The Future For Mortgage Brokers – Part 2
Estate agents, magazines, newspapers, websites, and already mortgage brokers were enticing people to buy almost any character they could get their hands on citing extraordinary historical capital growth rates as a basis for expecting the same growth in future years. Had similarities around the world continued to grow at such upsetting rates it is likely that the next generation would find it impossible to buy a home anywhere in the civilised world. It was clear that a bubble was forming, however nobody wanted to confront reality and let in it. Times were go good that similarities being secured by way of deposits already before a single brick had been laid while developers were planning and constructing a record number of similarities on almost any piece of vacant land they could obtain.
Fast forward to 2008 and the story is quite different. The credit crunch is in complete swing and the character market has begun to contract. The headlines are now reporting monthly declines in the average price of character in the UK and developments throughout Europe and the world are struggling to sell plots. Many developments have ceased part way by construction as they struggle to raise the capital to continue their projects.
The bubble has truly burst. People are now uninterested in investing in character and they are reluctant to sell their own homes and move into new homes. This is because the wait-and-see effect has entered into the psyche of the average punter as people prefer to keep where they are and wait out the worst of the credit crunch. And why not – who wants to sell their home at a substantial discount?
For mortgage brokers this not only method that there is less business to do for buy-to-let investors, there is also a without of business flowing in from people selling up and relocating. Because of the turmoil with interest rates – will they rise or fall? – many homeowners are also reluctant to refinance their homes. This has resulted in less remortgage work for mortgage brokers. With declines in all three of these markets it is no surprise home loan specialists are hitting the wall.
But it is not all doom and gloom in the character market. Unemployment is a meaningful factor in driving character prices down and it ha so far remained at manageable levels throughout the Western world as business try to retain staff and tough out the credit crunch. character prices are falling, but they are not in freefall. History may show that the late 2000s provided no more than a correction to character prices and many argue that it would be a correction we had to have. With character prices before exceeding six times homeowners’ salaries in some areas of the UK at the height of the character expansion it seems apparent that the bubble had to burst.
So while it would be foolish to predict that the character market is going to crash and burn like never before, it is worth noting that the next calendar year could prove telling for the character market and consequently mortgage brokers. Unemployment, while historically low, is rising. Each half a percentage point rise in the number of jobless results in many thousands of people joining the queue at the unemployment office and ceasing all activity with regards to the character market.