Loans Scotland

There are mixed signals on Edinburgh property market: the Edinburgh Evening News and ESPC puffing like mad and Jo Citizen saying it is nothing but propaganda - read the comments on The Scotsman.

Edinburgh, like London has a mind of its own as “buy to letters” pour in to buy quality and supposedly high rental incomes.

Round the corner from Windsor Street, a tenement has had some serious structural work required costing each owner £60,000. Takes a quite a housing market to cover that sort of expense!

MoneyExpert believes that 1 in 3 applications have been rejected - or an estimated 372,000 of the 1.2 million people applying for a mortgage or re-mortgage in the past six months have been rejected. This is up from the 1 in 5 in the six months to March 2007.

This is the bread and butter of the housing market and suggests that moving house is going to be more difficult, that getting onto the housing market will be more difficult and taking equity out of houses will be much more expensive (actually the last is not a product of the argument, but let’s assume this is true.)

At the same time people with credit cards are finding unsecured loans more difficult to come by.

All grist to the mill for those who expect to see the housing market slump.

The IMF (International Monetary Fund) is predicting that house prices will fall after rising 50% more than they should have done over the past decade. They are overinflated and need a correction. Fortunately we are not alone -it is even worse in Spain and Ireland. As far as the IMF are concerned, the European housing market needs correction to be sustainable in the long term.

Do we think that Britain’s addiction to investing in property is about to come to an end? Not likely. Every drop in price will simply lead to investors “bargain hunting” because we are so damned irrational about the whole thing.  Anyway, none of the analysts think that there will be a full scale crash, more like a 2-3 percent fall over the next couple of years.

First it was was taper relief, now self-employed entrpreneurs are going to find mortgages tricky to access. Its time to jump ship to the public sector.

The Mortgage Lender (TML) found that a quarter of mortgage applications from the self-employed and those with poor credit histories, though accepted even a couple of months ago, would most probably be turned down today. This reflects a new mood of caution among mortgage lenders about people they define as high risk, as concerns mount over bad debts following the collapse of the sub-prime mortgage market in the US.

Some British mortgage lenders are now requiring new borrowers to put down a larger deposit than has been the case in the recent past before they will advance any money on a property.

Fear not though, this market is so competitive that lenders will come back to the feast as soon as the credit crunch is forgotten.