With the economic downturn, the recent times are proving to be challenging for property investors who need to make new investments to increase their portfolios. A lot of the lenders have suddenly tightened the credit lines and obtaining a buy to let mortgage is now proving to be harder than ever.
Times of low deposit mortgage have long disappeared and this has locked out a lot of property investors out of the market. That in turn has led to lower sales of property and a marked reduction in the property investment market.
If the property market activity of the previous years is to return, then we would need to see a significant increase in the amount of commercial mortgage products available to allow buyers to return to the market. Property investor buying activity is a significant factor that drives the market direction and until these investors return to the market, the situation of the property market is likely to remain grim.
This means that the recovery in the market will be a long and slow process, taking a number of years before we return to the [previous highs of property prices. The ball is firmly in the lenders court to drive the market upwards. However, that does not mean that we go back to the irresponsible bad credit mortgage lending practices seen in the previous years. It simply means an increase in responsible lending is required to give the market a push start.
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In this year 2009, there goes a liquidity crisis in which there is shortage of supply cash to lend to consumers and businessmen. In result, these business owners are dealing with the shortage of commercial funds. Before, any business can go in to a bank and went out with a line of credit available to support his business. During the crisis, this was changed. Even business men with high credit scores and good credit history are being turned down when they apply for commercial loans.
