Honest Realestate Agent

Posts Tagged ‘credit crunch’

When Will This Credit Crisis Ease?

They talk about the green shoots of recovery; well I have not seen any, have you? I personally think that it is a form of increase confidence trick; an attempt to make people believe that the worst of this current recession is over; I work within the cost reduction specialists sector and things are still quite tough here.

They, and when I say they I am talking about the Government and business leaders, are no doubt hoping that this new confidence (false as it undoubtedly is) will spur people on to start spending money again; to start buying houses etc. Until these so called “leaders” realise that this crisis will only start to ease when the banks and building societies start to lend money again, the better. Already we hear stories of the bankers going back to their bonus culture, will they never learn? The bigger question is why are the Government allowing them to make the same mistakes again when we, the taxpayer, are the major shareholder? What our great country needs is a strong hand at the top, a person who can be a “real leader”.

Now I am not some financial whizz kid who thinks he has all of the answers. I am in fact just an average working class guy from the UK who works for a company that offers advice about becoming a foster parent and who also has a partnership in a company that offers affordable front doors. I do however watch and listen in amazement at times when I see what some of the politicians and greedy bankers say – they really are not in the real world – they probably would have absolutely no idea as to the average cost of a pint of milk or loaf of broad – they are complete jokers and a waste of space.

I personally believe that this current credit crisis will last until the end of 2010, at least. I know that this seem rather negative but it is just my opinion on the situation. With a stronger leadership this would no doubt change but while the Labour cronies continue to bicker and squabble what chance have we got? Bring in Vince Cable I say as the new Labour leader!

When will this recession be over?

They talk about the green shoots of recovery; well I have not seen any, have you? I personally think that it is a form of increase confidence trick; an attempt to make people believe that the worst of this current recession is over.

They, and when I say they I am talking about the Government and business leaders, are no doubt hoping that this new confidence (false as it undoubtedly is) will spur people on to start spending money again; to start buying houses etc. Until these so called “leaders” realise that this crisis will only start to ease when the banks and building societies start to lend money again, the better. I am already started to read reports about the ways in which these bankers have returned to their greedy bonus culture? In a way a more important question is why is our Government allowing them to get away with it? There is a real lack of leadership at the moment and it is about time somebody at the top started to crack the whip.

Now I am not some financial whizz kid who thinks he has all of the answers. I am in fact just an average working class guy from the UK who runs a web promotion company and who also has a partnership in a company that offers a professional DVD duplication service. I do however watch and listen in amazement at times when I see what some of the politicians and greedy bankers say – they really are not in the real world – they probably would have absolutely no idea as to the average cost of a pint of milk or loaf of broad – they are complete jokers and a waste of space.

I personally believe that this current credit crisis will last until the end of 2010, at least. I know that this seem rather negative but it is just my opinion on the situation. I may well revise my opinion if we were to change in Government or a new stronger, dynamic leader? Bring in Vince Cable I say as the new Labour leader!

It might be all of the financial troubles here in the UK. But an increasing number of people are choosing to buy a second home property that they can use as a holiday break, and then turn it into an investment by renting it out during the rest of the year. Others still have chosen to leave the UK altogether and find that piece of heaven they have been looking for by moving abroad.

Following this route is becoming easier for everyday people, it doesn’t matter what age you are, you can always invest in new property, however, whether your new home is in the UK or abroad, you will still have to protect it. Finding a company that will give cost effective cover for second home insurance and overseas property insurance isn’t as easy and can often be more costly than you might imagine.

Deciding on a company to insure your new home can be a tricky job, not to mention expensive. This is because insurance companies know that second homes are generally left unoccupied for lengthy periods of time, because of this, the home can face weather damage like burst pipes. Although it’s possible to work your way around these obstacles, you can still be knocked back by the concern of damage caused by or to the current guests.

If you do obtain cover you will probably find that most holiday home or buy to let insurance policies have restrictions in the small print. Because of this, you can get a shock when you find out your insurance is not valid when you make a claim as you haven’t correctly crossed every T and dotted every I. There are some providers who understand that most holiday home and second home owners only use their property occasionally.  

To help you out when buying your insurance, there are some second home policies that have no exclusions the small print. Also, if you choose to rent out your second home, those policies also come with extra protection like £5m public liability insurance and content protection against damage that has been caused by unrulely guests.

It has been over a year now since the sub-prime mortgage crisis started to take effect on the global economy. As uncertainty spread with regard to returns on loans and mortgages, lenders tightened their lending criteria – which led to the current situation in which mortgages are in (relatively) short supply and house prices are falling rapidly.

It’s impossible to predict exactly when the credit market is likely to recover, but most economists agree on what will trigger a recovery.

What is happening now?

At present, the mortgage market is very slow compared to previous years, although it is by not completely stagnant. £5.5bn of mortgages were offered in November 2008 – suggesting that lenders are cautious, rather than ruling out mortgage lending altogether.

The main difference between now and the peak of the mortgage market in 2007 is lenders’ ability to offer mortgages. Not only are mortgage lenders more cautious than they used to be, but the funds required to provide mortgages have become more expensive.

The main indicator of this is LIBOR (London Inter-Bank Offered Rate). The LIBOR rate is a measure of the average rate at which banks lend to each other. In recent months, LIBOR rates have remained relatively high in relation to the Bank of England’s base rate, meaning that despite the Bank of England’s efforts to encourage higher levels of lending in the form of base rate cuts, the cost of lending has been slow to fall.

What could trigger a mortgage market recovery?

The Government have now introduced measures to encourage higher levels of lending, most notably pumping billions of pounds into banks in order to improve their ability to lend. This in itself has not yet caused a measurable increase in lending, but it’s quite possible that it will aid banks as confidence increases amongst lenders.

The main factor affecting availability of mortgages is lending between banks. If lending becomes cheaper for the financial institutions themselves, lenders will be in a better position to offer mortgages and loans more freely.

However, it is unlikely that mortgage lending will return to anywhere near the levels seen at the peak of the market. Even when lending returns to healthy levels, lenders are likely to be more cautious about the credit history of borrowers, as well as deposits put down on new mortgages.