Lenders Tighten Up

In the last 4 weeks I have that many "changes to terms" coming across my desk that I think that lenders are giving up.

Time and again we are seeing reductions in loan to value. From 95% to 90% then on down to 85%. It has to be panic -- but on two fronts.

1. Worries about the ability to service loans
2. Concern that valuations are falling!

Yes that's right values are falling. Not prices advertised. I mean who wants to accept less on their main (only) investment. Lets listen to Estate Agents, when they talk about business being slow they mean volumes are reducing. This means that less instructions to sell are coming in. But this has happened in the past back to the 1970's. It means that potential vendors are less confident about prices it means they feel they cannot get their price. So they don't sell or withdraw their property.

Throw in the impotent HIPS debacle and it means less chance of a transaction. All in all it's a dip in the prices of property. Masked by vendors who now will not go to market.

Time to see property as a place to live for the next 10 years. I mean what is going to provide a recovery (demand) first time buyers are only getting 2% pay rises or less. Banking bonus will collapse after they greedily ramped up derivatives engineered with fresh air and bull.

Buy to Letters getting less than 6% return on the full value of their property are insolvent, and will either try to sell, or subsidise their mortgage. Tenants in these properties now have the upper hand.

Only London with the 2012 and a never ending stream of inhabitants could buck the inevitable. And even there signs of the bubble are evident.

Now if the lender tighten up all hope of a property recovery in the medium term are gone. I mean overly competitive lenders actually added to the inflationary problem.

With them taking the heat from the market along with all the other factors it has to be a recession. So time to look at real investment for a change, wealth and job creation in the UK has been neglected for a decade and the chickens are coming home to roost.