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UK PROPERTY STILL DEFYING THE PROPHETS OF DOOM - 2007 TO BE ANY DIFFERENT?


“Time called on housing boom” - “House prices will crash” - “Eventually” (clever that one!) were just two of the Sunday Times money section headlines in November and December. “House prices have peaked” said Rightmove in August. Closer to reality, was the Sunday Times headline of 2nd April “House prices rise - but not for everybody”.

International Mortgage Plans have stressed for three years now the imbalance in price growth in various areas of the UK. The indices of Nationwide and Halifax are a nonsense – even with the benefit of hindsight upgrading, they still witter on about “average property prices” – meaningless, as no one buys the average property in an average area. “MoneyWorks” asked us, in October 2004, to comment on the market and forecast its future. At that time, we felt the market had stalled mid-summer, that any pause was likely to be temporary and demand and continued low interest rates, would ensure a return to confidence. When asked to recommend areas for investment, we were emphatic in forecasting prime London and the Home Counties to have the call. Our forecasts for a halt to exuberant growth in previously unfashionable areas, was premature but we would certainly remain negative on them. Allowing for some self congratulation, it has to be said that the speed and extreme price increases seen recently have taken everyone by surprise. Knight Frank have estimated that prices in prime London locations rose 20/25% in 2006. In Kensington and Chelsea, Rightmove reports asking prices having risen recently by over 50%! On a more reasonable spread of area, “London” the Financial Times reports that house prices have risen by close to 13% in 2006, more than double the most optimistic guesstimates made earlier in the year. We now feel that prime London has gone too far, too fast and there may be a cooling-off, particularly if further bank rate increases are used to brake a worrying feature of our overall economy. London is the beneficiary, or victim, of a false market - city bonuses and foreign investors have driven prices and that money is now seeping through to the Home Counties, where there is an acute shortage of family homes. This is partly due to builder’s recent concentration on producing apartments for investment purposes.

We can see no diminution in demand. Added to an under supply of family property, we have the continued strength of the Buy To Let market. Buy To Let is now quoted as an industry by the National Statistics Office and, as such, experienced higher growth than any other industry between 1992 and 2004. The pace can hardly have slackened in the last two boom years!

Apparently, over 60% of investors are now choosing property over pensions, to fund their retirement. Much thanks due to our brilliant Chancellor and the rapacity of under-performing, overcharging financial services providers.

Lenders are meeting the increased demand in their services by a marked new “creativity “ in producing loans for multiple applicants and specific plans for parents wanting to help children through University, or just to secure a place on the property ladder - impossible on their own financial status. Two bank rate increases have obviously had little effect in dampening the home buyers’ enthusiasm - will the third quarter percent increase? Unlikely, with the huge demand for property at all levels.

Where mortgages are concerned, going into February 2007, IMP are still majoring on transparency, low rates and low charges, whether for fixed, discounted or tracker loans. Despite bank base being at 5.25% and most bank lenders seeking a margin of 1.25% to 1.5% above this, IMP are still able, via special and often exclusive schemes, to obtain rates as low as bank base, whether letting or for family occupation. Our exclusive expatriate scheme, funded by the Stroud & Swindon Building Society, allows for up to three properties at the same rate; loans are interest only, flexible and carry no early redemption charges at any time! Our mortgage table carries a wide range of lenders comparable terms.

Our general advice, at IMP, is to stop over-paying your existing lender, as refinancing costs can be quickly swallowed up in interest payment savings. By continuing to pay standard variable rate, or unattractive rates, with your lender, you are subsidising the new borrowers they court so avidly


Expatriate Mortgage Terms – March 2007
 
Lender Interest Rate% Max % Advance Arrangement Fee Special Features
Bank of Scotland Libor + 1-1.5% 80/85% 0.25% Special schemes GBP 70,000 min
Dresdner Kleinwort Benson Libor 1-1.5% 80% 0.5% Currency switching minimum loan GBP 100,000. Life assurance required. Minimum earned income GBP 75,000
Fortis Bank Libor +1.0 Sterling

Libor 1.25% foreign currency

CHF 2.10%
EURO 3.73%
HKD 4.00%
JPY 0.56%
USD 5.36%
GBP 5.33%
75% GBP 500 Min loan GBP 150,000 Loans to offshore companies and trusts. Multi currency mortgage available
Halifax PLC Under review 75% GBP 999 Requirement to return to UK within 3 years. Very restrictive no self employed applicants
Heritable Bank 5.82% 2 year discount 85% to GBP 250,000 0.5% IMP clients receive a special discount
Portman building society 2 year fix 4.85%

5 Year fix 5.48%
75% 1.5%

GBP 599
Family occupation only
Royal bank of Scotland Base 1-1.5% 80% 0.5% Terms can vary via different Royal bank operations areas
Stroud & Swindon 5.49% 3 year discount 75% GBP 595 Exclusive to IMP. No redemption penalties at any time. Free legal fee package for remortgages

Information by International Mortgage Plans - Table updated 19th February 2007

Notes some lenders have onerous redemption penalties for fixed and discounted terms. A usual penalty is six months interest in the first five years. Arrangement fees – all fees quoted are payable to the lender and usually added to the loan, although some require payment with the application. IMP charge an arrangement fee of 0.25% of the loan subject to a minimum of 250 and a maximum of 500. The arrangement fee is only payable when you are in receipt of an acceptable mortgage offer.

Most lenders have settled on a standard variable rate of 7.25%. Bank base rate 5.25%, three month libor 5.33%

For further details on our financing and refinancing schemes please see our website, www.international-mortgage-plans.com  or e-mail us at info@international-mortgage-plans.com  or call us on 00 44 1932 830660.

Matthew Wright

International Mortgage Plans are regulated by the Financial Services Authority, registration number 302775
We hold consumer credit licence number 504524
Buy to Let mortgages are not subject to the new regulatory regime


International Mortgage Plans
IMP

Matthew Wright
Blandings, Cobbetts Hill, Weybridge,
Surrey KT13 0UA
Telephone: 01932 830660
Fax: 01932 829603
e-mail: info@international-mortgage-plans.com
Website: www.international-mortgage-plans.com

Posted 22Feb07