The negative effects from the United States sub prime mortgage debacle has finally reached the shores of United Kingdom, and the ensuing credit crunch means that we are living in trying times. For those not in the know, a credit crunch occurs when financial institutions acts to curtail loans due to losses it could not sustain hence making it both more expensive and yet difficult to get financing.
It is the situation both the United States and major European countries are facing now, and was the direct result from the collapse of the sub prime mortgage in the last two years or so. The property bubble, sustained from the years 2000 to around 2006, saw prices rise as high as 50 percent in almost every state in the US, and saw high levels of speculative buying especially from those who could not really afford them. Thus arise a spate of Ninja (No income, no job agreement) loans whereby the mortgages hinges mainly on the premise that the property’s increase in price would offset the little or no collateral factor in the loan.
While it went okay for a while, there was no way such a model could sustain itself and the market corrected itself in a bid way and since then the property bubble had popped and burst at its seams. Prices went tumbling down, and correspondingly, defaults went up. Though prices were low, far too many homes flooded the property market causing price level to push even lower in property auction, and thus, lenders were left with a high loan which no one was able to service.
The complexity of modern financial instruments saw even banks outside the United States being exposed to the losses, and this was no small losses. It is estimated that banks were left straddling nearly USD500 billion on losses from the debacle from the more than USD5 trillion US property market. Of course, the reaction from major banks would be damage limitation and hence the credit crunch we are facing now.
It is however a good time for those with ample cash to find some good homes especially in London, where the property market did not suffer from the same blowout due to prudent pricing. Defaults are still the order of the day however and as such there are some good homes up for grab at London property auctions including mid to high end properties including those in Fulham, neighboring posh Chelsea. Those looking for great value homes can really find some good purchase provided they are willing to look around.
You should seek the assistance and services of trusted property auctions agents in your search so as to not end up with a lemon of a purchase in a home overvalued from the non payment of a high mortgage. Most of these homes were bought as speculation and when the hoped for hike did not happen, the purchaser has no choice but to auction it of. You should be able to spot some of these properties when browsing through property auctions catalogue which lists all the homes available as well as their respective reserved prices.
Be extra careful with properties with low reserve prices that do not garner good responses which points to such homes as being bad purchases. Trustworthy property auction agents should be able to tell you why. You should try to just pop by the house you are eyeing just to see if the picture in the property auctions catalogue is representative of the real thing. Many such house owners choosing this route find themselves stuck with a property that requires far too high an outlay in order to make it habitable.
Internet savvy property seeker can also look up properties listed in the property auction co uk website which is quite extensive in its listing of available homes. The same precaution should be exercise though as it is with the ordinary auction catalogue in that you should try to see the property with your own eyes or at least via a property agent. As it is with any property auction, though, be ready to move in swiftly should you find a value buy as there would undoubtedly be others doing the same. Most of the time, a good property should see at least valid bids from three or more potential buyers. Bid the highest that you could but do watch out for a far too high a pricing as it is still better safe than sorry in such trying times.
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