I read an interesting article in MoneyWeek magazine. A panel of experts were discussing the recent interest rate hike that we’ve seen across the board. The question was raised: “What if the banks get sick of forbearance and start calling in bad loans?”
When in actual fact, this is what we are seeing. James Ferguson, Chief strategist at Westhouse Securities exclaims that it’s like the banks are saying to people: “Base rates will go up one day; I’ve got you on interest-only with no parallel savings programme. I think you are toast. I’ve got to start getting some repossessions and nudging this along. Are you going to pay me back or are you going to default? I need to know – I need to manage my position”.
Ferguson has an undeniable point – with the millions of homeowners and property investors out there on interest only, without the cash in the bank to sustain an interest rate hike, how many of them would go under? In realism, this would likely cause a domino effect, everyone selling and being repossessed at the same time, causing prices to fall even further.
In fact – would you be able to sustain even a couple of percent increase?
It truly begs the question… Is holding on to your portfolio worth it?
I’ve seen my fair share of defaults in my time, and as a property consultant – I think I’m about to see a fair few more.
If you’re looking to explore any options that you have with regards to a sale even if you’re in negative equity, give me a call. We’ve been successfully implementing solutions for these situations even before the start of the crash, and at Rescue My Properties we have just that – a comprehensive solution for negative equity and variable cash flows.
Don’t sit on your bottom waiting for a solution to come to you – give us a call on 0871 221 6536 or book your FREE CONSULTATION today.
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