Westexe Mortgages Blog

Buying beats renting across 84% of Britain

Published by MILLIE DYSONE
The cost of servicing a mortgage is now cheaper than renting in 42 of the top 50 (84%) towns and cities in Britain, according to property website Zoopla.co.uk.

This figure represents a slight drop from three months earlier when was cheaper to buy than rent in 47 of the top 50 towns.

Despite the fall over the last quarter, buying remains cheaper than renting today across the vast majority of the country and it is cheaper to buy now than rent in more locations than at the same time last year. The shortage of mortgages and difficulties faced by first-time buyers in securing a deposit has increased demand for rental property and led to renting in Britain now costing 16% more on average than buying, up from 11% this time last year.

The average monthly rent in Britain has come down slightly by £9 on average over the past 3 months to £1,470 per month in February 2012. Meanwhile asking prices have dropped by £6,500 on average over the same period to £255,037.

Swansea, Oldham and Cambridge top the list of places where it currently still pays to rent rather than buy with rental discounts ranging from 4.6% to 8.4%. In contrast, it make most sense to buy in Milton Keynes where renting is 38.8% more expensive than servicing a mortgage, leaving renters £2,580 per year worse off on average. York and Preston also offer buyers better deals to buy than rent with renters paying around a third more on average in both places.

In London, despite the high cost of buying, it still beats renting with the average asking price for a 2-bedroom flat in the capital currently at £452,387, while the average rent for an equivalent property is £2,422 per month, making renting 29.6% more expensive than owning on average.

Nicholas Leeming of Zoopla.co.uk, said:

“Despite a recent increase in first-time buyer activity, demand from remains strong and is keeping rental levels at historic highs. This, along with historically low borrowing costs, makes it as good a time to buy as it ever has been. However many buyers are still unable to take advantage of these conditions because of their inability to secure a mortgage.”

Article by courtesy of Mortgage Introducer www.myintroducer.com

Times continue to be difficult for mortgage lenders and they seem unable to come to terms with how they want to lend, how to do so and who to.
Lack of confidence seems to be the biggest single denominator effecting mortgage rates and lending policy. This is reflected in the London Inter Bank Offered Rate (LIBOR), the rate charged between banks for financial transactions. This has risen to be more than double the Bank of England base rate and of course as we all know banks will charge a higher rate if they perceive a greater risk. This clearly demonstrates a lack of trust and confidence between the national and global banks. This directly results in a poor and costly financial wholesale market and higher rates passed on to the consumer, namely you and me.
For some time now we have noticed this manifesting itself in fixed rates creeping up, lenders tightening credit scores to restrict new business and of course the recent announcements from a number of lenders that they are increasing there Standard Variable Rates, which I am sure, with more to follow. As a result of poor past lending practices we have seen a movement away from what is regarded as more risky business. Namely, Self Certification of income is no longer available, sub prime mortgages have dramatically reduced and a there is trend away from Interest Only lending. Many of these changes will be more beneficial for the future stability of the mortgage market and hopefully will help to even out the boom and bust cycle.
But the million dollar question is “what should I be doing now” if I am on a tracker or standard variable rate with my mortgage. Do I stay as I am, because I have never had it so good or do I start to consider switching into a fixed rate to safeguard myself against any further or future rate rises. Perhaps if you are on a standard variable rate with your lender you should be thinking of that now, but if you are lucky enough to be on a tracker you could leave it a bit longer until the signs are that the Bank of England base rate is about to start going up. Either way it is a difficult judgement to make and only you can make it and if you leave it too long rates will already be higher than they are today. With a bit of guidance from ourselves or another independent mortgage broker you will certainly have a much clearer view.
In my opinion lack of confidence is the single biggest factor holding back the enconomy, availability of mortgage funds and of course lending policy. Once confidence starts to return everything else will start to improve including job prospects, order books and of course we will all have a greater sense of security and confidence in the future. But of course the Bank of England will start to increase the bank base rate and borrowing will start to become dearer for us all.
Whatever the view you hold on whats best to do with you your mortgage, it is not an easy time to make a confident and important decision. There is still an appetite with lenders to lend, even though they are more sensitive about who they lend to, how much they will lend and of course they are charging more. Even in todays more difficult market there are still lenders who will take a view on adverse credit (poor credit history) applications.

Do not listen to the scare mongers that you can’t get a mortgage unless you have a 25% deposit and that lenders are not lending. This is a complete nonsence, mortgage lenders do still have an appetite to lend, there are positive signs that the housing market will recover, many developers are reporting increased building and rising profits. First Time Buyers are returning to the market and lenders are accepting deposits as low as 5%. This is a great time to buy a property whilst property prices are held back and to re-mortgage before interest rates rise any more. Please take time to consider your mortgage situation, as the signs are already there. There is only one way mortgage rates are going to go and that is up.

Peter Marriott

MD Westexe Mortgage Solutions

Published by MILLIE DYSONSurveying & Conveyancing |
First-time buyer activity hit its highest level since March 2009, according to the latest Housing Market Activity Report by Connells Survey and Valuation.

The total number of residential valuations conducted during February was nearly a third (31%) more than a year ago. However, this represented a month-on-month increase of 43%, as the usual seasonal rise was bolstered by a flurry of first-time buyers looking to beat the deadline for the stamp duty tax exemption.

Increasing demand from first-time buyers was a key factor in the annual growth in activity. The number of valuations for first-time buyers rose by 52% compared to February 2011, reaching the highest number since March 2009.

This represented a 56% increase in the number of valuations for first-time buyers compared to January. As a result, first-time buyer demand accounted for 35% of all valuations completed – the highest proportion since September 2010.

John Bagshaw, Corporate Services Director of Connells Survey and Valuation, comments:

“There’s no doubt that the imminent deadline for the stamp duty holiday exemption has been a catalyst for first-time buyer activity. Many first-time buyers are now feeling a real sense of urgency, and this has boosted overall mortgage market activity in the last month. But the first-time buyer demand has also been supported by stronger lending figures at the lower end of the market, not to mention mortgage affordability.

“If this trend continues into the spring, the improvement should help soften the blow of the end of the stamp duty holiday in the longer-term.”

The buy-to-let market continued to expand in February, with 38% more valuations conducted for property investors than in January. However, it wasn’t just a seasonal increase. On an annual basis, Connells conducted 50% more valuations for buy-to-let investors than a year ago.

John Bagshaw continues:

“Property investors have begun the year by signaling their intent to grow their portfolios. The private rented sector is currently growing by 262,000 households per year and landlords are looking to take advantage of this swelling demand. An increasingly diverse set of mortgage finance options are being made available, and if lenders can maintain this progress, buy-to-let will help underpin growth in the mortgage market as the year progresses.”

Valuation activity from owner-occupiers moving home increased more steadily on an annual basis, with the number of valuations conducted up nearly one fifth (17%) compared to February 2011. However, this represented a larger than usual seasonal increase of 51% compared to January, as growing first-time buyer activity freed up property chains.

The remortgage also market grew in February, with remortgage valuations rising by 18% compared to February 2011 – a monthly increase of 21%.

John Bagshaw continues:

“Remortgage activity has shown consistent annual growth in the past few months, despite the distant prospect of the MPC hiking interest rates. However, the recent announcement by Halifax that it is increasing its Standard Variable Rate is likely to spark a surge in remortgaging activity as those facing increasing costs take stock of their finances. If more lenders join Halifax in raising rates, we may see the remortgaging market kick-up a gear in coming months as borrowers look to lock-in to favourable long-term fixed or tracker rates.”

First Time Buyer Specials

15% deposit – rates from 3.29%

10% deposit – rates from 4.29%

5% deposit – rates from 4.99%

0% deposit (100% mortgage) – rate 5.98%

Remember guarantor mortgages, including limited and full liability guarantor mortgages available.

Gifted deposit mortgages available.

Some First time buyer mortgages have free valuation and free legal fees.

Westexe mortgage Solutions are whole of market independent mortgage brokers offering free advice with no obligation 24/7 – call 01392 216344 any time or request a call back.

The number of 95% loan-to-value mortgage deals available to first-time buyers is at the highest level since before the financial crisis, according to Westexe Mortgage Solutions.

The number of 95% LTV deals currently open to first-time buyers is at a four-year high, with 59 deals currently available from 21 different lenders. This is up from just 25 in February 2011, nine back in 2010, and only three at the same time in 2009.

Even using the most conservative estimates, Westexe Mortgage Solutions suggests there could be over £210million worth of mortgage finance available to first-time buyers with a 5% deposit right now. Based on the average house price bought by first-time buyers, this is sufficient for over 2,000 first-time buyers to buy their first home right now.

As an indication of what this would mean for the housing market, during the 1980s and 1990s there were typically well over 500,000 first-time buyers every year – well over 1,350 a day, whereas currently there are only around 520 a day.

First-time buyers are being held back from taking up these deals only because they are unaware that they are available again.

“Well over 85% of young renters aspire to become homeowners but the vast majority of these say the fact they cannot raise a deposit is the key reason for not buying.

“There is a widespread perception that a minimum 20% or 15% deposit is required and they just don’t realise that there are now a lot more competitive 90% and 95% LTV mortgages back on the market.

“The first port of call for prospective borrowers should be to a mortgage broker as they can best assess which is the best product for their needs, but the fact that lenders are open to first-time buyers again is a really positive sign.”

Mortgage approvals surge to highest levels since Dec 2009
Friday, February 10, 2012
Published by MILLIE DYSONMortgages | 0 Comments
Loans for house purchase surged to 58,610 in January, according to the latest Mortgage Monitor from e.surv chartered surveyors.

This is the highest level since December 2009, and came thanks to an increase in lending to borrowers with small deposits. The figure represents an 11% increase on the 52,939 purchase approvals in December, and a 29% year-on-year increase from January 2011.

The sharp increase has been driven by more loans to borrowers with small deposits, with more first-time buyers being given access to high-loan-to-value (LTV) mortgages by lenders.

Since January 2011, high-loan-to-value lending has almost doubled. Loans to borrowers with a deposit of under 15% accounted for only 7% of all loans for house purchase back in January last year, but have risen to account for almost 13%.

This has helped more low income and first time buyers get onto the property ladder, with the number of loans to these borrowers increasing at a faster pace than loans to wealthier borrowers. There were 15,329 loans for purchase of homes costing below £125,000 – typical first time buyers property.

This was the highest number since March 2008, and a 31% increase from January last year.

Additionally, there were fewer loans on expensive property in January than in December, as the number of loans for purchase of expensive property fell in all price brackets over £376,000, suggesting wealthier buyers are beginning to represent a less disproportionately large share of the market.

Despite the improvement, deposit requirements are still high by historic standards, which mean first-time buyer numbers remain suppressed compared to their pre-2008 levels. In January 2007, the average deposit for house purchase loans was 31%, compared to 38% in January 2012.

Richard Sexton, director of e.surv, said:

“The mortgage market has so far done a reasonable job in repelling the onslaught from the eurozone. LTVs have trended steadily upwards over the past six months, and approvals volumes are holding up well.

“Lenders pushed out a spate of high loan-to-value mortgages in the summer to cater for the backlogged first time buyer market, and, although they have taken time to feed through, we now are we beginning to see borrowers take them up in notable numbers.

“But it won’t last forever. Despite all the encouraging news surrounding the market at the moment, danger lurks just around the corner. The rate at which banks lend to each other – LIBOR – has been creeping upwards.

“The banks are yet to pass these extra costs onto the consumer, but this is sure to happen, and will come in the guise of higher mortgage rates. If the situation in the eurozone becomes more tumultuous, which looks possible, lenders will batten down the hatches and scale back the amount they lend to first time buyers.

“The early months of 2011 were so weak that the year-on-year growth in January is more an indictment on how suppressed lending was a year ago than it is a sign of a vibrant market. First time buyer numbers are still low by historic standards and buy-to-let lending is forming an increasing share of overall lending.”

Had a great and really informative meeting last night, courtesy of the Federation of Small Business’s. Talk given by banksy6 @ Optix Solutions about Social Media

Buy-to-let market blooms
Wednesday, February 01, 2012
Published by MILLIE DYSONCommercial | 0 Comments
Moneyfacts research has shown that the availability of buy-to-let mortgages has risen over recent months.

There are currently 486 buy-to-let mortgage deals available, compared to 386 last February, report Moneyfacts.

Buy-to-let product availability

- February 2012: 486

- February 2011: 386

- February 2010: 243

As the availability of buy-to-let deals has increased, the average interest rate has reduced.

Buy-to-let average rate

- February 2012: 4.79%

- February 2011: 5.00%

- February 2010: 5.31%

Louise Holmes, spokesperson for Moneyfacts.co.uk, commented:

“During the peak of the credit crisis the number of buy-to-let deals shrank considerably as lenders saw it as a high risk area of the market.

“Many aspiring homeowners have had their property dreams dashed due to strict lending criteria and large deposits, meaning the only option left is to rent. This increase in demand for rental properties has resulted in a degree of competition returning to the buy-to-let sector, giving it a well-needed boost.

“These latest figures, particularly a reduction in the average rate, should make pleasing and encouraging reading for landlords and property investors.”

Buying is 16% cheaper than renting
Monday, January 30, 2012
Published by MILLIE DYSONEconomy | 0 Comments
Buying a home in the UK is over a £100 a month cheaper than renting, according to research by Halifax.

The typical monthly cost of buying a three bedroom house in the UK was £600 in December 2011: £116 (or 16%) lower than the average monthly rent of £716 paid on the same property type.

This represents a significant turnaround compared with three years ago when the average cost of buying was 29% higher than the average rent paid. The monthly costs associated with buying accounted for 29% of average UK disposable income in 2011, compared to 47% in 2008.

Home buying costs have fallen by more than a quarter (£328) since 2008, driven by a decline in the average monthly mortgage payment of nearly one-third (£242) due to the marked fall in mortgage rates and house prices.

The mortgage rate for a new borrower has been reduced to an average of 3.63% in 2011 from 5.75% in 2008, while the average house price has dropped by 11% over the same period.

Meanwhile, the average cost of renting has risen by 9% (£62) since 2009.

Higher demand for rental property, driven partly by the difficulties for potential buyers entering the housing market, has pushed up rents.

Over the past year, buying costs have dropped by 5% whilst the typical cost of renting has risen by 5%, continuing the trends seen in 2010.

The regional picture

Buying a home was more cost-effective than renting in eleven out of the twelve UK regions in December 2011.

In contrast, buying was more costly than renting in all regions in December 2008, demonstrating the considerable turnaround over the last three years.

Despite having higher absolute costs, buying is currently most affordable relative to renting in London with the average borrower in the capital paying 10.2% less per month than the typical private tenant.

At the other end of the spectrum, Wales is the only region where renting remains cheaper than buying.

Home Buyers: the inside track

The number of buyers entering the market has continued to decline despite the improvement in the affordability of buying compared with renting since 2008.

Halifax estimates that there were around 510,000 home purchases with a mortgage in 2011: the lowest annual total since 1974 and 6% lower than in 2010. Much of this decline can be attributed to the increase in the size of the deposit required, with the size of the average deposit put down more than doubling over the past decade.

In addition, higher costs related to moving home such as stamp duty and estate agents fees have also added to the overall cost of home buying.

Martin Ellis, housing economist at Halifax, commented:

“The affordability gains for buyers relative to renters in the last three years have been significant. The average mortgage payment has fallen dramatically over recent years as a result of falling house prices and mortgage rates.

“At the same time, rents have risen due to strong demand for rented accommodation.

“Nonetheless, despite the improvement in the relative affordability of buying a home, the number of purchasers has continued to fall due to the ongoing challenges in raising a deposit and the considerable uncertainty over the prospects for the UK economy, which have severely constrained housing demand.”

Buy to let now rock solid at 80% LTV
Friday, January 27, 2012
Published by MILLIE DYSONMortgages | 0 Comments
There are now six mortgage lenders offering more than 20 BTL mortgages with LTVs up to 80%, according to data from Mortgage Flow, Mortgage for Business’s bespoke buy to let mortgage sourcing tool.

From December 2008 to May 2010 the highest achievable LTV for a buy to let mortgage was just 75%.

The first sign that the tide was about to turn came from The Mortgage Works on 9th May 2010 when it introduced a limited range of products to 80% LTV. Investors then had to wait another nine months for another lender to do the same.

On that occasion the entrant was Kensington who introduced a solitary product to a headline hitting 85% LTV. Kensington has since withdrawn from buy to let lending.

The six lenders that offer 80% LTV or above now are Kent Reliance Banking Services, Saffron Building Society, Leeds Building Society, Aldermore Mortgages and as of today Clydesdale Bank.

David Whittaker, managing director at Mortgages for Business, commented:

“This is great news for landlords and investors and demonstrates the growing confidence of lenders in this sector who see buy to let as more profitable than homeowner lending.

“Between them, there is a good range of products on offer from two year discounted trackers to five year fixed rates. Some even come with flat arrangement fees which really start to make sense for investors looking to borrow larger sums