Don't worry, be happy (with your bigger mortgage payments)

If you’re trying to move, don’t give up.
There’s some frightening stuff floating around about the housing market at the moment.
House prices falling at their fastest rate for years, mortgage products disappearing faster than rats deserting a sinking ship, deals falling through because buyers who’ve agreed a sale can’t get the finance.
This sounds like a doom-laden scenario, and there’s no doubt that it’s far tougher to buy and sell now than it was just a year ago.
You only have to sniff the air in Nottinghamshire’s own housing market to realise that, with properties regularly being re-advertised at ‘new prices’.
Does this tell us that the market’s crashed and that we should all give up and go home? No, it doesn’t – though people who are all borrowed-out do need to pause for breath.
An economic downturn that started early last year and the credit crunch that blew up last summer have acted like a pincer and squeezed the market at both ends.
Buyers who are already borrowed to the hilt will find it almost impossible to get an affordable mortgage now because banks and building societies think they’re too much of a risk.
These are the people who would be well-advised to park their dreams of buying property for the moment. Anyone who has a poor credit history – especially one that includes CCJs – would be better off spending their money on paying things off.
And sellers looking for top dollar from their upmarket home won’t get it because the market has finally woken up to the fact that house prices had completely lost touch with affordable reality.
So there will be squeals at the extremes of the market and they’re attracting attention and headlines.
These are the places where the market has almost ground to a halt.
But in the middle? Well, it’s slowed down, for sure, because informed people are going to be naturally cautious.
It hasn’t stopped though. As I’ve said before on this blog, sensible homes in sensible locations will be bought at sensible prices by sensible people.
Forget quick sales, forget big profits. Concentrate instead on making sure your financial situation makes you a good bet with the bank or building society.
One final thought about the current economic crisis: could it also bring back pressure on wages?
You could say bosses have had it easy with pay over the last few years, either because business was so good they could afford to hand over a few more coppers, or because their staff found it so easy to buy what they wanted on credit that they never made a fuss.
They will now. With costs like mortgages increasing substantially, don’t be surprised if the peasants start revolting.
UPDATE: someone's asked me why it is that so many mortgages seem to be disappearing from the homeloans market. You need to know where banks and building societies get the money they lend you to understand this.
In most cases, the majority of this money comes from the cash that others put into the bank or building society as savings. The rest - usually the minority - is borrowed from wholesale money markets.
In a growing economy and a rising housing market, some of the banks and building societies were starting to increase the amount of money they borrowed from these wholesale money markets so they could in turn increase the numbers of mortgage products they offered (Northern Rock was the extreme example).
In the wake of the credit crunch, the wholesale money markets have more or less closed for business. So all those extra mortgage products the banks and building societies invented to meet growing demand have slowly but surely disappeared.
Hence all the headlines about the sudden withdrawal of mortgages. All it really reflects is what I mentiond earlier - the squeeze at the extremes of the market.
But it does mean that mortgage 'best buys' are thin on the ground now. And that you're probably best looking locally for the best chance of a decent deal.