A mortgage company on the ‘credit crunch’

The ‘credit crunch’ as viewed by the just-nationalised Brad­ford & Bingley’s buy-to-let mort­gage com­pany, Mort­gage Express (just closed for busi­ness) in May, 2008:

[A]s with all ‘big’ stor­ies, the issues are never quite as black or white as they are painted. It’s true that first time buy­ers are find­ing it harder than ever to get a mort­gage without a reas­on­able deposit and some homeown­ers may have seen a cer­tain amount of equity erosion over the last few months, but argu­ably this will lead to more real­istic assess­ments of both afford­ab­il­ity and prop­erty value.

And it’s import­ant to remem­ber when faced with gloomy head­lines about prop­erty price crashes and the return of hous­ing mar­ket con­di­tions not seen since the early 90s that, while today’s eco­nomy may be exper­i­en­cing dif­fi­culties, its cur­rent cir­cum­stances are noth­ing like those that pre­vailed nearly 20 years ago.

Back then, interest rates were in double fig­ures, unem­ploy­ment was sig­ni­fic­antly higher and homeown­ers were reg­u­larly com­mit­ting more than 60% of their salary to pay­ing their mort­gage, com­pared with around 35% today.

The cur­rent mort­gage mar­ket is in a much more stable con­di­tion than it was 15 years ago…

And thank­fully:

At a time when the vagar­ies of the hous­ing mar­ket are under even closer scru­tiny than usual, buy-to-let land­lords have yet again proved them­selves resi­li­ent to mar­ket con­di­tions and dire pre­dic­tions about the future of prop­erty investment…

[W]hatever the fin­an­cial com­ment­at­ors and ama­teur eco­nom­ists might say, they are con­fid­ent, rational and have a com­mon­sense approach to the future of their portfolios.

[Dis­clos­ure: I’m irra­tional and lazy with a Mort­gage Express buy-to-let loan]