If there was ever a sign that the market has topped, and is struggling to stay afloat, here it is.
From the Financial Times:
A number of specialist mortgage lenders are drawing up plans for instant mortgage approvals that would give house hunters access to immediate mortgage offers without even requiring them to obtain a formal property valuation.
The move comes as strong growth in the availability of electronic information accelerates the process of securing finance on property purchases. Fierce competition among lenders is also driving greater product innovation as they seek new ways to attract business.
The new service could mean that home buyers are able to secure an unconditional loan in a matter of minutes rather than the typical one or two-week time frame they currently face.
However, some property experts have voiced concerns over these unconditional offers. Melanie Bien at Savills Private Finance, says: “They do look extremely risky. Lenders want evidence that the property is worth what is borrowed and without this they could end up with their fingers being burnt.”
Reading this piece makes me ill. The only reason for the 5-minute loan is to enable impulse-purchasing of homes.
Can anyone help me understand why a one week timeframe to secure funding is a problem? Because, well, I can’t really think of any reason at all.
Contrarians take notice, if this piece represents the state of the market, the burst of this bubble is going to be painful.