Mortgage lending at record levels as property buyers scramble to beat June Stamp Duty deadline
Mortgage lending up to record levels as property buyers scramble to beat June Stamp Duty deadline
Mortgage lending reached £11 billion in March – the highest since records began in 1993 – as a result of the mad rush to beat the stamp duty holiday, which ends in June.
The Bank of England reported that there were 80,000 mortgage approvals in March, up from 73,000 from the previous year, buy slightly down on February’s figure.
Although the property market has boomed in the last few months, there are signs that some areas are slowing down. I’m seeing a lot of London prices fall sharply, as Estate Agent send me emails every day offering price reductions of up to £50,000 or around 10% of the asking price.
We have almost reached the point where it would be extremely difficult to buy and complete with a mortgage purchase before the end of June if you have not started the legal process already.
Another word for mortgage is ‘debt’. We have seen debt spiralling all over the world as government’s borrow or print trillions of dollars to prevent the economy from going into recession.
Whilst people in work are paying down credit card debt, there are signs that thousands of people are getting deeper debt, according to UK debt advice charity Step Change.
Sometimes this can be as a result of a catastrophic change, like a job loss or divorce. In other cases, it’s purely down to mismanagement of money.
Debts can creep up on you like a disease and before you know it’s too late and you are in too deep.
If this happens to you, take professional advice and do not bury your head in the sand hoping it will all go away. It won’t! In the UK, you can talk to charities such as citizens advice and Step Change
Once you talk to recognise charity, interest and penalty charges on your debts, as well as legal action, can be frozen for 60 days. This gives you breathing space and a chance to put together an informal debt repayment plan.
I was clearing out some of my old files for shredding yesterday from my financial advisor business. I came across several clients who reminded me of the importance of saving and investing.
One particular client first sought my advice 20 years ago when she had been through a lot of financial problems. To cut a long story short, we put a plan together and I arranged a mortgage for her to buy a second property by re-mortgaging her residential home.
At the time, houses were cheap and you could buy a three-bedroom property just outside London for around £80,000.
She had absolutely no money and I remember listing her non-property assets on my fact-find form as “£200” in the bank, and that was it. However, she some equity in her property, a mortgage and some consumer debt.
She used that equity to fund a deposit for a second property and a couple of years later did the same thing again.
She continued repeating this process over the following 20 years.
As I said, she started with £200 in the bank. In fact, she had several other personal debts so was actually in the red.
When she unfortunately passed away last year in her late 50’s her estate was worth around £1 million.
Not bad for someone who started with £200 in the bank.
Almost all of her wealth was due to her buying properties and holding them. Don’t forget that she was holding his properties during the 2008 financial crash, but they bounced back.
She never bothered very much with Pensions or the stock market because she said she did not understand them and prefer to invest in something she did understand like property.
3 Key Takeaways
- She did start taking money seriously and stopped using expensive consumer credit to buy consumer products which went down in value. Instead, she borrowed cheaply to buy assets which went up in value and put money in her pocket.
- She built her wealth using other people’s money. Could she have saved £1 million in her lifetime from after-tax income? No way. In Robert Kiyosaki‘s classic bestselling book, Rich Dad Poor Dad, his rich dad asked Robert, “how long would it take to earn $1 million?”. He then asked “how long would it take to borrow a million dollars and invest it to make more money?”
- She bought and held for the long term, despite the 2008 downturn.
You can learn to do the same thing.
I’ve seen countless examples of people building wealth over time through investing wisely and patiently. Some in property, others in business or the stock market. The principles and skills are the same and are learnable by anyone who makes the effort.
I’m giving away 3 free coaching calls sessions to anyone who is prepared to take the time and effort to learn and master money. Look out for the link in the next 48 hours on my Charles Kelly Marketing Facebook page https://www.facebook.com/CharlesKellyMarketer