Are BMV deals coming back to the market?
For the past decade, investors have become used to rock-bottom interest rates which have meant that borrowing money to purchase property has been fairly inexpensive. BTL mortgage rates have typically been as low as 2% and people have enjoyed a prolonged period where the economic conditions for investing have been positive.
We’re now in a period of transition, interest rates have risen on the back of inflation and the cost of borrowing is rising to levels that we haven’t seen since the late 00’s.
The speed of this transition period was accelerated by the mini-budget which was held on 23rd September. Thousands of mortgage products were withdrawn overnight and were replaced with higher interest rate deals in the weeks after as the markets reacted.
Since then, there has clearly been a loss of confidence within the market and after speaking with many of you, we can understand that you’re waiting to see what happens in the coming months.
As a result of the higher interest rates and potential recession, many are speculating that house prices will fall. This week Lloyds bank stated that they feel house prices will decrease by as much as 8% next year and then stagnate for the following four. This is a logical conclusion as there have been many years where prices have risen without correction.
So where does this leave the investment market?
Over the past few years we have struggled to secure properties which were below market value. There simply wasn’t the demand for developers or private sellers to use an online agent like us as properties have been selling like hot cakes nationwide.
Whereas we previously did lots of deals with developers seeking to offload properties cheaply and quickly at discounted rates, they’ve been able to sell them at higher values on the open market at the full asking price.
This is where we feel the first big change will be in the coming months if the market does cool off to the extent people are predicting.
Developers will need to secure sales in order to pay off their development loans so there may be an avenue to utilise our services. We can typically find buyers for discounted stock very quickly if the price is right.
A wider recession and prolonged periods of higher interest rates may result in a larger number of ‘distressed sellers’ who are seeking to offload their properties at reduced values. We have the capacity to source these deals through our extensive network of agents and introducers.
If the deals are available, we’re the type of business who will have access to them.
Let us know what you think
Feel free to get back to us with any comments or opinions you have about what you feel is going to happen in the property market. We’re always keen to hear the thoughts of our investors.
For those of you looking for ‘BMV deals’, we are working with a developer who needs to offload some freehold stock quickly at 15% discounts against the open market value. These should be available next week.
For developers / sellers reading this. If you do need to utilise a more streamlined selling service then we’re happy to help advertise your property to our investor database once we have reviewed it. We offer a unique route to market and can get your property seem by the right people!