More home loans, higher interest rates
Home loans market is ready to
expand, but at a higher
price
James Charles
January 4, 2010 Sunday Times
The UK’s Sunday Times reports that interest rates will rise for home loans even if the BoE does not raise rates. Banks passing on the ever increasing cost of funding as the political event unfold in the first half of the year is the main story.
There are a couple of quotes from the top two lenders concerning loan availability. They are reporting that there should be more 90% LTV loans available for owner occupant home buyers (no comment on BTL). Also reported is a BoE rate rise so that the Base Rate reaches 1.5% by the year end.
No one can predict the future. For investors out there it is wise to stress test the portfolio to see how well you can handle rising costs from rising loan payments. If the BoE does raise rates and it is well signaled there could be a follow on rise in wages as the BoE will be taking action in anticipation of inflation. Nothing is certain. Plan for multiple scenarios and then let the future come to you.
The Council of Mortgage Lenders (CML) reports that they expect only a small rise in the total number of new transactions for 2010. The total net lending is expected to almost double. I did not check with the CML website to see how they can line up a doubling of net lending while only showing a 5% or so rise in total transactions. I do not put much faith in most predictions so not that interested to check the CML predictions.
If you have views or comments, please share. No one of us is as smart as all of us. Contribute to the conversation
-John Corey
James Charles
January 4, 2010 Sunday Times
The UK’s Sunday Times reports that interest rates will rise for home loans even if the BoE does not raise rates. Banks passing on the ever increasing cost of funding as the political event unfold in the first half of the year is the main story.
There are a couple of quotes from the top two lenders concerning loan availability. They are reporting that there should be more 90% LTV loans available for owner occupant home buyers (no comment on BTL). Also reported is a BoE rate rise so that the Base Rate reaches 1.5% by the year end.
No one can predict the future. For investors out there it is wise to stress test the portfolio to see how well you can handle rising costs from rising loan payments. If the BoE does raise rates and it is well signaled there could be a follow on rise in wages as the BoE will be taking action in anticipation of inflation. Nothing is certain. Plan for multiple scenarios and then let the future come to you.
The Council of Mortgage Lenders (CML) reports that they expect only a small rise in the total number of new transactions for 2010. The total net lending is expected to almost double. I did not check with the CML website to see how they can line up a doubling of net lending while only showing a 5% or so rise in total transactions. I do not put much faith in most predictions so not that interested to check the CML predictions.
If you have views or comments, please share. No one of us is as smart as all of us. Contribute to the conversation
-John Corey
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