It’s a ‘buyers market’ at the moment and there is certainly more property for sale now than for a very long time. However, it is not all plain sailing for the buyer. Despite the incredibly low interest rates, gross mortgage lending is at an all time low. It appears that the banks are very wary of who they will lend to and what they will lend against. This delicate economic climate has made lenders very cautious and the result is a stagnating market.
My advice to anyone thinking of buying their next home is to focus their attention on their funding first. It doesn’t matter how many homes you have bought or sold in the past, lending conditions are not as they were. Lending criteria is far stricter than the free-for-all of the boom period, with low deposits, self certifications and multiple times salary deals a very distant memory. You may be surprised at how little the banks will actually lend you.
According to myintroducer.com, 84% of first time buyers now rely on their parents to assist with a deposit*. It is not unusual to find deals that require 25 and 30% as an expected ‘put-down’. Lesser deposits result in higher rates and stricter associated rules. These days, if your credit rating is not squeaky clean and your income is not cast in granite for the next few decades, you may have to jump though hoops!
This stricter approach from the banks has also had a knock on effect for sellers. Once a sale is agreed, the banks send in a surveyor to ensure the sale value is realistic. Their interest is to guarantee they don’t lend too much against a property, just in case they have to repossess.
In addition, the conveyance process has slowed due to the greater degree of scrutiny placed on the application process for borrowing. For the buyer, the longer you take to complete a sale the more chance there is for someone to gazump you (see last blog). However, if your funds are organised before you offer, the sale should progress a lot faster.
To help smooth the buying and selling process, we have linked up with a team of independent financial advisors who can provide both buyers and sellers with a free financial review. Feel free to call our Hexham office to make an appointment.
