Hard Money Loans
Pitbull Mortgage School Offers Loan Officer Training on Hard Money
Author: Real Estate Investor, Category: Private Loans
I’m also known as the Pitbull which is a name I was given many years ago by my friends and competitors due to my tenacious business approach. Somehow the name stuck throughout the years and I accepted it as part of my persona. My business career has spanned over 30 years. In the 80’s I was an anchor on the Financial News Network. Perhaps you remember me from my nightly reports. After the network was sold to CNBC I was offered to host The Leonard Rosen Show, which was nationally syndicated. In the 90’s I became the CEO of a large medical group. We specialized in the treatment of chronic obesity. Our focus was to provide medical services to our patients and provide a hard money loan to finance their treatment. This was a huge success, and is what opened my eyes to the hard money business.
We train loan officers, mortgage professionals, Real Estate Investors and hard money lenders how to succeed in the hard money business. If you are interested in a career in mortgage lending, our hard money school is a must for every mortgage broker and industry professional. Pitbull mortgage school is much more than a loan officer school providing loan officer training. In order to compete in the competitive environment of mortgage brokering, you need to learn all the aspects of hard money lending. Pitbull mortgage school is the definitive answer to a high income career in mortgage banking. Our California based hard money seminar series has trained mortgage professionals, loan officers, and attorneys in the lucrative field of private financing.
I host the most powerful and dynamic seminar on hard money lending that has ever been taught.
I teach the secrets and techniques of the hard money mortgage business to brokers all over the country. My students learn more in the first 45 minutes than most brokers have learned after 20 years in the business. The tuition of my seminars ranges from $395 to $695 depending on the venue. If you can’t get away, you may be interested in purchasing my DVD which was filmed at our seminar at the Monte Carlo Hotel & Casino in Las Vegas on February 7th 2007. This seminar was a tremendous success and sold out with standing room only!
I hold nothing back, Everything is disclosed!
You will receive the actual names, phone numbers, and contacts of my preferred hard money lenders.
This seminar is a must for any loan professional who desires to earn $500,000 or more in the hard money business. I know no other industry that affords more potential to earn in excess of $500,000 per year.
My experience tells me that most loan officers and mortgage professionals never even come close to reaching their potential in the hard money business. The reasons are simple- they spend most of their time spinning their wheels instead of converting their time into what I call revenue producing efforts. You need to know what to ask the borrower to flush out the real information. Then you need to learn how to manage and control your borrower through the process. And most importantly, you need to know where to place the loan for funding. Most brokers never get their loans funded. No funding, no commission. This seminar will teach you the specifics of how to get your hard money loans funded.
The Pitbull Mortgage School teaches you specifics not hypotheticals.
Here is a sample of what you will learn:
- How to do mezzanine and conduit loans.
- How to start a hard money mortgage company.
- How to ask the right questions of the borrower
- How to manage your borrower
- Where to place your loan scenario
- How to determine the real value of the property (the Pitbull Hard Money way)
- How to package and sell your loan to the investor
- How to do raw land deals, commercial projects, foreclosures, NOD’s and real estate development projects
- How to assess an appraisal that will lead to funding the loan
- How to earn 4 to 5 points on a first trust deed
- How to do second mortgages and make money doing them
President of Pitbull Mortgage School, the largest organization in the country teaching hard money to mortgage brokers and hard money lenders, Leonard Rosen was previously the CEO of a large medical group with 6 clinics. Also the former anchor of Financial News Network and host of the Leonard Rosen Show.
A Lifetime member of Who’s Who in Business, and author of “From here to Financial Freedom,” Mr. Rosen is a renowned National Speaker who has been featured in CNN, Forbes, American Chronicle and many local and National publications. Currently Mr. Rosen is a private consultant to numerous mortgage companies. A former Army Ranger, and a graduate of both the University of Minnesota and Shattuck Military Academy.
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Hard Money Loans-Easy To Borrow
Author: Steve A Clark, Category: Private Loans
Hard money loans are the amount being borrowed to solve some urgent financial problems. The term hard signifies it’s quite Herculean to obtain because these loans are not provided by banks or financial institutions rather they are disbursed by private financial groups or lenders known as hard moneylenders. Hard can also be interpreted in different manner as there is high upfront cost involved and exorbitant interest rates are being charged. These loans also have high origination fees and cost more than an average mortgage (in some cases going as high as twice that of average mortgage).
Hard money loan is generally explored as the last resort. It should be understood like if one is willing to sale his/her business venture or the property and he/she thinks with a little bit of renovation and repairs the money generated can be quite high then hard money loans can be the best suited option for him/her. All he needs to do is to obtain the loan utilize it make some extra money and return it.
The uniqueness of hard money loans lie in their various characteristics like they have private lending sources. They come with short interest term of one to three years they charge upfront fee on closing before three months of the due date that is quite astronomical. There is limited number of debt covenants and they are shorter in duration. Moreover the failure in repayments results in the sale of the assets to nullify the debt.
Hard money comes in forms like hard money business loans or residential hard money loans. The hard money loans are usually secured by real estates of commercial viability. Hard money borrowers get the fund based on the estimated value of the commercial or residential real estate. The lenders are interested in money generating properties such as apartments, shopping malls, office buildings, hotels, hospitals and so on. However potent income generating activities like land acquisitions, bankruptcies are also seen with interest.
People who have been turned down the mortgages by the financial institutions because of various reasons like having a poor credit history, non competence to pay as they lack in desired income etc. also look upon the hard money loans as their saviors. Hard money loans are also sought by persons who are falling behind the repayments of their mortgage or fear the foreclosures.
The investors are lured by the typically high return on their amount which banks fail to provide them. So investing in hard money loans to borrowers having equity of 30-40% in the property seems to be a better proposition to them. These loans are given on the appraised value of the commercial property unlike traditional bank criteria which seek too many documented proofs like credit card scores, tax returns and income statement of the borrowers. Lesser paper work and lesser verifications make the procedure to obtain these loans very brisk.
Author: Steve A Clark
Article Source: EzineArticles.com
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Hard Money Loan to Stop Foreclosure And Requisites
Author: Real Estate Investor, Category: Private Loans
According to the Mortgage Bankers Association, nearly a quarter of a million home owners face foreclosures every three months, across America.
Sixty percent of the effected families wish that they knew better about the mortgage they were dealing with. Still, it’s never too late to understand your options in case of a foreclosure.
Hard Money Loans
Hector Milla Editor of the “Best Loan Modification Companies” website — http://www.BestLoanModificationCompanies.com — pointed out;
“…Typically the best option that most are unaware of is getting a hard loan. To many, it is possibly the simplest option to stop foreclosure and requisite. These hard money loans are never offered by the banks or financial institutions. In order to avail these, you will have to look in your local area for private lenders. A legal expert can easily locate such lenders but nowadays nearly every community has at least one private lender who specializes in hard money loans…”
Terms
The private lenders will provide up to 60 to 70 percent of the amount as collateral against the value of your home. A major drawback is that the interest rate will be on a higher side ranging from 11 to 19 percent, in most cases. Furthermore, to safeguard the interest of a lender, the appraised value of the home will be assessed lower than its original market value.
Nevertheless, getting a hard loan is sometimes very beneficial as the home owners not only get the financial help they require but it seldom entails any income or credit evaluation.
“…Before you embark on a journey to financial freedom with hard loans, make sure to consult an attorney. As hard loans are mostly unregulated, an attorney can easily assess the terms of the lender and protect you from any undue claims…” H. Milla added.
Further information about how to get professional assistance with a mortgage loan modification by http://www.BestLoanModificationCompanies.com
Hector Milla runs his corporate website at http://www.OpsRegs.com where you can see all his articles and press releases.
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Can I Get A Hard Money Loan and Then Refinance to a Conventional Mortgage On A Foreclosure Property?
Author: Real Estate Investor, Category: Private Loans
A hard money loan is a type of asset-based loan, which is usually provided by a private lender, oftentimes an individual.
Terms vary between lenders, are usually more specific and strict than with conventional lenders, and they often come with high interest rates. Typically, a maximum of 70% of the home’s market value will be loaned by the hard money lender.
Hector Milla Editor of the “Best Mortgage Loan Modification” website — http://www.BestMortgageLoanModification.net — pointed out;
“…It is possible to refinance a hard money loan into a more traditional mortgage on a foreclosure or any other property; however, the borrower will want to fully research the terms of both the hard money loan and refinancing loan. He/She will also want to make sure they qualify for the refinancing that they want…”
Qualifying for hard money may be easier in certain aspects(often credit score is not considered) than with typical lending institutions, so this is an important point to consider.
If the deal is not structured right, there may be seasoning issues with the institution when the decision to refinance is made. Seasoning is a term that refers to the length of time that the property has been owned by the seller. Different types of loans have different seasoning requirements, and these will need to be fully understood before setting up the deal.
Many hard money lenders will not issue a loan on a home that will be the borrower’s primary residence, so this will also need to be considered.
The new value of the home at the time of refinancing will need to be verified, and any repair or fix-up costs will need to be validated through receipts and other paperwork. The investor may also need to wait from 6-12 months to refinance depending on seasoning issues.
“…In conclusion, it is possible for a foreclosure property to be refinanced from a hard money loan originally used to purchase the home –or other property– but this will depend on several factors: the terms of the original loan, the terms of the new refinanced loan, and whether or not the buyer qualifies for both loans. This is not a situation to jump into without thorough and proper research…” H. Milla added.
Further information about how to get professional assistance with a mortgage loan modification by visiting; http://www.BestMortgageLoanModification.net
Hector Milla runs his corporate website at http://www.OpsRegs.com where you can see all his articles and press releases.
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Hard Money Loan to Stop Foreclosure Immediately
Author: Real Estate Investor, Category: Private Loans
Hard money loans are specialty loan products, only taken on by investors who are willing to invest in high risk loans.
The loan to value ratios are low, the interest rates are higher, the points or fees are typically much larger than other mortgage loans, and these types of loans are often due and payable sooner.
Natalia Osorio Editor of the “Loan Modification Foreclosure” website — http://www.LoanModificationForeclosures.com — pointed out;
“…The financing criteria for a hard money loan is often based exclusively on the value of the collateral which is the property being financed, and no or very little consideration is given to a borrower’s credit. This means that even a person in foreclosure whose credit and credit score has severely declined can qualify for this type of loan if there is a sufficient amount of equity in their property that reduces the investor’s risk. The loan to value is 65% or less. This means that if your home has a value of $350,000, the maximum loan amount would be $227,500 which is 65% of $350,000. Hard money lenders really prefer making loans on properties with a loan to value of 50% or less…”
Interest rates on hard money loan to stop foreclosure immediately will be substantially higher than other mortgage loans, often 12% or even greater. Often they are interest only loans so that none of the payments apply to the principle.
In addition, a hard money loan will charge the borrower the maximum amount of points allowed under mortgage law regulations. So expect to pay at least six points or six percent of the loan amount to acquire this financing. Usually the six points plus all other closing costs are included in the total amount of the loan, so you will need some wiggle room in the value of your collateral to cover the loan closing costs as well.
These loans are often amortized over 30 years, but are due and payable within eighteen months to five years.
“…In addition, if you own other property, you are an especially good candidate for a hard money loan to stop foreclosure immediately because these lenders are open to cross collateralizing your other property. This means that other properties of yours would be encumbered in the hard money loan as well…” N. Osorio added.
Because of the small number of qualifying features, as well as the independent nature of these investors, hard money loans can close very quickly and can be excellent to stop a foreclosure.
Further information about how to get professional assistance with a mortgage loan modification by http://www.LoanModificationForeclosures.com
Hector Milla runs his corporate website at http://www.OpsRegs.com where you can see all his articles and press releases.
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Private Real Estate Money: the 5 Advantages of Private Money Over Hard Money Loans or Mortgage Loans
Author: Real Estate Investor, Category: Private Loans
For real estate investors there are numerous benefits and advantages to private real estate money versus hard money loans or mortgage loans to fund your real estate investing business. Knowing the advantages can mean the difference between making a real estate deal work or losing a good deal to your competitors.
As the credit-bubble continues to unwind, traditional sources of real estate financing are drying up and real estate investors need to find alternative sources of capital such as private real estate money.
Advantage #1: Speed and Cash Flow
The ability to close a real estate deal in less than two weeks is a huge advantage over having to wait weeks or even months for a typical bank loan approval. The importance of speed cannot be overstated in a competitive market and quick cash gives you a big edge over other investors.
Imagine if you are the seller and someone comes to you to buy your house and has a two or three month escrow period before closing plus several financing contingencies versus another investors who will close in two weeks with no contingences.
Not hard to tell which offer the seller will accept. And the real power of this offer is the seller may accept a lower price to close quickly with no contingencies. So not only do you get the deal from the other investor, but you get it at a lower price. The power of private real estate money is the ability to close quickly and drive better deals terms to your advantage.
Advantage #2: Simple Paperwork
Have you ever gone to a closing on a traditional mortgage loan and had to sign 2 inches of paper work. Now image going to closing and only signing two or three documents (yes that is not misprint).
Private real estate money deals are incredible simple and the total paperwork is normally less than 10 pages and includes two or three simple documents. The documents included in a private real estate money transaction are a mortgage (Deed of Trust), an installment note and possible a disclosure statement. The only other required paper work is to name your lender on your property insurance as you would in any normal loan situation.
Advantage #3: You Control Terms and Conditions
One of the incredible advantages of a private real estate money transaction is you control the terms and conditions of the loan. For example, you can offer a very short term loan of only 6 months if you know you are going to flip the property for quick profit. Or you can offer a 5 or 10 year term if you plan on holding the property for a long term rental.
You can also control the conditions of the loan such as not allowing a prepayment penalty for early prepayment. Most normal mortgages and hard money loans require a 1% to 10% prepayment penalty to pay a loan off early. With private lending transaction you control the conditions and can simply add a clause that allows an early prepayment without a penalty. That can mean a huge savings down the road.
Advantage #4: Reduced Fees and Costs
Private real estate money is less costly than mortgage loans or hard money loans. For example, most hard money loans can ultimately have total interest cost of 20% or greater by the time you factor in all the fees, points, interest and other costs. Even mortgage loans can be very costly with fees and upfront points factored in and the high interest rates most investors must pay versus home owners. Loans from private real estate money sources usually have no points and very few costs. The total cost of most private loans is somewhere in the 9% to 15% range with little upfront or back-end fees.
Advantage #5: Flexibility
Private real estate money provides tremendous flexibility for both you the borrower, but also for the private lender. The private lender can invest small amounts of $5,000 or less in deals or large amounts to fund larger apartments or commercial property purchases. You can also work with lenders to structure a term that fits the lenders needs.
Do you want to learn more about Private Lending and Download our new FREE 20-page ebook titled “Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders!” then simple click here for your instant download===> Private Lending Presentation Kit.
Mike Lautensack is a full-time real estate entrepreneur in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE Real Estate Wealth Newsletter go to http://realestatewealthtoday.com/Private-Lending-Presentation-Kit.
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Real Estate Home Mortgage Deduction Soon to Vanish
Author: Real Estate Investor, Category: Real Estate Investment analysis
The American Dream is often paired with owning one’s own home. For decades Legislator’s have protected that dream with allowing home owners to claim the mortgage interest paid on their homes as a tax deduction. With a possible phase out of this deduction, could the dream fade?
“There are no cows more sacred in the tax code than the deductions for mortgage interest and property taxes. Together, they add up to at least the $ 75 billion annual subsidy for housing and Homeowners. ” The New York Times.
In 2002, 37.2 million taxpayers claimed the deduction, writing off $336.6 billion, or about $9,000 per taxpayer. Representing about 37% or so of itemized deductions, it was slightly more than itemized deductions for deductible state and local taxes, and twice as much in deductions as charitable donations. Clearly, the mortgage deduction is important and worth a huge amount of money.
In 2005 it was estimated that:
* The mortgage interest deduction will cost the Treasury $72.6 billion, according to congressional estimates.
* The $250,000 and $500,000 tax-free exclusions of home sale profits for single sellers and joint filers, respectively, will cost $23 billion .
* Property tax write-offs cost $20 billion, and tax subsidies for local and state housing bond programs account for $1 billion.
When a congressional committee examined the distribution of homeowner benefits for 2004, it found that people earning $200,000 and more a year – just one-half of 1% of all homeowners filing for deductions – pocketed 22% of the $70.2 billion in write-offs in 2004.
In 2007, Rep. John D. Dingell (D-Mich.) unveiled a draft of his “carbon tax” legislative reform package. Part of this draft legislation was a phase out the mortgage interest deduction on large homes. The phase-out schedule for the mortgage interest write-off, beginning with houses of 3,000 square feet, which would lose 15 percent of their deductions, and ending with houses of 4,200 square feet and larger, which would receive no deductions at all.
Dingel said: “In order to address the issues of climate change, we must address the issue of consumption-we do that by making consumption more expensive.”
Naturally, with the real estate market bust, the Dingell package was shelved. Once the housing market recovers, lets’ say two years from now, it’s a very good bet the administration will be looking hard at ways to increase taxes to pay down the huge bailouts. The unusual financial troubles and the move to green, will be the perfect time to push through such legislation. Unlike the Dingel proposal ,which was aimed at larger homes, the future legislation will most probably cover all mortgage interest deductions. To increase its’ chance at passage, it is a good bet it will be a phased in plan with deductions decreasing over a number of years.
To get the reversal of the sacred deduction started, President Obama’s impending budget proposes a cap on the mortgage interest rate deduction. Couples earning $208,850 or more would loose the deduction. Where currently households at the 33% and 35% tax rates are allowed the deduction, Obama would reduce their deduction to only 28% of the value of those payments. This is likely a first step to what seems to be a total elimination of mortgage tax deduction. If (when) this passes, Obama will find it easier to lower the earning cap for the mortgage tax deduction, leading up to an even lesser amount in the future. It seems on the horizon that the mortgage interest rate will be only for low income earners.
Bob Schwartz is a Certified Residential Specialist, real estate broker specializing in San Diego real estate. Read more of Bob’s ‘tell it like it is’ real estate opinions & subscribe to his free RSS feed at:San Diego real estate blog Also visit San Diego real estate & San Diego real estate agents
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Experts Forecast 2007 U.S. Real Estate Market Trends
Author: Real Estate Investor, Category: Real Estate Investment analysis
Modest median price gains in new and existing homes, a stable interest rate on the 30-year fixed mortgage, decreased housing starts and a stable unemployment rate are some of the features of the 2007 housing forecast provided by major trade group economists as reported by The Inman News.
NAR chief economist David Lereah expects new-home sales to fall from 1.07 million units sold in 2006 to 975,000 units in 2007, which is an 8.7% decline. He cites decreased new home construction as a large contributing factor to this change. The median new home price of $238,400 in 2006 is expected to increase by 1.3 percent to $241,400 in 2007.
NAR also predicts that existing home sales figures for 2006 to end around 6.47 million units, which is an 8.6% decline from 2005. The 2007 forecast for existing home sales is 6.43 million units. The median price of existing homes in 2006 was $223,700 and is expected to increase 1.7% to $227,500 in 2007.
Doug Duncan, chief economist for the Mortgage Bankers Association predicts the interest rates on 30-year fixed mortgages to stay around 6.5 percent, but mortgage originations to fall 14% to $2.1 trillion.
While Lereah predicts that the unemployment rate to stay at 4.7 percent, Duncan takes it higher and believes it may reach 5.2 percent by midyear 2007. However, he concurs with Lereah in predicting modest home price gains in new and existing homes for the coming year.
The housing forecast of The National Association of Home Builders (NAHB) is in line with NAR and the Mortgage Bankers Association. According to David Seiders, Chief Economist at NAHB, the year 2007 will see the housing market re-adjust itself once the housing demand stabilizes, leading to a healthy balance between supply and demand.
Looking at the state level, the California Association of Realtors (CAR) projects that the median price of California homes will end 2006 around $560,700, and will decline in 2007 to $550,000 — a 1.7% drop. The number of units sold in California will end 2006 around 481,200, and is projected to decrease 447,500 in 2007. CAR predicts that the unemployment rate will stay around 5.1 percent, although interest rates on the 30-year fixed mortgage may hover around 6.7 percent in 2007.
The overall housing forecast for 2007 made by these four major real estate trade groups is not at all bad. Home buyers and investors planning to go ahead with their real estate activities can fare better with the help of a good real estate agent.
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FHA Purchase Real Estate Financing
Author: Real Estate Investor, Category: Finance Your Real Estate, Finding Loans or Investors, Invest In Real Estate
If you need to obtain necessary financing for the purchase of a home it is important for you to know that there are alternative lending sources other than banks and traditional lenders that you can use for a mortgage, even if your credit or other circumstances are less than ideal. There are government sponsored programs that allow a variety of people wit different backgrounds to purchase a home with a low or no down payment and affordable interest rate. Fha purchase financing is an option many people who are involved in the buying process.
Fha purchase financing is financing insured by the Federal Housing Administration which is a government owned organization that works to extend mortgages to people who do not meet traditional lending criteria. The Fha was established under the National Housing Act, with their goal being to extend financing to people with repayment abilities who otherwise lack the ability to get a traditional loan. Read the rest of this entry »
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SARB New Lending Numbers For 3rd Quarter Show Noticeable Progress On The Long Road To Better Times
Author: Real Estate Investor, Category: Closing in your Investment Deal
Value of new residential loans granted nearing positive year-on-year growth
After a lengthy spell of non-stop year-on-year decline spanning beck to June 2007, the =month that the National Credit Act was implemented, the value of new residential mortgage loans granted is steadily nearing a return to positive year-on-year growth. In September 2009, the rate of year-on-year decline had been reduced to -13.8%, and while this still appears to be significant decline, it is significantly better than the -27.5% just one month before, and hugely better than the -62.2% rate of decline as recently as April. On a month-on-month basis, broad growth has been in progress since early-2009.
For the 3rd quarter as a whole, the year-on-year decline was -22.2%, which had more than halved on the -49.6% of the previous quarter, while the quarter-on-quarter growth rate had grown at an impressive rate of +30.3%.
The SARB numbers are beginning to show more concrete confirmation of the increased volumes that we have been feeling since earlier in the year, with September’s R18,8 bn being the highest value of residential grants this year, and more than double that of January. While improving, though, the value remains less than half of the all-time high of R39.5bn reached in May 2007.
The noticeable improvement in value of loans granted since the beginning of the year reflects the positive impact of 5 percentage points’ worth of interest rate cuts since late-2008, banks responding to better environment with some relaxation in lending criteria, and a mildly improving economic growth performance.
Commercial mortgages following a similar trend to residential
In recent years, the trend in commercial property loans granted has also taken on a similar shape over the past two years or so, having shown negative growth since earlier back in 2006, reaching an extreme rate of year-on-year of -86.9% in December 2008.
Much of this weakness may reflect residential development finance, but the commercial property sector has probably also played a major role, with the returns of the major 3 sub-sectors of commercial property, namely retail, industrial and office space all showing significant deteriorations in performance from 2008, as the recession started to bite.
Since the beginning of 2009, however, the year-on-year rate of decline for commercial loans granted has diminished steadily to a mere -11.6% in September, while over the third quarter its quarter-on-quarter growth rate had turned slightly positive to the tune of +5.4%.
The focus of growth has been mainly on loans on existing properties, with the numbers still reflecting tough times for new developments
Breaking new loans granted up in a different fashion, the severe weakness in the new development market, compared to the existing property market, is apparent.
The breakdown of new mortgages by loans on existing buildings, on construction of buildings, and on vacant land, lumps residential and commercial property together. (although residential property is the dominant segment in the mortgage market). Whereas the year-on-year decline in the value of mortgage loans granted on existing buildings has diminished steadily from a low of -56.9% in February 2009 to -17.2% as at September, loans granted for construction of new buildings showed a more extreme -43.4% decline as at September, while vacant land mortgage grants were -71.3% down year-on-year. The weaker state of loans on construction and vacant land confirms the lagging status of the new building market, versus that of the existing market. On the residential side at least, this has much to do with a combination of a weak “existing property” market and a surge in input cost inflation for builders in 2007 and 2008, which opened up a wider gap between new and existing home prices, making it difficult to bring competitively priced new stock to the market.
Capital repayments growth has overtaken payouts growth, which could send total Mortgage loans outstanding into negative growth soon
A noticeable feature of the mortgage market as of late has been the steady recovery in capital repayments, which showed positive year-on-year growth in value in September to the tune of 17.9%, possibly a partial reflection of a more cautious household sector determined to reduce its level of indebtedness in many instances (given that household borrowing for residential purposes is the dominant force in the mortgage market). This is in sharp contrast to mortgage payout value growth, which was still in sharp year-on-year decline at -44.2% as at September (although starting to turn for the better slowly).
The large difference in growth rates between capital repayments and payouts has meant that the value of capital repayments has been catching up to that of payouts. The bygone years of booming growth in new lending had seen the value of capital repayments as a percentage of payouts declining from a 99.7% in March 1999 all the way to 37.9% by November 2008 (although by 2008 the low percentage was more a reflection of financial stress than booming new lending)
This percentage has rebounded sharply in 2009 to record 92.4% at September 2009. The combination of negative growth in payout value and positive growth in capital repayments translates into ongoing decline in year-on-year growth in the value of total mortgage advances outstanding, registering a meagre 3.6% in October and looking increasingly likely to head into negative territory within the next few months. Such is the typical lag between new lending turnarounds and trend changes in growth in the value of outstanding mortgages, the latter being dependent on the relative performances of payouts vs capital repayments.
Outlook
The steady rise in new residential mortgage loans granted is expected to continue until at least mid-2010, where-after one may see some flattening out in the level as the positive impact of the 2009 interest rate cuts wears off. This rise in grants is starting to spill over into an improving payouts situation with something of a lag. Noticeable increase in building loans is only anticipated in the second half of 2010, once the decline in oversupply of existing properties on the market makes new developments viable on a larger scale.
However, in a generally more conservative environment compared with a few years ago, capital repayments growth looks set to outstrip new loan growth for a while, and this is expected to translate into a decline in total value of outstanding mortgage loans over the year of 2010, to the tune of around -5% year-on-year at next year’s end.
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