September market overview

What a week for the financial world.

Lehman Brothers went in to administration

AIG (the world’s biggest insurer) was Nationalised to save if from meltdown
Merrill Lynch (and possibly Morgan Stanley) were forced into the arms of “safer” bank
HBOS saved from a Northern Rock-like run. Being snapped up by Lloyds for a relative pittance

A year ago, any one of these events would have been regarded as laughably impossible. All five have happened in just five days.

Many grew up reading of the Wall Street Crash of 1929 - will our grandchildren talk of the “Mortgage inspired World Credit Crunch of 2008”? Who knows?

We do know the following:

These huge incidents are impacting the financial markets across the globe. Newspapers and other media seem to revel in what could be the downfall of capitalism; we all still prefer to live indoors. The ability for us to be able to raise mortgages to buy our homes continues to be an imperative in a modern economy. Although property prices may fall in the coming 18 months, the massive undersupply of housing in the UK will prevent any long term deterioration in house prices.

Mortgage lenders will continue to offer mortgages. It’s just that there may be less lenders than there were last year, and there may be less again in 2009. But, once the market begins to head upwards again more lenders will arrive in the UK and provide further choice.

Now, more than ever, it is clear that good quality independent mortgage advice is an important service. As more companies cease trading, our level of experience is increasingly unique. You can use our services to get access to many schemes you cannot find in your high street and benefit from out long term connections. These are at the highest levels with so many lenders.

Because of the shock waves currently rushing around the world, LIBOR (the rate at which banks lend to each other) has risen. Mortgages are being re-priced every day and they are very likely to be going in an upwards direction soon. We can expect all the major lenders like Halifax, Woolwich, C&G and Abbey to have higher rates.

Now is a good time to get in touch with us to try to reserve monies, mortgages are highly likely to be cheaper now than over the next few weeks.

The mid term view must be that Bank Base Rate will fall over the next 6 months, perhaps by up to 0.5%. This makes Bank of England tracker products, particularly at low loan-to-values, more attractive. None the less for the more cautious, as I write this, there are many well priced fixed rates worth considering, depending on whether you are buying or re-financing at present.

For an up to the minute view call us and speak to one of our advisors. All of whom are experienced and with an average service time of 10 years at Chase De Vere, expert advice is just a phone call away.

Hopefully before we pen an October update no more institutions will expire, and effect the market in a negative way. We appear to be in the eye of the storm - things can surely only get more stable from this point on……

Simon Tyler

18^th September 2008