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| The Treasury Moves to Combat Credit Crunch: Reaction and Commentary from Young GroupThe Treasury is reported to be evaluating options designed to alleviate the financial sector’s current liquidity issues. Here, Neil Young, CEO – Young Group, provides his reaction and commentary to the moves the Treasury is considering.
By: Young Group The Treasury is reported to be evaluating options designed to alleviate the financial sector’s current liquidity issues. Welcoming the move, Neil Young CEO – Young Group, comments; “As banks have become less willing to lend within the interbank financial market, the cost of financing has increased and mortgage lenders have had little option but to pass on the higher costs to their client base. The Treasury will be Judged by the Mortgage Products Made Available “It is on the High Street that the effects of the liquidity problems are being seen as, despite reductions in base rate, lenders continue to tighten their lending criteria, increase their arrangement fees and raise the cost of their mortgage products. Intervention by the Treasury cannot come soon enough for those seeking to finance a property purchase.” Chancellor, Alistair Darling will meet with The Council of Mortgage Lenders (CML) next week. It is thought that details of the Treasury’s initiatives intended to ease the liquidity issues currently being felt in the market will be announced at this time. Neil Young comments; “It is to be hoped that any measures that the Treasury puts in place are attractive enough to encourage lenders to get on board. We await the details with interest, but the Treasury will be judged on the impact that its initiatives have on the mortgage products that become made available by lenders.” Buy-to-Let Disproportionately Affected The credit crunch has disproportionately impacted on the professional buy-to-let sector and it is hoped that the Treasury’s measures, when announced next week, will enable lenders to return to evaluating each and every market on its particular merits. Neil Young comments; “There are many areas across London that offer solid investment opportunities and rental yields in the Capital are outstripping the national average by 3:1, but lenders’ increasingly harsh criteria, higher rates and increased fees are applied across the board. Lenders are making broad brush decisions and not taking into account the specifics of regional markets. The London market for instance behaves very differently to that of Manchester or Glasgow.” London’s Rental Yields are c. 3 Times the National Average The same broad brush approach is being applied to applicants. Rather than taking the time and resources to evaluate applications on their individual merits lenders have - in a bid to protect themselves - all but closed the door to purchasers seeking gearing in excess of 80%. However, with rental yields at around 5% investors with a long term outlook have no issue with gearing at this level. Neil Young comments; “Lenders are taking a cautious approach and on the whole are not offering finance at more than 80% loan to value and products with LTVs of 85% are extremely rare in the current market, even for investors with impeccable credit ratings. It is hoped that the Treasury’s plans to release pressure from the financial markets will result in a sense of normality return to the mortgage market, with applications being considered on a case by case basis” -ends- Neil Young, CEO - Young Group, is available for interview Press Contact: Michael Oakes t: +44 (0)845 356 1000 Communications Manager – Young Group e: moakes@youngggroup.co.uk Notes for Editors: About Young Group Young Group specialises in providing Property Portfolio Management services to private investors; offering the best off-plan direct investment opportunities in London. Young Group manages the entire investment process from sourcing the opportunities through to financing, furnishing, letting and management. Young Group owns all the property that it sells and also retains a number of units in each development for its own portfolio. As the principal in every transaction, Young Group does not realise any profits until completion and has transacted in excess of 1,700 apartments, with a retail value of £700 million. The Group’s lettings division, Young London, has successfully let the majority of investors’ apartments within a week of completion. The Group's portfolio managers liaise with the Young Lettings (www.younglettings.co.uk) • Young Group clients have access to finance products from across the entire market via Young Group's FSA regulated mortgage desk, Young Finance (www.youngfinance.co.uk) • Young Group's iconic Canary Wharf development, The Landmark (www.TheLandmarkE14.com) • Young Group’s COO, Sylvana Young, has just been named Bradford and Bingley’s Property Woman of the Year, 2008 for London. Young Group supports NORWOOD and CHILDREN with LEUKAEMIA, two charities particularly close to our heart, donating £50 per property exchange and providing additional support throughout the year. Visit www.younggroup.co.uk to learn more. About Young Finance Young Finance (www.youngfinance.co.uk) For further information, contact: Michael Oakes +44 (0)845 356 1000 Communications Manager - Young Group moakes@younggroup.co.uk # # # Young Group specialises in providing Property Portfolio Management services to private investors; offering the best off-plan direct investment opportunities in London. Young Group manages the entire investment process from sourcing the opportunities through to financing, furnishing, letting and management. Young Group owns all the property that it sells and also retains a number of units in each development for its own portfolio. Website: www.younggroup.co.uk End
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