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Global financial turmoil at the heart of property forum discussions

Buy, sell, wait and see, everyone seems to have an opinion, but when you examine what is being said it is clear that even the 'experts' don't really know what to do.

This week a leading economist was asked by John Humphries on the BBC Radio Today programme what the current turmoil in the finance markets meant for ordinary people and their money. 'I don't know,' was the reply.

It is a bit like that on the forums. A new thread on the totallyproperty.com forum says it all. Everyone expects further falls in house prices in the UK. Politicians avoid using the dreaded word 'recession' but there seems to be little doubt among property investors that recession is what is happening.

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Professional investors on the forum say the key is identifying the bottom of the market and then to buy. But that is the multi million pound question – the bottom of the market. Just when we think it can't get much worse, another bank crashes. The downfall of HBOS in the UK has certainly brought it home to UK investors that it isn't going to get any better quickly.

Hey, there's always the Olympics. One hopeful poster advises buying in East London which is bound to benefit from the traditional house price jump associated with the world's premier sporting event.

'But the key is being able to call the bottom. I think that would be very difficult to do at the moment,' posted by solutioninvestments sums it up.

But when that bottom does come it could be buy, buy, buy. Several posters claim it is a good opportunity for astute investors and for first time buyers to get on the ladder. Which brings us neatly to the next important point – yes buy, but is there finance available?

Britain's biggest mortgage lender is being created by Lloyds TSB rescuing HBOS but both used to be separate banks – Lloyds, TSB, Halifax and Bank of Scotland. We don't yet know what this creation will mean for the already restricted lending market.

The question of buy-to-let finance comes up on the landlordzone.co.uk forum. A poster wants to know what the best deals for buy-to-let mortgages are and describes fees as 'extortionate'.

The answer is to look at various comparison sites. But we still don't know what effect the Lloyds TSB takeover of HBOS will mean for mortgages.

One case highlighted on the singingpig.co.uk forum sums up a dilemna faced by those seeking a re-mortgage in the current climate.

The property owner is seeking to re-mortgage as the current fixed rate is coming to an end. The property is valued at £250,000 with an outstanding mortgage of £196,500, a rental income of £1,075 per month with outgoings of £900 a month. A remortgage was apparently turned down because the rental income didn't meet the required calculation. The advice from a mortgage broker was to pump in some capital and get the LTV down under 75% then there will be a few more mortgages available.

It illustrates that even current investors with mortgages who are seeking new products are not finding it easy. Those responding advise against locking into fixed rates right now.

It is not just in the UK that mortgages are becoming restricted. In India surging inflation and interest rates has created a situation where ordinary buyers can't get the finance they need and developers are being hit by a double whammy – dropping shares and sales.

The problems are there on the indianrealestateforum.com. What is the best home loan, will home loan rates come down? The questions are strikingly familiar. The post shows that the finance ministry is under a lot of pressure to reduce rates as a general election is coming up next year. But in the current economic climate this is hardly likely.

If you want to be cheered up it is always worth looking at the US forums. 'The banking and finance system is being held together by bubble gum and bailing wire,' is the opinion of one poster Richard W in Las Vegas, one of the areas of the US worst hit by foreclosures.

Poster on the biggerpockets.com forum believe it is hard to see any end to the downturn and there is a lot of concern about tax hikes that will be needed to pay for the US government's bailing out of large financial institutions.

There are optimists of course. Many believe that headlines claiming we are heading for another Great Depression like that of the 1930s are simply hype. Markets and finance have changed massively since then. Quite rightly a comparison is not really practical.

But when you have the UK headlines, backed up by admissions from the UK Chancellor, that it is pretty bad, possibly the worst since the Second World War, then it really is time to think hard.

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