September 18, 2007
Buy to Let threatens property market
After the problems in the states with their sub prime mortgages, the humble buy to let speculator in the UK is now being compared to the sub prime mortgages and some experts believe that the same thing may happen here in the UK.
The typical buy to let speculator buys property on a mortgage and is counting on the rental income to pay the mortgage for him. But after the sub prime and Northern Rock events banks are going to be very careful how they lend money out and for what purpose. After all a young couple buying their first home has to be a better bet for the banks, than a speculator who is looking to borrow huge amounts on a property that they have no intention of living in.
With interest rates high and banks being ultra careful, the property market would change and prices would no doubt fall. This would trigger other buy to let investors to sell and if this happens the whole property market could be effected.
Source [Bits of News]
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