My thoughts on the latest Council of Mortgage Lenders report...

My thoughts on the latest Council of Mortgage Lenders report...

Hey guys,

You may have noticed that I have started to get involved in the whole "Where is the market going?" debate. You may also notice that I try an stick to the educational side of the debate rather than be drawn into a tit for tat using statistics.

Well I wrote about it last month and now the latest CML report confirms what I was saying. Stagnant but certainly nothing to worry about as long as you have followed my 2 year cash flow rule and put money aside (in your provision account).

It's funny I was on a train this morning to the accountants and was reading over peoples shoulders the various headlines of the doom and gloom of the peoples financial positions. They were all focusing on the CML report but of course where I look and see nothing too much to worry about, they have taken a more cynical approach.

Let's take a quick look at the basics of the report:

  • House prices will have risen 7% in 2007, and 1% in 2008.

    • >>> The article continues below <<<

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  • Actual property sales will total 1.17 million in 2007 and 1.01 million in 2008.

  • Gross lending to reach £360 billion in 2007 and £340 billion in 2008.

  • The number of people who are 3 or more months in arrears will reach 145,000 by the end of 2007 and 170,000 by the end of 2008.

  • The number of repossessions to total 30,000 in 2007, and 45,000 in 2008.

  • Base rates to end the year at 5.5% in 2007 and 5.0% in 2008, obviously this is good news for all our cash flows.

    • Let's pick up a few points:

  • These statistics are only guesstimates and not actual figures.

  • Mortgages arrears in 2007 equate to just over 1% of total mortgages and just under 1.5% in 2008. Hardly something that needs to make the front page of the newspapers (unless of course you want to sell sensationalism)

  • Repossessions equate to about a quarter of a percent in 2007 and just under halve in 2008. Hardly something that we should be worried about.

  • The base rate will come down which will mean slowly easing of cash flow. This is obviously the best news of all for investors.

    • Trust me on this, over the next two years you will be seeing more and more doom and gloom articles about the property market but ask yourself if you really need to worry. Sure you might not be able to sell your property so as long as you can cash flow it you'll be fine.

    I view this part of the cycle as opportunity rather than gloom. As always while everyone zigs, I zag... This is one of those times that I will make a great deal of money from property.

    As always, if you have any questions or concerns over where the market is heading then feel free to call the team.

    Live with passion,

    Brett Wood

    PS. Funnily enough, Capital Economics have a belief that prices will drop 3% next year and 3% the year after and I could find 100 other sources showing me 100 different predictions.

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