UK Property Market Still Recovering From 2007 Financial Meltdown

UK Property Market Still Recovering From 2007 Financial Meltdown

Five Years After the financial collapse of the UK’s 5th largest mortgage lender – Northern Rock, the UK property market is still struggling to return to its halcyon heyday, many potential homebuyers are still trying to get on the property ladder.

However, educated property investors are cashing in using the best techniques taught by successful property investment experts who have been making money from property since the crash.

What happened?

In late 2007 and early 2008, many UK financial institutions suffered near collapse due to the onset of global financial meltdown. This economic crisis was the worst since the Great Depression of the1930’s.

Northern Rock Fiasco Still Haunting UK Property Market

Northern Rock Fiasco Still Haunting UK Property Market

Banks had to have government bailouts and investors faced economic downturns on stock markets the world over.

This led to the sub-prime mortgage crisis in the United States of America (USA), where US banks had to provide emergency bailouts to the 2 main mortgage lenders, Fannie Mae and Freddie Mac, due to restrictions on the availability of loans.

The repercussions of the US crisis were felt in the United Kingdom, particularly in the property market.

The U.K. credit crunch began because The Bank of England had to provide emergency funding to the 5th-largest mortgage lender in the UK, Newcastle-based – Northern Rock. The Northern Rock Crisis caused panic on many UK high streets.

Investors suffered vast losses due to the high proportion of mortgage loans made to homebuyers in the United States who had a poor credit history. Banking institutions and investors were left unable to offset debt from these sub-prime mortgages.

One UK lender affected by the toxicity of the situation was Northern Rock, who were bound to struggle because they were acting as a specialist mortgage lender.

Although Northern Rock was still profitable at the time, many customers withdrew the contents of their accounts out of fear of losing money. Northern Rock suffered losses totalling over £2 Billion (GBP) and had to be bailed out by the UK government.

Five years on…

The UK property market has changed dramatically since the 2007/8 global credit crunch that affected Northern Rock.

Now, it is much harder for property buyers to even get a mortgage, as lenders have reigned in lending because they are still scared of over exposure and almost all mortgage lenders have tightened their qualifying criteria and revised the loan to value of many of their mortgage products, with some lenders withdrawing what used to be their most popular interest only mortgage products.

Even selling property to potential buyers has become more of a challenge. As property asking prices continue to fall

Statistics Then & Now

Number of properties advertised for sale

2007 – 120,000
2012 – 93,000

A drop of 23%

Number of properties sold

2007 – 129,000 properties sold.
2012 – 74,000

a 44% drop.

UK property asking prices figures for both 2007 and 2012 are almost the same, with 2012 just about £1000 (GBP) less than in 2007.

Number of mortgage approvals

2007 – 105,000 approved.
2012 – 50,000 approvals.

With the collapse and government buy out of Northern Rock, the UK banking system has seen some readjustment but it is safe to say that the UK property market has changed drastically.

Northern Rock, a once solid financial institution was bailed out by the government and became publicly owned 3 years ago is now owned by Virgin Money, and is remarkably still trading, although the government state that lessons have been learned, many UK investors and even homebuyers are still struggling with doubt and it may be that the UK property market will never be the same again.

Now there is a brand new resource available for serious property investors, who want to get the most from property – A step by step zero-to-multi-millionaire Property Investor Roadmap – written by successful Multi-Millionaire Property Experts – Rob Moore & Mark Homer of Progressive Property.

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