As the number of first-time buyers continues to fall in ฝากขายคอนโด 2011 we are struggling to see how the housing market can be lifted out of the gloom. Mortgage lenders are approving fewer loans for borrowers with small deposits and, according to sources, the approval rate for loans up to £250,000 accounted for less than 25% of approvals! Without the first time buyers entering the market it is difficult to see how the whole market can start to move.
It was also significant that approvals for mortgages where the deposit was less than 25% also fell to a very low level. The average loan-to-value in the cheapest price bracket fell to 66% - far below the 76% LTV seen in September 2006, as borrowers found it harder to secure mortgages with a smaller deposit.
It appears to us that there are a number of factors weighing the housing market down:
1. The banks reluctance to lend.
2. General economic conditions which mean people are feeling less secure and therefore unwilling to make the move.
3. The fall in house prices has put people either into negative equity or into a position where they are unwilling to take a "loss" on their property.
4. The absence of first time buyers to make the chains and get people moving - property is sitting on estate agent books for longer and longer
With the economy in peril from every angle, lenders are playing it safe and training their sights on wealthier borrowers. If you are one of the fortunate few who can get access to mortgage finance then life appears to be very sweet for you. The mortgage lenders are very willing to throw money your way (at excellent rates) and home owners are giving large price reductions to secure a well-placed buyer.
It appears that HSBC is willing to lend £350m to borrowers with small deposits however the details have not been tested, i.e. we have not spoken to anyone who has successfully received finance from HSBC. If you are one of the fortunate few perhaps you could leave a comment informing everyone how you got on?
Separate research from LSL Property Services showed a 0.3% fall in house prices in September. David Newnes, director of LSL, said the modest summer recovery in the housing market "came to an abrupt end in September". He added: "There are still serious barriers to a sustained property market recovery. Outside London, prices are falling throughout England and Wales and this has contributed to a fall in the average house price."
According to Property Wire magazine the average age of a first time buyer is now 35 which will add to the pressures on the housing market. Half of prospective homeowners aged 25 to 34 said they can't afford the deposit for a home unless their circumstances change, such as receiving a lump sum of money or getting a better paid job. Government statistics are also now showing record numbers of people under 25 are unemployed and therefore will not be able to save for deposits.
To summarise the market is gloomy with little prospect of improvement. The housing chains could be built by property investors buying houses for the rental market but this would put more pressure on the first time buyers as affordable houses are sold to investors. In our opinion the banks, with government invention if necessary, should introduce incentives to get first time buyers into the market. What form these incentives should take needs careful consideration because intervention, historically speaking, always causes problems. New affordable homes could be built (as suggested by the last government) however these do not appear to be materialising with any sense of urgency.
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