Bye, Bye, Buy To Let!

It has been reported, that up to 200,000 buy-to-let borrowers have seen their investments plummet, as the downturn in the UK housing market continues. This figure seems sure to grow as the relative slump in house prices continues, but it should be remembered that the downturn followed a period of unprecedented growth.

Unfortunately, it seems that many people viewed housing as a treasure trail, particularly those whose experience of such matters was limited. Lenders must take their share of the blame, because in many instances they stoked up the buy-to-let market, sometimes without full consideration of the experience or financial status of their mortgage borrowers.

If a market becomes overheated the bubble will eventually burst. It happened with the dotcoms and now a similar thing has happened to those who got into the buy-to-let market at the wrong time. Of course timing is everything. Oh, what wonderful thing hindsight is! Even the experts don't always get their timing right, but they are able to read the signs before situations get really bad, otherwise they wouldn't be experts would they?

Apparently there are around a million buy to let mortgages in the UK and in the region of 200,000 of those were taken out at the height of the boom. Therefore, many buy-to-let borrowers are either in negative equity or on the verge of being so. If you compare the figure of 1000,000 buy to let mortgages, with the figure of 30,000 ten years ago you can grasp the scale of the issues involved.

It seems now that people will think twice before investing in buy-to-let properties, and that mortgage loan companies, will probably think three times before deciding whom to lend to. It may not quite be bye, bye to the buy-to-let market, but there will certainly be a period of enforced restraint by lenders and borrowers alike.

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