Think Money warns boom in rental market indicates ongoing trouble
for mortgages
Released
on: September 2, 2008, 4:43 am
Press
Release Author: Melanie Taylor
Industry:
Financial
Press
Release Summary: The recent boom in the rental market reflects
the continuing difficulty for homeowners trying to sell, and may
even prolong the problems in the housing market, says Think Money.
Press
Release Body: Financial solutions company Think Money
(thinkmoney.com) have warned that a recent
boom in properties put up for rent may indicate further trouble
in the housing market towards the end of 2008 and going into 2009.
Recent
findings by RICS (the Royal Institution of Chartered Surveyors)
have shown a significant surge in the number of homeowners being
forced to put their homes up for rent rather than selling, because
many homeowners believe that “becoming a landlord is a better
option than selling in the current climate”.
Faced
with increasing mortgage
costs and a very slow housing market, many homeowners are finding
it more financially viable to put their own homes up for rent,
while at the same time renting cheaper accommodation for themselves
– effectively making a ‘profit’ each month,
which helps towards their own costs.
The
survey also indicated that many would-be homeowners are currently
forced to stay in the rental market, as the UK economy experiences
70% fewer mortgage approvals than this time last year.
Melanie
Taylor, Head of Corporate Relations for Think Money,
commented that the RICS’ findings reflect a continuing downturn
in the housing market, despite recent suggestions that mortgages
are becoming more freely available.
“The
news that several lenders have been dropping their interest rates
raised some optimism for the housing market,” she says,
“but these statistics from the RICS give a less positive
picture.
“It’s
true that interest rates are coming down for prime mortgages,
but for the majority of consumers, getting onto the housing ladder
is still proving difficult.
“For
those already on the housing ladder, it’s getting off it
that’s proving difficult. The lack of activity in the market
continues to be a real problem for those looking to sell –
which is forcing many to put their homes up for rent while they
wait for the housing market to recover.”
Mrs
Taylor also added that the boom in the rental market could have
a knock-on effect on the mortgage market. “Even though
the number of homes for sale is getting smaller, the decreased
demand for mortgages means that the fall in house prices is being
sustained,” she says.
“Only
when mortgage lenders begin to relax their lending criteria are
we likely to see this situation change.”
Mrs
Taylor continued that in the current market, renting out your
home can be a viable option for freeing up extra funds, but warned
that the responsibility of becoming a landlord is not to be taken
lightly. “As long as you are willing to make a temporary
compromise on your living conditions, you can significantly cut
down your outgoings each month, which could help you financially
and enable you to save up for when the housing market recovers.
“But
it’s important to remember the responsibilities of being
a landlord. In particular, if anything goes wrong, you are responsible
for the costs,” she says. “So make sure you aware
of the risks if you’re considering taking this step.”
Think
Money (http://www.thinkmoney.com) are a financial
solutions company based in Salford Quays, Manchester. The company
specialises in a range of financial services, including mortgages,
loans, debt help and advice (including debt management plans,
IVAs, and debt consolidation).
Web
Site: http://www.thinkmoney.com/mortgage/
Contact
Details: Melanie Taylor
0800 074 4222
melanie.taylor@thinkmoney.com
2008
