Property Rescue Blog

The dramatic 1.5% cut to base rates announced by the Bank of England last week has been welcomed by business, industry and homeowners.  Yet despite this fall in interest rates and the money that has been pumped into the banking system by the government, there is still a shortage of mortgages for first time buyers.

The approval rate for new mortgages has slowed substantially over past months.  Around 57% less mortgages are being approved than at this time last year.  The figures hit rock bottom in August when just £2.1 billion was put into new loans – the lowest amount since 2001.

In the main, banks and building societies appear to be passing on last week’s bank rate cut to its borrowers – at least in part.  But mortgages that benefit from falling rates, such as tracker deals, are in short supply, and new borrowers are expected to find a hefty deposit before lenders will consider their mortgage application.  The nervousness and uncertainty that overshadows the housing market makes it difficult to be optimistic.  Many analysts predict that the next two years will produce further falls in property prices with only a slow recovery in market activity.

Estate agents have borne the brunt of many a sarcastic comment during the rich pickings of recent good times, but they are suffering more than most at present.  The RICS (Royal institution of Chartered Surveyors) reports that on average estate agents sold under 11 homes during the quarter August to October this year – the lowest level since the RICS began keeping statistics back in 1978.  Agencies that expanded to meet the demand of a bullish market are now having to lay off staff or close branches to cope with the sudden downturn.

Anyone wanting to sell their home is at the mercy of what has become a global economic crisis.  An all pervading feeling of helplessness has engulfed vendors as they simply wait, hands tied, to see what the future will bring. 

Property Rescue provides a way of selling up and moving on despite current economic uncertainty.  The offer is simple and straightforward with no hidden extras to pay and no obligation to proceed.  Advice is free and confidential, and you can talk to an expert about your circumstances and your property.  If you accept Property Rescue’s offer for your home, the sale can proceed swiftly without the possibility of collapsing at a later date.  You can be assured that your sale will go through, leaving you free to start planning for the future.

For details and a free, no obligation chat, contact Property Rescue today.

With the property boom having come to a grinding halt, there has been a continual decline in inflated prices. From Newcastle to Manchester, and Birmingham to London, it seems no-one is clear from this slump.

Rumours have been circulating for a while now over the prospect of either selling your property to rent it back, or selling to move in to rented accommodation.

With the property market fluctuating, it seems smart to sell when the market is riding a wave, and buy once this boom has crashed. However, this takes serious knowledge of the property market and strong forecasting. Something perhaps better left to the experts.

This is because; you have to take in to account, the cost of moving (transportation / fees, etc) and the monthly rental fee. It is normally the case that a mortgage payment is lower than a rental payment, not to mention the fact that property prices will have to drop a reported 4% to make selling and renting worthwhile.

The gains from selling to rent can be huge, and have proven to save buyers around 30%. How? As the market has begun to fall, house owners have sold their property, moved in to rented accommodation, only to emerge back on the property ladder a few months later at a ‘discounted’ rate of around 30%.

Genius. Well it can be. The market can be futile, and unpredictable. For all the ups and downs we are subject to, property is genuinely a sound investment in the long term. Sit there long enough and you should be seeing a handsome profit. Nonetheless, I think we would all be happier if there were a way to lower our mortgage, move in to a bigger property, or simply increase the figure in the bank.

Selling and renting is building up quite a reputation for itself, and rightly so. There are however, some pitfalls of which you must be aware. Renting normally requires signing a minimum 6-month contract. If the market does suddenly rise, you may be a few months behind watching prices rise whilst you are contracted to rented accommodation. Naturally if you have the means to support both payments, then you could always rent whilst looking for a ‘bargain’ knowing that once one comes along, the deposit is happily waiting for you in your bank account.

Not only this, but we never truly know how long the slump will last, or whether it is actually a slump or just a slow down. As a result of this, it is important to understand the elements before subjecting yourself to them.

Buying and selling property involves a major decision, and for many of us it will be the biggest decision we ever make. If you see moving as an annoyance, and are not particularly optimistic about property prices, then perhaps think of other solutions – if you can find one. But, if you don’t mind the thought of moving twice, and have a view about where the property market will go, then perhaps selling and renting is for you.

As anticipated, the Bank of England’s Monetary Policy Committee (MCP) has cut interest rates today.  What was not anticipated, however, is the size of that cut.  Half of one per cent was expected, maybe one per cent if the bank was feeling brave, but very few foretold the massive one and a half per cent that the MPC obviously feels is required if it is to have any effect on inflation and the threat of recession.

This brings bank rates to 3.5% and is a move that has been welcomed by the CBI but how will it affect those with mortgages, credit card debt or other loans? 

One of the areas where bank rates affect most of us is the impact they have on our mortgages.  Indications are that there will be a downward movement in mortgage interest rates but so far the lenders are ‘unsure’ as to how much of this cut will be passed on to borrowers.  The value of property has dropped sharply over the past year and those who have borrowed against the value of their home might be feeling the pinch.  Similarly, those who bought property recently could be facing the fact that their home has decreased in value.

The credit agency Experian quoted some astounding figures in August this year, in which they said that  many middle class areas have household debt of more than £53,000, not including mortgages.  Spending in good times when property values are high and jobs are secure is one thing; paying it back in less prosperous circumstances is quite another, even if the interest rate has dropped.

The question on everyone’s lips is whether this huge bank rate cut will boost the ailing property market.  First time buyers ought to be encouraged but whilst mortgages are scarce and nervousness over long term values remains, the jury is out as to whether it will be enough to stage a revival.  Mortgage interest reductions will help some households manage their finances, but set against this are Christmas shopping costs, a huge level of individual debt and dramatic increases in fuel bills, the effect of which is likely to hit in the first quarter of next year.  

Families in financial crisis will need to look hard at their Christmas budget and think of ways in which they can either cut their expenditure or boost their income.  Second jobs, renting out a room in the house, selling unwanted items on the internet – these are all ways of making a bit of extra cash to help out over the Christmas season.  But in cases where financial problems are serious these initiatives alone are unlikely to be enough.

Facing debt is difficult, lonely and stressful. There are agencies that help people in this financial crisis, such as the Citizens Advice Bureau and the government’s national debt line. If you want to sell your home to raise cash or to avoid repossession, you may be thinking a sale will be impossible in the current climate. That’s where Property Rescue can help.  They guarantee to give you a valuation for your home which, if you accept it, will lead to a fast, secure sale.

Give Property Rescue a call for more details.  You can speak to one of their experienced advisers in complete confidence and entirely without obligation. 

In a speech given on Tuesday 21 October in Leeds, the governor of the Bank of England, Mervyn King, admitted that the likelihood of recession in the UK was real and that the downturn could be ‘prolonged’.  Hot on his heels came the Prime Minister admitting in Parliament that recession was around the corner.

This could hardly have come as a surprise to anyone who has read the papers, watched the news or observed the downward spiralling of global economies over the past few weeks, yet the markets reacted the morning after Mr King’s speech with a tumble.  One does not doubt the validity of his warning but wonders whether spelling out the impending doom was justified.  After all, anyone unaware of impending recession must have been visiting from a far away planet!  It all begs the question of whether those in the know are talking a bad situation into a worse one.

There is just a glimmer of light, however, peeping through the darkness of the very long tunnel of home ownership.  The Bank of England reduced interest rates by half of one per cent earlier this month and some pundits think that that another cut will be necessary if Mr King’s warnings about controlling inflation are to be heeded.  Lenders have already responded to the initial cut and are likely to feel pressure to cut mortgage interest rates further should there be another cut in Bank rates.

Meanwhile, back in the long dark tunnel, the numbers of people entering negative equity are rising fast.  There is no end in sight to the fall in house prices, leaving some of those who have purchased recently in the worrying situation of knowing that their loan is more than the worth of their home.; all a grim reminder of the last property crash in the early 1990s.  Currently it is estimated that around 60,000 home owners are entering negative equity every month. 

If you are in that situation, you may be content to wait for stabilisation of the property market.  If cyclical trends are to be believed, property is likely to recover some, if not all, of its value over time.  For many, sitting tight could be the best option. 

But not everyone has the luxury of choice.  If you need to sell up because of rising debts or inability to meet your mortgage repayments, give Property Rescue a call and ask about their guaranteed valuation service.  Initial consultation with one of their experts is free and entirely without obligation.  They will not pressure you into proceeding and will not pester you with phone calls should you decide not to go ahead.  In a market where almost nothing is moving, it is still possible to sell your home.  Call Property Rescue for an informal chat and more details.

Unemployment figures released this week show 1.79 million people out of work in the UK (measured between May and August 2008); the highest number since the 1990s.  This figure is expected to increase to 2 million by the end of the year, with many analysts predicting further rises during 2009. 

The construction industry has been hard hit as work slows or stops completely on new builds throughout the country.  As well as affecting those directly involved in building trades it has a knock on effect for suppliers and manufacturers.  Additionally, the manufacturing sector – already weak in the UK – has recorded an all time low in the number of people it employs.

The UK is a nation of small businesses, many of which are sole traders or employ under 10 staff.  It is these that are affected most immediately when work dries up.  Without large asset value or access to funding they can find themselves in a cashflow crisis that can bring them down within a few months or even weeks.  This is compounded by the fact that nervous banks are reluctant to renew loans or allocate new investment, especially to businesses that are struggling. 

For every ‘statistic’ whose business goes under or who is laid off due to lack of work there is a personal story of hardship.  Many of these are homeowners with mortgage payments that become difficult – or in some cases, impossible – to meet.  The minority will have insurances that meet the cost of mortgage interest, but those who default on their repayments will increase the burden of an already serious problem for the lenders.  As unemployment rises there is sure to be an increase in the number of repossessions taking place.  With house prices continuing to fall, some lenders will find themselves having to accept a sale price that is lower than the outstanding mortgage.

At a difficult time for homeowners it is reassuring to know that there are options open, even when the situation looks bleak. 

Lenders will encourage you to talk to them about making different arrangements whereby you can meet your payment obligations.  For example, they may be prepared to lengthen the term of your loan, or accept smaller (or interest only) payments for a period of time until you get back on your financial feet.  Always communicate with your lender when times are hard.  They will be much more responsive to you at this stage than if you bury your head in the sand until the situation is critical.

If you simply can’t meet repayments, you might want to explore other options that will allow you to stay in your home.  There has been some negative publicity about the less reputable companies that offer buy and rent back schemes.  Property Rescue has a sound financial backing.  Their experts have years of experience in many aspects of the property market and will explain all the options to you clearly before you make any commitment.  If this is an area that you want to explore, then explore it with Property Rescue.  Valuations of your property are free and there is no obligation to proceed. 

Call for more details about how the scheme works.

The rate of inflation has risen to 4.7%; new unemployment figures released this week show 5.5% of the working population were without a job during the three months ending July 2008; those claiming Job Seekers’ Allowance have increased, the number of redundancies is on the rise, and the world financial markets continue to be jittery. 

As economic gloom deepens, it feels as if we are all at the mercy of the government, world monetary forces and powers far beyond our control.  There is little we can do to control inflation it’s true, but there are a few simple measures that can help stretch the household budget, especially as summer turns to autumn and we switch on the heating:

• The government has announced help – via the energy companies – for  homeowners to insulate their homes.  Your energy supplier will know more  and should be contacting you with details of how you might benefit.
• If you haven’t already shopped around for gas and electricity, now’s the time  to do so.  A surprisingly large amount of money can be saved by switching  provider.  Cost comparison sites are available, such as uSwitch.com. 
• Think about where you shop and what you buy, but remember to take  account of all the factors involved.  If you buy mainly in a cheap supermarket,  but ‘top up’ with luxuries from two others, you’re likely to spend more in petrol  than you save at the till. Use the facilities you already have – like your freezer  – and plan ahead when you’re grocery shopping so that the number of trips  you make is reduced.  Planning and making a list will help you buy only what  you need and avoid throwing out food past its sell by date.
• Don’t dismiss second hand stuff!  If you have growing kids or are expecting a  baby, look out for second hand shops, charity shops and car boot sales,  where new or nearly new clothes and toys can be picked up for just a few  pounds.
• Watch the interest on your credit cards.  If you have a big credit card bill, look  at transferring the balance to a company who offers a balance transfer  deal.  A little surfing on the net could save you a lot of money!
• Use comparison sites to check that you’re getting best possible deals on  insurance for your car, home and contents.  It’s tempting to ignore home  contents insurance when you’re strapped for cash, but if you change your  existing arrangements, you could save a significant sum without having to  relinquish it.

At Property Rescue we hope these tips come in handy.  They’re all simple things that are easy to do but very worthwhile.  Remember, if budgeting becomes impossible and you can no longer afford your mortgage repayments, always talk to your lender.  They will be keen to help you if at all possible.  If you need to sell to avoid repossession or simply to cancel out debt, then contact Property Rescue.  Even in such a dire housing market, they still guarantee to make an offer for your home.

This week the government has announced a £1bn package of measures designed to help homeowners through the current financial crisis.  Whilst everyone must surely welcome this news, the question as to whether it will go any way towards resolving the stagnant housing market remains unanswered.

In brief, the measures include:

• raising the threshold at which stamp duty becomes payable on property     purchase from £125,000 to £175,000 – effective immediately
• more government help with mortgage interest payments for those on income support or claiming job seekers allowance, plus a reduction in the length of time such people have to wait before they’re entitled to this help (a reduction from 39 weeks to 13 weeks)
• raising the threshold of the loan value on which people on income support and job seekers allowance can get help with interest payments – up by £75,000 to £175,000
• £200m into a scheme whereby ‘social landlords’, such as councils and housing associations, will help homeowners who get into difficulties – perhaps through part ownership or additional lending

Some first time buyers who have been putting off the purchase of their first home may be persuaded that this is now a good time to enter the market.  If this happens it could provide a kick start to the bottom property tier and help those in existing chains to complete.  However, there is scepticism over the effectiveness of these measures because none of them address the issue of money supply, which has been at the heart of the credit crunch  The number of mortgages being approved has fallen by more than 70% over the past year – a trend that is expected to continue.  Without funds available for first time buyers and others, the housing market seems doomed to remain in its current state of malaise.

Interest rates were held at 5% by the Bank of England at its meeting on 4 September – the fifth month in a row that rates have remained static as the Bank struggle to contain rising inflation.  The threat of a recession could, however, mean that the Monetary Policy Committee elect to reduce interest rates very soon in an attempt to buoy up a flagging economy.

Homeowners in debt should study these new measures carefully.  Some could find that the help on offer from the government is enough to see them through current difficulties, but inevitably there will be those for whom the situation is too dire or the financial problems too deep.  If you are facing the possibility of losing your home, talk to Property Rescue about their guarantee to buy your property.  Their service could allow you to stay in your home, rescue your credit rating and get through the hard times ahead.  Contact them for an informal chat without any obligation.

Homeowners struggling to pay their mortgages should be able to sell part of the equity in their homes to avoid repossession, the Liberal Democrats have said.

James Kirkup, Political Correspondent, The Guardian

The equity sale scheme is part of a package of measures drawn up by Vince Cable, the party's Treasury spokesman, to meet what he says is the urgent need to avoid thousands of families losing their homes.

A slowing economy and rising mortgage costs are putting growing pressure on millions of homeowners.

Figures earlier this month showed that the number of repossession orders made by courts in the second quarter of 2008 jumped by 24 per cent. A total of 28,658 orders were made in England and Wales between April and June.

Mortgage-holders struggling with their repayments should be able to sell all or part of the equity in their house and rent it back from housing associations or even private companies, Dr Cable has proposed.

The Liberal Democrats also say that courts should be given new guidance to ensure that they only order homes to be repossessed "in extreme circumstances".

Councils and housing associations should also be allowed to borrow money from commercial lenders and use it to buy land and empty homes for use as social housing.

Dr Cable outlined his plans as ministers complete their own economic assistance package, expected to be published as early as next week.

The Treasury is known to be considering a stamp duty "holiday" in the hope of stimulating the housing market.

Dr Cable said that showed ministers are missing the point.

He said: "The Government seems obsessed with fighting a losing battle to artificially prop up the housing market, rather than finding ways to deal with its worst effects.

"Ministers must act to help the thousands of families struggling to keep a roof over their heads.

Source of Article: http://www.telegraph.co.uk/news/newstopics/politics/liberaldemocrats/2632080/Struggling-home-owners-should-sell-equity-to-avoid-repossession-say-Lib-Dems.html

Figures released this week show that new mortgage approvals fell in June to a new low.  Successful mortgage applications were down a staggering 23 per cent from May according to statistics released by the British Bankers’ Association (BBA), who say this is the lowest number of mortgages approved in any single month since their records began back in 1997.

You may have a feeling of déjà vu when you hear warnings from the BBA about the state of the housing market.  Their forecast echoes that of the Council of Mortgage Lenders in predicting that this year is likely to see the worst fall in property prices since the early 1990s.  Whilst some argue that this is purely a levelling off of an over-inflated housing sector, the impact it is likely to have on those who have just entered the market is likely to be severe.

Negative equity may become an issue if house prices continue their downward spiral.  This is particularly true for those who have recently taken mortgages of 100% or more against the cost of their home.  Lenders are adopting a much more cautious approach now, but we only have to look a few months back to find a very different attitude. 

Of the mortgages secured in June, only 19% were for buying homes; the remainder were re-mortgages on existing property.  The fact that new buyers are not entering the market will send ripples upwards and outwards to anyone who wants to sell, making the market even more stagnant than it already is. 

Falling prices, negative equity and low mortgage lending all add fuel to the argument that the housing crisis is likely to take some time to resolve.  The more optimistic commentators are talking about the end of 2009 before the situation improves, but others are thinking much further ahead.  For those who need to sell rather than want to sell, this equals bad news.  Property is simply not shifting off the estate agents books, causing some agents to even go out of business.

If you need to sell your house fast there is an avenue by which you can do so.  Property Rescue makes a guaranteed offer for your home and, if you accept that offer, the sale can be tied up within a matter of days or weeks.  The benefits to you are that you have a certain sale, you will not be subject to your buyer pulling out further down the line, you will be able to move on and, perhaps, benefit from falling house prices by becoming a cash buyer.

Property Rescue promises never to push you into action that you don’t want to take, nor to proceed until you have all the information you require.  For more details, contact one of their property experts and start the ball rolling towards that elusive sale.