Why Are Some Banks Being Cautious Of Harborne Homebuyers and Buy to Let Investors?
As the property market continues to grow in Harborne, its becoming more apparent that banks are becoming more cautious at giving mortgages to both homebuyers and Buy to Let Investors.
The Harborne property market is an enigma and chock-full of contradictions.
Notwithstanding an economic recession and forecasts of property values dropping, nobody seems to have informed the Harborne homeowners selling their homes and those Harborne people looking to buy them. As I have discussed in many recent articles on the locality, the Harborne property market is booming and property values in some sections of the market are rising, yet amidst enthusiastic reports of gazumping, there are disgruntled and malcontent grumbles about mortgage company surveyors down valuing property on survey.
However, before we talk about the banks and surveyors, let’s look at what is happening in the Harborne property market now.
Land Registry figures published last week showed unyielding evidence for what everyone in the property industry had been saying since the market reopened after a seven-week lockdown on May 13: property prices are rising.
The average value of a Harborne home rose by 0.3%
in the year to June to £345,400
Many expect the statistics to show more rises following the Stamp Duty Holiday announced in July, which unbridled a burst of buying activity in the Harborne property market. In many (not all) sectors some properties have been going for over the asking price whilst some have been going to sealed bids.
Some newspapers have even suggested a small minority of homeowners are ‘backdoor-gazumping’, which is genteelly being referred to by estate agents as ‘retuning the asking price’ — as in, the homeowner removing the property from the market, ‘retuning the asking price’ in an upward direction, then placing it back onto the market.
Conceivably enthused by these stories, some house sellers and estate agents might be getting a little carried away and placing overambitious asking prices on homes they are selling. Customarily a property with too high an asking price wouldn’t sell — yet some over-enthusiastic Harborne buyers are paying over the odds for certain types of properties.
So, let’s look at what is happening to the Harborne property market by house type and the number of bedrooms ...
As you can see, the best performing type of property in Harborne is the semi-detached house and the best-selling properties when it comes to bedrooms are 3 beds.
These are quite impressive figures for the Harborne property market, yet some of the banks are having none of it
They are looking apprehensively into 2021 when furlough/the new job support scheme ends, meaning it’s quite tough for all buyers borrowing high percentage mortgages (i.e. more than 80% to 85% of the value of the property in a mortgage).
It is even tougher for self-employed buyers (whose income is less than assured) to get those high percentage mortgages — and finally, the banks are most certainly concerned with high percentage mortgage buyers who pay over-inflated prices for property using the bank’s money… hence the down valuing (Definition of Down valuing : the buyer and seller agree a sale price, then the mortgage is applied for with the buyer’s bank and the bank’s surveyor states the purchase price the buyer is paying is too much).
One small note to Harborne landlords: I am also hearing that some overzealous Harborne buy to let landlords who are over-egging the potential rental figures on their buy to let purchase in order to obtain the mortgage, are also being reined in by the banks.
Now this is not a huge issue (e.Surv – a nationwide surveying firm only reported a 4% increase in surveyors having to down value property in Q2 2020 compared to Q1), yet should you be lucky enough to have multiple offers on your home, ask the agent what the overall buying position of the buyers are. You need to specifically ask what percentage loan the buyer is taking on and the position of the buyer in the chain (they have to find this out anyway by law and you have a right to know that information as the property seller if you ask).
The bottom line is the highest bidder might not be the best buyer for you. It’s true, average property prices are rising nationally, yet this does not mean you should pay over the odds for your next Harborne property.
If you would like a chat about any aspect of the Harborne property market – please do send us a message or pick up the phone.