Where is UK mortgage market going?

Where is UK mortgage market going?

Where is UK mortgage market going?

A very good question indeed, the state of UK mortgage market has been steadily deteriorating over the course of past two years. After the market breakdown between 2007 and 2009 there has been a ray of hope for better future as property prices started gaining on value. Even though that happened, what really is going to become of the mortgage market before our very eyes?

History and finance, while seemingly totally different subjects, have something in common: you can try to predict both by comparing past sets of circumstances to present, creating analogies and drawing up conclusions for current events.

One of people dealing with this particular discipline is Jonathan Davies, world renown economist and wealth building specialist. Regardless of his reputation and accurate past predictions, if you're about to sell some properties, in a few minutes you will really want him to be wrong this time. The gentleman claims that the temporary rise in property process was just a mere fluctuation and prices will inevitably fall very sharply over the next two to four years, even by 30%.

Should this prove to become reality, it will change the mortgage market and nationwide quality of living for the years to come. Just imagine the financial disasters of people who opted for bad credit mortgages to cover the costs of their properties during the last couple of years. Without fail, those very same people may find themselves with loads of negative equity, effectively crippling their finances.

The way it works is very simple: customers who's credit score is less than satisfying opt to pay more interest and get the mortgage anyways. They sign up for a loan which is outrageously expensive in the long run, but most of them hope to refinance in two or three years and lower the interest on remaining period of time.

Due to how refinancing works, however, the object being refinanced has to be of more value than the amount of loan taken. It's very logical since in case of mortgages, refinance is really just another secured loan. Secured against the property in question, which means that if you fail to keep up with monthly repayments your property will be repossessed to cover the remainder of loan. The repossessed property has to be of enough value to sell and pay for the loan. Now imagine all those people who took out high interest, bad credit mortgages, paying interest only for the first couple of years in hopes of shaving some money off monthly payments while waiting for good opportunity to refinance.

If prices really drop this drastically, those people will not be able to refinance. They'll be stuck with very expensive mortgages on properties which are no longer worth the money paid for them, and there will be no easy way to get rid of them.

POST COMMENT

Ways To Ultimately Succeed at Twitter Using Successful Marketing Methods Tricks to Gain Maximum From the Shares Market Why Uniqueness Is The Key Factor To Get A Perfect Marketing Logo Design? My Shed Plans by Ryan Henderson – Is it Scam ? Do Not Fail in Affiliate Marketing! Discover 5 Basic Rules For Online Wealth Creation Types of baseball Trading Pins are available in market "Product Marketing" - Free Traffic Secrets Exposed! Magniwork A Scam-Magniwork Power Generator Scam Article Marketing Success: Are You Writing for One Person or the World? Beat Eczema Scam-Beat Eczema Book Reviews Popular Sales & Marketing Management Courses : Sales & Marketing MBA in India Multi Level Marketing System Exposed 7 Day Belly Blast Diet Scam-The 7 Day Belly Blast Diet