We would of course prefer to look at the Nationwide as offering a step in the right direction, and even if we take an average it may indicate that the fall in residential property prices is starting to slow down, and if that is the case the next logical step is looking for the market to bottom out.
We maybe a little way off this stage as the market had predicted a 10% fall this year and the market to bottom out by the end of this year, and some positive signs of recovery next year. If we can bring any of this forward it would be wonderful for home owners who may feel stuck in negative equity or who are unable to sell at a realistic price to enable them to move house.
The major problem is finance with mortgage lenders avoiding any clients who may have had even a small blip in their credit rating, and looking to lend at 60----75% LTV to clients with a good credit rating. How many clients particularly first time buyers have that size of deposit. Although lenders say that they will lend at 90% LTV, you are going to have a first class blue chip credit rating.
So how does all of this effect the commercial mortgage market and the access to the commercial mortgages that go with them.We have to look back at history to see what happened in the last recession during the late 1980's and early 1990's. The residential property started to fall following the withdrawal of double MIRAS in 1988 and did not show any real signs of a positive recovery until 1995.
That was a very long time in the doldrums, and we did not have the problems of credit scoring and money supply.Today we have a massive pent up demand from clients who wish to buy for the first time and clients who need to buy and sell for family or work related problems and cannot because the supply of mortgage money has all but dried up.
Commercial property has traditionally held its value and has not been subject to the same fluctuations as the residential markets.This time however the money supply has hit business very hard and with clients who are now being very careful how they spend their money, shops and businesses have had to cut their margins to the bone to attract customers, with survival being the name of the game.
In the past commercial property did not suffer at the same time as the residential market and tended to take any impact some two years after the residential market began to decline. The importance of the revival of the residential market is that has to happen prior to any sign of recovery in the commercial market..
Again we have clients who want to start a new business, or expand what they have, or who want to take advantage of current market conditions and build up a business into new areas of commerce. The frustration in business is tangible and long established businesses struggle to come to terms with the banks who have forgotten how to lend and who they should be lending to.
Without the access to flexible banking,commercial mortgages, finance, and loans we cannot get out of this straight jacket that we are in through no fault of our own. The banks have to take responsibility for where we are today and not penalize the good clients who have been the mainstay of the business community in the past.
With access to finance, mortgages and loans we will get out of the situation a lot quicker than if we have to remain on a starvation diet of the money supply. Listen Gordon Brown, you started out being called Flash Gordon and now we are down to Grey Gordon.What we need in business is a return to confidence in the market and that should start from the top. Its no good talking about doing some thing you do have actually do it to see any changes in our access to normal banking.
Come on Gordon lets make access to commercial mortgages, finance and loans a priority now and lets get businesses going again and put smile back on the business community and the country in general.
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