A good example is that several lending institutions are tightening their lending criteria.
Mortgages
It is going to be an interesting year ahead. Mortgages are going to be more difficult to get as there simply won't be the money around to lend. The banks will only lend to people who:
- Have a good credit record
- Have a substantial deposit or equity
- Have a proven track record in investing in property
This is because the banks are risk adverse and see these types of people listed above as low risk prospects.
However, there are still lenders out there who are willing to help people that do not fall into the category above so all hope is not lost.
Opportunity
To be perfectly honest, I see the current state of affairs as a huge opportunity. There are greater investment opportunities available now than ever because there are fewer investors and even less first time buyers.
Professional Investors
The negative press have done the professional investors a huge favour by scaring off the competition. These people are still buying properties and they do not care if the house prices are going up or down. It is heavily in their favour now to buy at cheaper prices. They know it is a buyers market because they are the only buyers and also the way to make money is to see through all the commotion, which always confuses the market. They tend to go against events, follow basic principles, and then watch everything turn around.
Rental Income
I asked if they could still make money by renting these properties and the answer a friend of mine gave me was a big "Yes" because nothing else has changed and people continue to need rental property. They are more likely to need the properties now as there will be far less on offer. The investors know that a rental yield of 10% on any property is profitable.
The house price crash or credit crunch will make a number of people a lot of money.
