This week we shall undoubtedly see the thorny subject of bankers bonuses raising its head again, especially as Barclays are due to be the first bank to reveal its bonus figures on Tuesday. Whilst this is a cue for Vince Cable to stomp down the well-trodden warpath, the property market is usually a beneficiary of this.
Already this year we have seen the number of enquiries for large mortgage loans on £1m plus properties increase dramatically as many traditionally cash-buyers look to take advantage of low mortgage rates and property prices that in a few years time will look like a very good deal as the economy improves.
With things as they are at present many of these High Net Worth borrowers wish to hang on to part of their cash for either rainy-day funds or invest it elsewhere. After all, when you can finance 50% or 60% of a property at rates just over 2% it leaves a lot of options open.
However, what is even more interesting is the view that many of our City clients hold that fixed rates are the way to go, with 5 years being particularly popular on at least part of the loan. In fact as one client told me, “Anyone not looking at fixing over the next few years is frankly mad”. Actually, frankly was not the actual F–word used, but you get the picture!
Although in recent years Private Banks have been filling the void left by many traditional lenders turning off their lending taps, it is welcome to see that the appetite for large mortgage loans is returning to the High Street. Many lenders are now comfortable again with loans up to £1m, and some are looking at returning to the £1m to £2m lending arena this year.
In fact, some are already doing this quietly for certain brokers and clientele, offering products that are comparable with Private Bank offerings and do not demand a slice of the customers assets to manage to help “sweeten” the deal.
Whatever you think of bankers bonuses, (and the average banker in my experience is not a power hungry monster driven by greed, but a hard-working, decent individual doing a valuable job in today’s’ financially led world), “bonus-season” is an important time for those working in the property market.
Not only does it help to free up property further down the chain, but I am sure the tax revenue from the higher stamp duty levels will be most welcome.
Of course those looking for these large mortgage loans may not have the same borrowing issues as those potentially looking to purchase the properties they vacate, due mainly to the amount of deposit they are able to put down, so mortgage lenders do still need to do more to assist 1st and 2nd time buyers before a healthy, realistically priced housing market returns to full health.