Largely responsible for the prevailing funding crisis our banks have found an easy target to join the millions of their customers already suffering from their excessive hubris and greed - our hapless socialist Government!
Gordon Brown is an unlikely banker's friend but in his desperation to do anything that will achieve public approval he has agreed a £50 billion bail out to loosen the current mortgage funding shortage. Hopefully this and a further £50 billion fallback amount which the banks will undoubtedly seize on might ease the strangling of the property market which threatens to turn a modest correction into something far more serious.
Having wasted billions in ill considered forays into overseas markets and financial mechanisms beyond their competence and despite obscene levels of profit from other activities our bankers the new age "robber barons" of our society have gone cap in hand to our government to help them from the pit they have dug themselves. As that new sage Vince Cable the Lib/Dem spokesman pithily put it "The banks want to privatise their profits and nationalise their losses" - absolutely! Of course the ultimate underwriters of this "bail out" are the taxpayers already suffering mortgage interest rate increases at a time of base rate reductions.
Abbey haven't earned the nickname "The Shabby" without cause - within hours of Browns funding announcement they gave his plan the proverbial two fingers by hoisting their rates by over ½%! Who will follow them Nationwide, Alliance & Leicester and HBOS would share favouritism. Whilst Nationwide are a building society they behave like a bank being the only mutual to be joined in the current OFT case against unfair banking practices and charges.
As so often with Brown "The devil is in the details" of his rescue plan - "specialist lenders" and most building societies will not share in it. So building societies who have managed their lending prudently will get no assistance. It will be reserved for the banks and the big three building societies Nationwide, Yorkshire and Britannia.
Expatriates are increasingly marginalised by lenders. They need not worry about, Nationwide's terms as in common with many of the largest lenders they view expats as alien beings when it comes to mortgages. Whilst happily accepting deposit funds from expats lending to them is anathema
Our January website headline "Moneys too tight to mention" correctly forecast the current lending crisis as lending is down nearly 50% against a year ago and the number of mortgage products decimated to 20% of the products available then.
The shortage of funds has been seized on by the greedy banks to dramatically increase their lending margins- less money so let's charge more for it! Profiteering from borrower's misery is appalling and should be stopped but our government kow tows to these lenders.
A year ago a good 2 year fix was costed at 5.35% - now 6.09% is a benchmark a 0.74% lenders margin increase when bank base rates have been reduced by 0.25%. On expatriate buy to let deals we have The Mortgage Works (TMW) a subsidiary of Nationwide asking 6.99% for a 3 or 5 year fix with a 0.75% arrangement fee - that's a huge margin measured against a 5% base rate. Just to make sure they are not at risk a 30% personal stake in the property is required.
Thankfully many building societies who wisely avoided their banking counterpart's forays into ill advised ventures have wisely continued to match their lending requirements to their member's incoming deposits and repayments. They should be strongly positioned to provide some sort of "normal" service if they don't succumb to the barrage of new "friends" who will suddenly see their merits. Building societies deserve to be supported combining traditional values and service with rates usually more competitive than banks with shareholders and ever fatter executive cats to feed.
We have previously highlighted the difficulties in funding new build buy to let apartments - these problems have been greatly exacerbated by the current "squeeze". Many lenders have withdrawn from lending on these properties at all - others now limit their loans to 60/70% with fierce underwriting requirements and unattractive lending terms. If funds are needed or going to be needed for this type of proposition its time to make friends with the limited number of players in this marketplace or with brokers whose longevity and production of good quality business with lenders should give them an edge.
Hopefully those who have predicted or are predicting a property price collapse will not be allowed their moment of Schadenfreude. A "correction" would not come amiss but the banks need to start "playing the game" and if they don't its long overdue that Gordon Brown finds a backbone and makes them put their houses in order and treat their customers fairly.
Expats wishing to compare their own loan package with what is currently available should click on IMP's website at http://www.international-mortgage-plans.com/ which gives an overview of the current marketplace, lenders comparable terms and incorporates a cost and commitment free 48 hour acceptance in principle. Alternatively email firstname.lastname@example.org
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