Hello sqftmag,
Re prices & Interest rate cuts/property slump
Two large lenders have passed this reduction on to the borrowers who are on their SVR. The reality is that most customers are not on lenders SVR but various derivations & plans. So a reduction in the SVR is a headline to make us feel better about ourselves. Even on th SVR you will note that the margin is 2% over. Thats a big margin. Mortgage approval/booking/reservation etc fees have doubled in the last 6 months.
A large sector of the market is now with nonstatus/subprime lenders who use LIBOR as the base, which is currently 6.6% plus a loading. The reality of the rate change is minimal, and being used for headline publicity only.
So until margins reduce to previous levels and rates reduce again and fees and charges are halted and reduced, it will always be a cosmetic exercise.
Smoke and mirrors is a good description.
£100K mortgage saving £15-20 per month.
The action of 0.25% cut is a better headline than the reality of £15-20 saving.
Property will (in my view) remain generally stable with local variations and afte further cuts in Feb/April a strengthening will happen and maybe even a minor rise towards the end of the year.
There is no real need to panic, what good will panic do.
If youre in a house with a value of 200,000 that falls in value to 150,000 with a mortgage, panic will not help you one bit.
Best just tighten the braces and buckle up for the timebeing.
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