Mortgage rate reduction
Plenty to talk about in the property market once again this week. On Monday we saw more mortgage lenders announcing they would pass on the bank rate reduction to their borrowers as well as Nationwide predicting house prices would continue to fall in 2009/10.
On Wednesday the Bank of England predicted that the UK economy could shrink by 2% over the next year and that a recovery will not take place until well in to 2009.
Following the bank rate cut to 3% three lenders relaunched tracker deals for new borrowers on Wednesday passing on at least part of the cut. Also on Wednesday it was announced that UK unemployment had reached an 11 year high with 1.82m people currently out of work, this will not be helped by todays announcement by the RBS that they will cut 3,000 jobs.
Today it was announced that the Eurozone was officially in a recession with the UK , Germany , Italy and Spain all suffering significant economic problems.
Heres a news summary from the last week:
* Fri 14th Nov – New Recession Fears Ahead of G20 (news.bbc.co.uk)
* Fri 14th Nov – RBS to Cut 3,000 Jobs Worldwide (news.bbc.co.uk)
* Thu 13th Nov – Tracker Deals Returning to Market (news.bbc.co.uk)
* Wed 12th Nov – Bank Warns of Recession into 2009 (news.bbc.co.uk)
* Wed 12th Nov – Unemployment Reaches 11-Year High (news.bbc.co.uk)
* Tue 11th Nov – Mortgage Squeeze ‘Stifles’ Market (news.bbc.co.uk)
* Mon 10th Nov – Nationwide Warns on House Prices (news.bbc.co.uk)
* Mon 10th Nov – More Lenders to Mirror Rate Cuts (news.bbc.co.uk)
What does all this mean to property investors?
The lower mortgage rates and falling house prices means you will be able to buy houses cheaper AND secure a cheaper mortgage on them. This then means that the cashflow produced from buy-to-let is significantly increased.
What’s more, with unemployment rising and the recession coming in to full force less people are going to be able to pay their mortgage or get on the housing market in the first place. This means there will be more repossessions and more bargains, but more critically there will be more people looking for rental property.
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So put all of this together and you have cheaper house prices, cheaper mortgages and an increasing rental demand! |
This is a buy-to-let investors dream! Some people think it’s better to wait until house prices bottom-out. This is the wrong thought process because that’s only thinking about equity when for an investor equity does not come in to it as you are not selling houses you are only buying them and renting them out.
Now is the time to take action and turn the recession in to your dream situation and not your worst nightmare!
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