Mortgage Brokers And A New Future – Part 2

Estate agents, magazines, newspapers, websites, and even mortgage brokers were enticing people to buy almost any property they could get their hands on citing extraordinary historical capital growth rates as a basis for expecting the same growth in future years. The extraordinary growth could not continue forever, however, otherwise people in the future would not be able to afford to buy anything.

A property bubble was clearly forming but most people chose to ignore it. Times were so good that properties were being secured by way of deposits even before a single brick had been laid while developers were planning and constructing a record number of properties on almost any piece of vacant land they could secure.

Things are certainly different now. The property market has declined massively thanks to the credit crunch. The headlines are now reporting monthly declines in the average price of property in the UK and developments throughout Europe and the world are struggling to sell plots. Some developments have even come to a complete standstill as the construction companies struggle to get finance to finish them.

The bubble has truly burst. Amateur investors have fled the market and owner occupiers are unwilling to sell their homes as prices have dropped. Homeowners who have considered moving house have decided to wait out the worst of the credit crunch and wait for prices to rise again. This seems fair enough – nobody wants to take a hit on their own home.

For mortgage brokers this not only means that there is less business to do for buy-to-let investors, there is also a lack of business flowing in from people selling up and relocating. Because of the turmoil with interest rates – will they rise or fall? – many homeowners are also reluctant to refinance their homes. So mortgage brokers are also doing far less refinancing work. Brokers are therefore being hit from all angles, so it’s no wonder many have struggled.

But there are signs that things will improve. Unemployment is a key factor in driving property prices down and it ha so far remained at manageable levels throughout the Western world as business try to retain staff and tough out the credit crunch. Prices may be in decline, but they are not hitting the floor.

History may show that the late 2000s provided no more than a correction to property prices and many argue that it would be a correction we had to have. With property prices previously exceeding six times homeowners’ salaries in some areas of the UK at the height of the property boom it seems apparent that the bubble had to burst.

This means that while the property market might not implode, movements in the market in the near future could be pertinent for mortgage brokers. Unemployment, while historically low, is rising. Each half a percentage point rise in the number of jobless results in many thousands of people joining the queue at the unemployment office and ceasing all activity with regards to the property market.

By: marktc

Article Directory: http://www.articledashboard.com

Find the perfect Mortgage for your home by speaking to a broker at UK Mortgage Source today www.ukmortgagesource.co.uk