News

SEPTEMBER 2008
This month I thought I would cover a subject that seems to be on the minds of many people at this time, namely PROPERTY PRICES FALLING. I guess the question most of us ask is ‘How much is the value of my property going to fall?’ Whilst no one can answer this question with great certainty, it is useful to examine the reasons for the drops we have seen so far this year. It is almost entirely due to the end of an era of easy borrowing. Until 12 months ago it was relatively easy to obtain mortgage finance, often without proof of income and by borrowers with past credit problems. Clearly this is now much more difficult, as the banks are being very careful about virtually all borrowing, even when lending to each other! The results have been that people cannot buy property as easily, which in turn forces prices down. How far they will go impossible to predict, although lending rates have fallen in the last few weeks as the banks are becoming more concerned with being competative.

Since the beginning of the Summer there are other issues that are likely to impact on prices, namely inflation. The Government tell us it is 4.4%, but anyone with a home, that pays for electricity, gas, and water, has a car that runs on anything, or even eats food, may feel that understates the real rate by more than a little. Obviously items such as computers and TVs are coming down in price, as is clothing. This brings the ‘average’ to 4.4%. For the first time in many years we are experiencing a substantial increase in our living costs. Clearly, if inflation continues to climb, affordabilty for mortgages will reduce. This could impact further on the housing market.

Conversely, we all need somewhere to live, and it is noticable that rents seem to be moving upwards at an alarming rate, which will no doubt result in more people concluding that buying is better value. Providing those people are able to get mortgage finance, this will have a positive impact on property prices.

To summarise, and answer the question above, it is useful to accept that everyone in, and many outside of  the housing industry has a view. Mine is that prices do not have that much more to fall if the subject property is reasonably desirable, and in good overall condition. The first sectors of the economy to go into this downturn were Financial Services and Property. It is very likely that these sectors will be the first to emerge. As a firm we are starting to see an increase in activity as more of us become accepting of ‘The New Era’ of slightly higher rates that are more consistent with the past 15 years, than the past 3. 

JUNE 2008
In this months news page we would like to show some headlines from the recently published report: 'Value of Mortgage Advice’ from The Association of Mortgage Intermediaries.

Independent mortgage advice could save consumers
£1,830 per year

The Association of Mortgage Intermediaries (AMI) published its 'value of mortgage advice' report on 21st May 2008. The report, from independent financial services research company NMG, examines the value of mortgage intermediaries to consumers in getting them the most suitable mortgage, at the best price, with the best service. NMG has estimated that intermediaries could save consumers up to £1,830 per year compared with going direct to lenders. This is the average difference between the costs of a Standard Variable Rate (SVR), most frequently offered by lenders, compared to a fixed rate, the most popular choice by advisers.
 
Chris Cummings, Director General of the AMI, said:
"Intermediaries are able to identify the most suitable product for the consumer at a competitive price. Analysis of consumer attitudes shows they value this advice much higher than that provided by lenders. Independent research suggests that intermediaries could save consumers £1,830 per year compared with going direct to lenders. And in these difficult times it is more important than ever for consumers to access good financial advice.
 
Statistics compiled by NMG show the value of advice to consumers:

• Research showed an average annual saving achieved from purchasing via an adviser to be £962 per annum. With just under 1.36m intermediary mortgage sales in the 2006/07 financial year, the savings achieved by intermediaries for their clients is estimated to be between £1bn and £1.2bn per annum*
• The average cost of SVR mortgages being taken out by consumers via lenders equates to £1,830 per annum.  This results in extra mortgage payments of £155 million over a 12 month period of which £135 million is attributable to the direct channel*
• Among brokers over 73% were able to place over 95% of their clients with a lender first time, thus saving time and worry for the potential borrower*
• Of all GB Adults who arranged their current mortgage via an adviser more than half (55%) felt that they were kept informed on the progress of the mortgage application yet among those who arranged it through a bank, building society or lender direct the figure drops to only a third (34%)
• For those who experienced financial difficulties, it is often only the intermediary sector that can help.  During the period 1 April 2006 to 31 September 2007, 83% of borrowers who had suffered financial difficulties were assisted by mortgage intermediaries*

*The full report is available to all consumers on www.a-m-i.org.uk
If you are paying too much for your mortgage, call us on 01872 571868 at the Perranporth office, 01726 871150 at the St. Austell office, or use the contact form.