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In the July 2008 Issue of Property Investor News
Mortgage Outlook
The annual Halifax County House Price Survey revealed that all of the UK's 104 counties and unitary authorities have recorded at least a doubling in their average house price in the last 10 years. County Armagh in Northern Ireland had recorded the fastest house price growth in this period with prices increasing by 331% by the end of 2007.
However we are all becoming increasingly aware that residential property prices now seem to be re-aligning themselves as it would have been unrealistic to expect prices to continue to grow at that pace.
The key problem now facing the industry is the lack of mortgage funding within the market. This is mainly due to the fall out from the sub-prime lending problem in the US but it also seems that some lenders in the UK have also been overzealous with their funds - lending at overly competitive rates at 100-125% loan-to-value (LTV). This has affected almost every aspect of the mortgage market with buyers now having to put down a heftier deposit than previously. Let's ask the experts exactly how the credit crunch has affected the buy-to-let mortgage market.
1) How is the current state of the buy-to-let mortgage market? When compared with the standard residential mortgage market how is it holding up during the credit crunch?
Jeremy Law (JL): The fundamentals that have driven the buy-to-let market for the last 10 years are still the same. Rental demand grows through less people per household, more students, immigration and a more mobile workforce amongst other reasons. In the current market, there are far less people entering owner occupation and these people are further driving rental demand as they need somewhere to live.
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