When will people buy property and borrow again?

publication date: May 27, 2010
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

When will people buy property and borrow again?

According to Kate Faulkner, MD of Designs on Property, just offering high rate mortgages at 90% isn’t enough. According to Savills the rate you can borrow is typically twice the price of lower loan to value mortgages, so the lending criteria may have improved, but it’s clearly at a cost!

Kate believes for people to really start borrowing again, particularly potential first time buyers:-

  1. The market needs to have recovered to 2007 prices
  2. Property prices need to show improvement consistently over a 12 month period
  3. Loan to Values need to be 95%, that still requires £7-10,000 deposit
  4. The cost of servicing mortgages needs to be around 4-5%
  5. Rents need to increase above the cost of servicing a mortgage

Until this set of criteria is achieved, she just thinks it’s possible for the property market to recover to 2007 prices, but not possible for the enthusiasm of buying and owning a home coming back into the market and the volume of sales to go back to the one million plus mark they were at prior to the credit crunch.

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For more information and market commentary, visit Kate's Property Market Updates, or if you have a property question, contact us via enquiries@designsonproperty.co.uk or tel 0845 838 1763.


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