Swap Rates

As property investors, you should keep aware with what is happening in the wider economy - particularly with regards to what is happening with interest and swap rates (the borrowing rates between institutions)

http://www.swap-rates.com/UKSwap_extended.html


as these can clearly effect what you will be able to borrow against an investment property that you are looking at buying and/or re-mortgaging.

The latest figures from the Council of Mortgage Lenders (CML) show that repossessions continue to rise.

The number of people's homes who were repossessed were up 21% in 2007. This is the highest level of repossessions since 1999. in 2007 27,100 homes were repossessed by people who could not afford to keep up repayments on homes and who didn't arrange an exit strategy with either the bank or another third party, such as a home repossession intervention buyer.

The mortgage market has recently got much tougher for borrowers with rates still relatively high and a greatly reduced number of mortgage products on the market. In April last year there were 13,428 mortgage products, there are now just under 4,000 mortgage products on the market. Many borrowers are coming to remortgage at their end of fixed rates and are expected to have to pay higher mortgage costs putting pressure on their outgoings and increasing the likelihhod of more repossessions. Even though there have been several interest base rate cuts the Government have been critical of the banks for not passing on the savings to borrowers. This stand-off is likely to continue as banks look for ways to prop up their profits following losses from sub-prime mortgages in the UK and US.

More repossessions do mean that there are more opportunities for mortgage intervention companies. These companies claim to 'buy your house quick' and generally negotiate 15 - 25% off the value. Even though it is a benefit for a home owner not to get reposessed and for them to get some equity rather than none and potentially stay in their own home there has been call for reugulation for these types of companies as there have been a growing number of complaints due to sharp/poor practise from this industry. The leading companies in this sector have welcomed the opportunity for regulation and are working with the Government to put a regulation framework together.

Banks are showing large drops in House Prices whereas Land Registry price figures are showing only a small reduction

This practise by the banks has been attacked by Stuart Law, Chief Executive of Property Investment firm Assetz. He condemns the banks figures as being distorted and creating alarm in the market while they continue to profiteer from inflated mortgage products and fees. Law says, "the marginal 0.2% monthly fall in house prices, reported by the Land Registry provides a true reflection of the current housing market and is far removed from the spurious 2.5% fall suggested by Nationwide last week. The Nationwide figures are skewed based only upon it's own data while Land Registry data provides a more reliable overview of the entire market."

Law expects to see individual banks and lenders continuing to report high house price falls while the truth is much lower. While there is a reduction in house prices this needs to be accurately reported and not over-hyped by banks who have their own agenda and interests to protect.

Law also accuses the banks of profiteering. "It is the the banks profiteering which has led to purchasers trying to chip away at vendor's asking prices, in order to compensate for the additional borrowing costs they now have to endure."