For Eager Risk-takers Mortgage Lenders Have The Final Say By Michelle Harricharan At Isnare.com Ezine Articles

Housing prices in the UK have fallen for the eight successive month, this time dropping to historic lows according to The Royal Institution of Chartered Surveyors. These consecutive drops resulted from the inability of potential buyers to secure mortgages.

However, the current credit crisis and the tighter lending criteria expected by many banks have not thwarted some buyers from wanting to take advantage of falling housing prices. While a majority of would-be-buyers are opting to lay low and ride the credit crunch out, some buyers are hoping to capitalize on the fall in prices.

Some 13% of “recession virgins” who were not previously interested in investing in property revealed in a recent poll that low prices may very well lure them into the property market. To many first-time and even experienced buyers low prices can never be a bad thing. Several financial gurus and some “recession virgins” remain hopeful that the present climate will recover and investment in hard assets like housing would eventually pay off.

Low prices are often tantalizing, and to many are a reward in themselves, but the risk-takers may find even greater benefits to acting now. Already in the game, they may opt to take advantage of the slow market to haggle for a price up to 10 per cent lower than the asking price. This is a slippery but skillful gamble that is definitely not for the fainthearted. The strategic buyer stands to gain a great deal if all goes well. But all will not necessarily go well. The seller can turn down reduced offers and there might be no going back. Helen Monks may be considered among the risk-takers. In her assessment of whether first-time buyers should hold out or act now she boldly suggests that “those who can secure a big enough mortgage would be well advised to go for it now”.

Also trying to see the silver lining in the current financial situation is The Royal Institution of Chartered Surveyors. In their bleak March 2008 Housing Market Survey the organization stated that significant price falls in the housing market have been prevented by limited supply. Anatole Kaletsky maintains a level of optimism amidst much industry panic as well, suggesting that prices in the UK will continue to fall but not as heavily as in the US.

Hints at possible stabilization or even a financial turn may drive the risk-takers forward but buyers, in the end, have little power. Whichever direction the housing lows push potential buyers, ultimately the real decision-makers are the banks. The Council of Mortgage Lenders suggests that the present housing climate may be the result of pent-up demand from buyers who are not getting mortgages. As Helen Monks reports, “Should lending conditions soften and lenders start offering mortgages to less-than-perfect borrowers, prices ought to rebound once more on the strength of this unleashed demand”. At this point however, unless these risk-takers can secure a comfortable mortgage, it is doubtful that they will be able to take advantage of the low - and still falling - housing prices.

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