtain because lenders have imposed new regulations and have made it difficult for buyers to complete a property deal. The situation in London is different as it is flooded by foreign investors. The stability of the property market in the city of London can only be attributed to the kind of investments that are coming in and cannot be taken as a factor which will lead to the stability of the property market. The end of the stamp duty holiday may not have affected London, but it certainly has caused a number of problems for sellers and buyers across other parts of the country.
QCFP Points out That Lenders Exploiting Loopholes in Fine Print to Increase Interest Rates
This property report from QCFP looks at the millions of homeowners in the country who had obtained mortgages when interest rates were at their lowest. It is certain that they had signed on the dotted line without reading the fine print mentioned in the contract. Perhaps these people never considered that they would soon come across a situation where the fine print would return to haunt them. They would have placed their trust in the lending institutions they dealt with and believed that nothing could ever go wrong. Unfortunately, the very lenders who were enthusiastic about approving mortgages with low rates of interest are today looking forward to exploiting the fine print which always existed in the contract. They are making all attempts to use legal loopholes which people can do nothing about and increase interest rates for the money outstanding.
QCFP Mentions That Lenders Are Using the Easy Way out to Increase Interest Rates
In a report published today in the Telegraph it has been pointed out that lenders are looking forward to using the easy way out when telling people that interest rates of mortgages will be hiked. They are pointing towards clauses mentioned in the contract and telling people that they are legally bound to pay more because of a number of reasons. They cite a responsibility to the shareholders apart from their obligation towards the savers. The same lenders never make a mention of the kind of mistakes they committed and caused losses to the banks which required the taxpayer to bail them out. They never speak about why interest rates are being increased when the Bank of England has made no change to the base rate. They are certainly looking forward to taking the easy way out and burdening people with extra costs which they cannot afford.
QCFP Asks People to Educate Themselves before Getting into Mortgage Deals
This report will certainly send shivers down the spine of people who are looking forward to purchasing homes soon. Doubtless that it would also have made life uneasy for those that already have mortgages on their homes. Under the circumstances, it can only be suggested that people educate themselves about the terms and conditions of a mortgage before going ahead and signing on the dotted line. People cannot afford to commit mistakes, which will cost them dearly and will do well to look at any loopholes, which can be exploited by lending institutions. Purchasing a home can be a priority but getting into a trap which will be difficult to get out of is something that people should avoid at all costs.
QCFP States the Government Has a Major Problem on Their Hands
QCFP talks about the outstanding mortgage debt in the country which is currently given as £ 111,350 per household. Even more startling is the figure that this debt is owed by 11.2 million households. These figures are not coming down from history but have been calculated at the end of February 2012. About 8% of the debt is owed by people that borrowed interest-only mortgages and are nearing that the end of their term. These people have no strategy to return the money borrowed for the purchase of their home and will soon be required to vacate their properties. Countless numbers have also defaulted on mortgage repayments and are facing the prospect of repossession. The figures certainly indicate that the government has a major problem on its hands for which they will have to come up with a strategy. They cannot let millions of homeowners lose their homes because this will affect the property market as well.
QCFP Looks at the Government Measures to Ease Financial Crisis
The outstanding personal debt in the country is estimated to be in the region of £ 1.457 trillion for which the government has introduced quantitative easing measures. This indirectly means that the government is printing more money and pumping it into the economy in the hope that it will help reduce personal debt. Until this time, around £ 325 billion have been pumped into the economy and even more is expected soon. The measures which are adopted by the government are also fuelling inflation which they have not looked into. The quantitative easing measures are certainly not helping in easing the financial crisis that is being faced by the population in the country. The government will have to think about other measures, which will bring relief and perhaps even help gain a sense of control over the crisis.
QCFP Asks Why the Government Cannot Make the Money Available to People
If the government is looking forward to printing money in order to reduce the debt burden under the guise of quantitative easing why can they not provide the funds to the 11.2 million people that are sitting on debt’s worth trillions. In doing so the government will not just be helping people quantitatively but will also make it easy for them to gain a sense of ease from the burden they face. Quantitative easing will then become a reality which it presently is not. The £ 325 billion which were inducted into the economy are lying in the vaults of banks and have not reached the people who really need it. The government will do well to think in this direction if they intend to see the millions of mortgage holders retain their homes.
QCFP Says Buy to Let Investors Making Hay While the Sun Shines
QCFP looks at the trend which is becoming more evident in the market as individual home buyers are unable to purchase properties for themselves and buy to let investors are snapping up deals. The rental market has seen an upswing and values of rental properties are at their highest. People have been complaining that landlords are charging high rents, and a number of defaults have also been registered. This has in no way restricted commercial investors from completing property deals because they are looking forward to profiting from the shortage of housing, which is evident. Around 25 percent of all deals completed in the country are said to involve buy to let investors whose only intention is to make hay while the Sun shines. They are not picking up properties to give a boost to the real estate market but are doing so to profit from the shortage in housing. Unfortunately, they seem to have all the support they need from the authorities who be and continue to corner a large share of the property market.
QCFP Comments No Financial Restrictions for Commercial Investors
Unlike individual home buyers, buy to let investors are not restricted in any way and are able to obtain mortgages from lending institutions without any difficulty. A majority of the mortgages approved for such investors is in the interest-only category where they are not required to repay the capital borrowed in the initial stages. This facility is no longer available to individual home buyers who are required to have an income of £ 50,000 a year to be eligible for mortgages like these. With such facilities available to commercial investors why wouldn’t they want to cash in on the boom in rental values?
QCFP Asks What Is in Store for the Average Briton in the Country
Looking at the circumstances that are prevailing and the fact that commercial investors are grabbing properties, which are available, it must be asked as to what is in store for the average Briton who is looking forward to purchasing a home. They cannot get mortgages without a large deposit while interest rates have also been increased. Interest-only mortgages are out of the question unless people have the desired level of income that lenders want. Under the circumstances, it must be said that they will continue to remain homeless and keep paying commercial investors the high rental values that are being demanded. They will not be in a position to purchase a home for themselves unless the authorities make changes to the kind of regulations that have been imposed.
QCFP States Property Market Will Not Improve unless the Government Can Reverse Unemployment.
QCFP talks about the already high figures of unemployment which are prevailing in the country. When last reported these figures were said to be in the region of 2.67 million. People were either made redundant or were required to work for wages, which were far below what they could have expected. Reports have now emerged that another 100,000 jobs will be lost over the summer with over 40% of those being made redundant being under the age of 40. It is quite likely that the large numbers that are unemployed would have a percentage which would already have purchased homes with another section perhaps preparing to do so. The difficulties which confront these people will either make them sell their homes perhaps shelve any plans which they had to purchase a dwelling for themselves. This indicates that the property market is ultimately going to feel the heat and will again be subject to a beating.
QCFP Looks at the Reasons behind the Unemployment
When looking at the numbers of the unemployed one gets the feeling that the economic conditions in the country are the only reason why these figures seem to be moving up. There is definitely a connection between the economic conditions and the higher figures of unemployment. However, it is also necessary to look at the faster pace at which the population is increasing. A look will also have to be taken at the numbers of jobs, which have been outsourced to other countries. The authorities in command will have to act in a manner, which will not only reduce or curtail the population while looking forward to bringing back jobs, which were outsourced. Failing to meet these requirements will mean that the authorities will have to create jobs within the country which will be a difficult task.
QCFP Looks at What’s in Store for the Housing Market.
Doubtless that the housing market will be affected by the scenario that has been forecast because more people will be looking forward to selling properties rather than purchasing them. This will create an increase in the supply of properties, which will bring prices lower. People without jobs and with mortgages will not be able to hold on for long. They will be looking forward to taking actions, which will get them out of debts and will even be willing to conduct distress sales if required. The repercussions on the property market in the country are likely to be disastrous unless some actions are taken by the authorities to bring about an improvement in the conditions.
