January 9, 2010

It’s a chill wind blowing through the property market

It is not just the icy blast of a winter wind straight from Siberia that has been cooling the UK housing market. The thermometer might have been reading minus twelve outside Rob Towers this morning – but things are even frostier in the world of real estate with property prices falling faster than the temperature outside.

The fact that so many employers are only paying people who turn up for work is not exactly guaranteed to help people make ends meet when times are hard. I would imagine that smaller wage packets can only add to the UK’s country’s repossession problems.

I may be just a tad cynical – but the recent repossession news is only encouraging in that the people who created this fiasco – banks and building societies are largely being funded by the tax payer to clear up the mess.

With so many people being trapped in houses that have plummeting values, there really is no alternative than to go back to the old ways. This may be revolutionary thinking – but what is wrong with thinking of a house as somewhere to live and staying there. Keeping the payments down as far as possible is a good way to avoid repossession and stop repossessions. That is only possible for those people fortunate to still be in work and earning as much as they claimed they did when they got their mortgage of course.

Which brings us rather neatly to the only new thing in the property market that is worth considering. In the past we all got mortgages and patiently paid them off over twenty five years. Because everybody’s mortgage was exactly the same. But lo – now things are very different.

Not put off by the failure of endowment mortgages based on mythical nest eggs being built by ‘experts’, we had a profusion of ever-more complicated mortgages that tracked or tracked back and didn’t even seem to need a guaranteed income to pay them off.

The result is that there are some unbelievably good mortgage deals around IF you qualify for them. Am I alone in thinking this rather ironic? You can still get a mortgage if you are a good investment…. But we have to deal with the same dreadful financial institutions which created this sorry mess in the first place.