The Availability of Loans is Being Questioned

From official resources it has become known that in the first quarter of 2009 3.55 per cent of landlords fell in three months arrears. The cases of repossession have slightly increased (by 0.05 per cent) compared to the same period last year. However, referring to the Council of Mortgage Lenders at the moment there are about a million of buy-to-let landlords in the country. Experts of the mortgage industry sphere are afraid that the buy-to-let market may cause considerably greater arrears and defaults than the owner-occupier segment. The typical situation took place in the early 1990s, and probably present losses may be as bad as the losses of the early 1990s. Furthermore, specialists of the banking sphere insist on the abolishment of self-certification loans, including self-certification mortgages. The trouble is that self-cert loans do not require the confirmation of income. About 45 per cent of loans given in 2007 were self-cert loans. Since there is a big probability that borrowers will not able to pay off the mortgage bills, such loans will be less available, in other words they will be available for a narrower group of people. As a result of this challenging economic situation and lack of money in the banks and other financial institutions, many lenders will force the pressure on clients and decrease the availability of new borrowings. For example, tomorrow Nationwide Building Society, Britain’s third-biggest mortgage lender, will use only half of any income-related bonuses, overtime or commission, rather than all of such extras, to calculate affordability. As for property prices, London prime property was up in price by £4,462, which represents a growth of 0.34 per cent. The biggest improvement of property price was witnessed in South West London with a monthly increase of 1.36 per cent. Central London showed an insignificant increase. The Department for Communities and Local Government released official figures, saying that the annual decline in house prices reached 13.6 per cent. In 2009 house prices went down by 1.3 per cent in March, after a sharper downfall of 2.8 per cent in February. Terraced houses held their value the best, falling by only 1.1 per cent during the month, whereas flat-owners were seriously wounded by the 1.9 per cent drop of property in March.