Weekly Q&A With Executive Director Ed Mead And Mortgage Expert And Director Of Coreco Andrew Montlake - Feb 12 2015

Weekly Q&A

Weekly Q&A With Executive Director Ed Mead And Mortgage Expert And Director Of Coreco Andrew Montlake - Feb 12 2015

Join our weekly questions & answers session with Executive Director Ed Mead and mortgage expert and Director of Coreco Andrew Montlake.

    @RishiB: There is a definite disconnect between second hand and new build. Traditionally new build is an investment BUT there does seem to be a shift in demographics insofar as many wealthy older retirees are now looking to return to London. These buyers could take up a lot of slack IF the developers can wait. Overall the foreign ownership "thing" was driven by developers needing to fund their developments in the fact of sticky bank lending. This led to the growth of prices and overseas ownership. CGT changes shouldn't affect this and with the world economy looking a little fragile again perhaps these flats will prove to be a bit of a safe bet again. Overall though I think price gains will be more modest in these areas so those buying them will need top be taking a medium term view on their values. When finished Nine Elms as an example will look fabulous, but who will want to rent these places whilst the work is going on.....
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    Monty, if mortgage companies are now fighting for market share and are driving rates lower, aren't they creating a rod for their own back because surely the rates they are lending at are difficult to make money from - is it a loss leader?
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    @JamesC: Great question. The reality is that lenders have been making good money for a while now as Bank Base rate and SWAP rates are low, so the cost of funds are relatively low. The spread therefore between this and the actual rates they have been providing is a pretty good margin. Add in the fees and it works quite well. Of course as competition increases and rates get lower then they do start to eat into that profit margin which means that they will only go so far. There will be the odd loss-leader in there to get business in but this will probably be a short-term strategy to get as much PR as possible. These days there are also other considerations such as capital adequacy to think about and slightly differing costs from lender to lender, dependent on where they get the funds to lend out. It is an interesting time and we will see how far lenders are prepared to go to get the business in.
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    Quiet week but good questions, thank you everyone.
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