Today’s Mortgage and Property News: The Mortgage Crunch
Property Prices are set to drop by a massive 40% this year, according to Lew Geffen – head of Sotherby’s International.
In an internal memo – released to the media this week – Geffen advises his agents to encourage sellers to drop asking prices by 25% immediately.
Geffen predicts that the property market could tumble this year (2008), saying “Today’s low offer is tomorrow’s miracle price”.
And he states the fact that Banks are tightening their lending criteria and asking for large deposits, will signal a dramatic slow down in the market.
Meanwhile, the Alliance Group predicts that as much as 8000 people could lose their houses amid signs that debt levels, particularly in the middle income group, are rising rapidly. The auction company says that mortgage stress was spreading across all cities and income groups.
Alliance CE, Rael Levitt said next week’s expected interest rate hike would simply worsen the financial crisis facing many families that were already battling with spiraling food and fuel prices. The greatest distress levels were seen by home owners with houses in the R2m-R5m range and less in the lower-end price range below R500,000.