THE MORTAGE CRISIS HITS – ENGLAND’S PAIN, SPAIN’S GAIN

There is one trade that is booming in the UK. It is the manufacture of ‘For Sale’ and ‘For Let’ signs. These are being displayed as fast as they can be produced and placed outside properties going on the market. Few however are attracting buyers. Most roads are now colourfully enriched by a forest of such advertising notices. The latest blow to despairing British estate agents is the decision by the First Direct Bank to close its doors to new mortgage customers. The one bank to offer deals as low as 4.95%, it is unable to cope with demand from buyers turned away or turned off by higher rates of interest. Typically interest rates are being increased to 6.45% and it is still, watch this space. Kent Reliance Building Society has raised their rates to 7.59%. The British housing market is in shock with 40 per cent fewer applying for mortgages. Applications are down from 122,401 in December 2006 to 72,880 just 12 months later. The situation is worsening by the day. It has been reported that as many as 500 deals are being pulled each week. One insider says ‘Prices and buying criteria are being modified by the day’. House prices are plummeting. 
DOORS SLAMMED SHUT ON BUYERS
Many first time buyers are excluded from any possibility of getting a foot on the property ladder unless they are able to place an eye-watering deposit, often as high as 35%. With the average home now costing £177,000, and restrictions on lending, this is clearly beyond the means of most buyers; especially those hoping to become first time property owners. Being a member of a high paid profession such as teacher or doctor is almost a necessity. One building society will lend only to teachers.
ENGLAND’S WOE, SPAIN’S GET UP AND GO?
Southern Comfit International, the Liverpool based overseas property agents have updated their website to remind buyers of the advantages of buying in Mediterranean Europe. Others are likely to follow suit.
The general feeling seems to be that Spain’s housing slowdown could benefit from the UK housing slump. If it does then recent inertia along the Costas could be heading for a soft landing and then a bounce, as disappointed British buyers look abroad for a solution to their needs. Both Spain and Cyprus offer an alternative lifestyle with greater opportunity than does the constricting UK economy. Properties in Spain are still available at lower prices and deposits; competitive interest rates, and a ‘can do’ attitude that has long disappeared from British banks.

(435) FBSR © Michael Walsh

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