Monday, January 12, 2009

House Building

I had a most interesting talk this morning with a builder of houses.
He felt that the vulture funds only had about 6 months to get their money invested, as, since the big boys had muddled through Christmas, things in the New Year had stabilised somewhat.
The problem is still the Banks not lending, but it would appear if you have a good deposit, things are not too bad. Of course, if the price has come down from £200,000 to £145,000, a 25% deposit drops from £50,000 to just £36,250 - still a lot but much more manageable. Arguably, you shouldn't be trying to buy a house unless you have that kind of cash available - and on the remaining £108,000 you only need a salary of about £30,000 to have a proper old fashioned capital and interest mortgage.
That's actually part of the problem with the present position - the interest only mortgages meant no one was paying anything back to the Banks and Building Societies, and that capital element was always a large part of what was re-lent.
So you heard it hear first - the construction industry has another 6 -9 months maximum before it improves somewhat.
Or we're all doomed.


Winchester whisperer said...

But what's the longest dated mortgage available and if it's not being offered by Northern Rock, what is the reason for that?

kinglear said...

ww - I don't know - the longest I heard of previously was 40 years - if you were under 25.
NR are simply pulling money back in and giving it to the BofE