Can you believe it?  Well yes I can!  I did not think they would come back as soon and from such a large lender but they are back.

 

The lender: Nationwide

The borrower: existing customers

 

Now Nationwide are a massive lender to the UK property market.  They employ analysts to study the state of the UK property market as they have literally billions riding on it.

 

So what do Nationwide think?  Well they think the UK property market is:

 

1. suitable for lending purposes
2. suitable to lend at greater than 100% of the value of the property

 

If you were ever looking for a clue or a hint that UK property is okay then this is it!

 

Nationwide have obviously examined the risk and have come to the conclusion that they can lend 125% of a property's value today and not put the bank in any financially weaker position.  This is because Nationwide believe one thing and one thing only:

 

Prices are going to rise fast

 

Now if I were to read between the lines I would perform the basic calculation:

 

Building Society LTV   125%

Normal Risk LTV           90%

Differential                     35%

 

35/90 = 39%

 

So Nationwide think property prices are going to rise 39%!!!

 

Now this is a very very crude calculation however it seems that the Nationwide at least think their money is safe lending £125,000 on a property valued today at £100,000.  This is very brave. 

 

Now I know one thing. They would not have made this decision lightly.  They know something that we don't.  I reckon more lenders will start coming out with 100% mortgages.  It was just Nationwide who had the balls to do it first (and in style in my opinion going the full distance with 125%!).

 

So expect to see 100% mortgages for existing customers and soon, sooner than you think a 100% mortgage for brand new customers i.e. first time buyers.

 

These lenders do not care about upsetting the government.  They could not care.  They will do whatever it takes to take market share and provide a return for their shareholders.  Mercenary but true.  Would you expect anything else from a company that you owned some shares in?

 

We are in a drought however finance is out there.  This presents a massive opportunity for the bargain hunter.  Is that you?  If so we can help you find those bargains and help you buy those properties no money in.  Contact us and we will tell you how you can be a member of the Ahuja Group.

 

Ajay

 

Posted on: 13th Jul 2009