As you are well aware, mortgages have been withdrawn in the thousands by lenders in recent months.
With property prices having fallen an average of 10% in the past year, lenders are still holding back on borrowing to would-be buyers. This has particularly been the case on new-builds (especially new build apartments) because of the way the prices have plummeted over the past months.
The valuations on new-builds have caused great concern to lenders. This is because lenders have never known what incentives, such as cash backs, discounts, stamp duty, fully furnished, fitted kitchens etc.. have been included in the sale.
The concern is that many lenders believe properties have been sold for more than they are really worth. This has led to many outstanding mortgage amounts on new-builds being greater than the actual value of the property (i.e. negative equity).
However, this has changed as property developers will now be required to reveal exactly what incentives have been offered to the buyer as part of the property sale. This will enable the valuer to put a more realistic valuation on the property and thus help prevent the borrower falling in to negative equity and the lender losing £thousands in unpaid loan amounts.
This can only be a positive thing for the property market and will hopefully help to bring confidence back into the market sooner rather than later.
