Finance Update March 2009 - Olswang

Real Estate Finance
Real Estate Finance News
Mortgage Rescue Scheme and Homeowners' Mortgage Support Scheme
The government has announced further details of the Homeowners' Mortgage Support Scheme, which will
allow borrowers with mortgages of up to £400,000 to take a payment holiday if they suffer an income
reduction, either through losing their job or having their hours cut (for more information see here).
The Law Society has updated its practice note on mortgage repossessions to include information on
the Mortgage Rescue Scheme (for more information on this Scheme see here).
Land Registry
From 28 February 2009 the Land Registry began destroying paper documents, where a scanned image
exists on the Land Registry database. Requests for return of paper documents can still be made after this
date but they may be too late.
Real Estate Finance Market
Data from the Council of Mortgage Lenders (CML) published on 12 February shows that mortgage lending
has fallen to a 34 year low, falling to 516,000 mortgages in 2008, down 49% from 2007. According to
Nationwide, house prices fell by 1.8% in February and have fallen 17.6% since the same time last year,
this is despite interest rate cuts and reports of rising enquiries from prospective buyers. This fall in
property prices has brought house prices back down to levels seen in 2004, with some of this being
blamed on the lack of mortgages available on the market. According to Jones Lang LaSalle's latest
Residential Market Forecast, house prices are set to fall further with an annual drop of 13-15% expected
during 2009. House sales are at their slowest in 30 years, with three properties being sold per estate
agent on average in January, according to the Royal Institution of Chartered Surveyors. According to
CML, the number of repossessions rose significantly in 2008 to a 12 year high, although the figures were
11% lower than was forecast.
According to the latest data from the Bank of England, in net terms the total bank lending in the 4th quarter
of 2008 for commercial property was negative at -£5.3bn (this figure has not been negative since the end
of 2004). At the same time UK commercial property prices have continued to fall and according to the IPD
UK annual index they fell 26.3% in 2008 (this is faster than during the 1930s). The number of property
sector insolvencies also rose in the 4th quarter of 2008 to 1,935, a 176% increase according to Experian.
House building levels have fallen to the lowest level on record according to figures released by the
Department for Communities and Local Government.
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