19th July 2011
First time buyers and borrowers with smaller deposits are enjoying the first signs of recovery in the UK mortgage market, report moneysupermarket.com
There are now 312 mortgage products at 90 per cent loan to value, an increase of 17 per cent since June.
The last time there were was over 300 products available was in November 2008, when Bank of England base rate was at 4.5 per cent and the impact of credit crunch began to have a major impact on mortgage lending.
As well as an increase in the number of mortgage products available, the average rate on 90 per cent mortgages has also begun to fall.
The average rate on fixed rate mortgages has dropped 0.53 per cent in the past year to 5.87 per cent this month – and has dropped 0.17 per cent since last month. Although tracker mortgages at 90 per cent LTV are now more expensive than this time last year, the average rate is now 5.5 per cent, a drop of 0.22 per cent since June.
“There is a severe shortage of first time buyers at the moment and one of the reasons for this is down to the fact that it’s been so difficult to get a mortgage unless you’ve had a deposit of 25 per cent or more. It’s therefore encouraging to see an increase in the number of 90 and 95 per cent mortgages available.
“That said, we are still a long way off the number of products that were available pre-credit crunch and those with smaller deposits are still having to pay a higher rate of interest than those who are able to put down 25 or 30 per cent. It’s good to see things are moving in the right direction though as this should make it slightly easier for people to take that first step onto the property ladder.”
18th July 2011
Beware of Direct deals
At Westexe Mortgage Solutions we always try and make clients aware of all the possible solutions to match their circumstances and this does include lender direct deals.
So what are Direct Deals ? Well many banks have various outlets for marketing there products, historically the majority of products have been offered through brokers like Westexe, consequently you do have more choice using a broker as we can look at the “whole of the market” to find a suitable product.
More recently some lenders have offered very competitive rates to existing customers if they deal direct. We try to make clients aware of these deals where possible and recommend they consider all options. However, we have received negative feedback from customers who we recommend to go direct. Often the great rates advertised by these direct lenders are not available once the lender has fully assessed the mortgage application. This has left our clients frustrated as they were unable to get the great rate originally advertised and in the end they had to accepy a higher rate than what Westexe would have acquired via another lender.
The benefit of using Westexe Mortgage Solutions is that we search the “whole of the market” and if a lender cannot offer the mortgage required, then we can look to place with another lender with the minimum of fuss. When going direct they can only offer you a mortgage from their one limiting range of products giving you little or no choice.
27th June 2011
What better time to take out a fixed rate !! Competion returns to the mortgage market as 2 year fixed rates fall to there lowest since Bank of England Base rate fell to 0.5% in March 2009. NOW is the time to fix a rate, whether it is for 2 years, 3 years or 5 years. As the prospect of bank base rate rises draws nearer this has to be the optimum time to take a rate whilst they are at there lowest. Don’t be disappointed, act now before it is too late, we all know rates can only go in one direction and that is up.
15th June 2011
At last a lender showing willingness to help people who have had past credit problems. All County Court Judgements and Defaults more than two years old IGNORED, satisfied or not. Up to 90% loan to value for First Time Buyers, Re-mortgages and Home Movers.
15th June 2011
5 year fixed rates from 4.25%
3 year fixed rates from 3.65%
2 year fixed rates from 2.89%
Tracker rates from 1.99%
Buy to Let rates from 3.15%
15th June 2011
Confidence index shows largest ever rise
Nationwide Building Society, the UK’s third largest mortgage and savings provider, today releases its Consumer Confidence Index for May 2011.
Robert Gardner, Nationwide’s chief economist, said:
“The warmest April on record, combined with the feelgood factor of consecutive bank holidays and the Royal Wedding, helped push up the Nationwide Consumer Confidence Index by 11 points in May.
“However, despite recording one of the biggest monthly jumps ever, the Index still sits at 55, nine points lower than the same period last year and well below the historical average.
“This month’s rise was largely driven by significant increases in the Expectations Index, which rose by 17 points to 76, and the Spending Index, which registered a 16 point rise to 79. But underlying consumer sentiment remains cautious, as shown by a more modest three point increase in the Present Situation Index, which now stands at 23, the same level as May 2010.
“It seems that although consumers are starting to cultivate a more positive view of the future, their current situation remains challenging. The still subdued readings of the Employment and the Future Income Indices reinforce the view that household budgets are still under significant pressure.
“It is also important to remember that the Consumer Confidence Index fell to an all-time low of 40 points in February and recorded figures around the mid 40s during March and April, so consumer confidence still has quite a way to go to recover to the levels recorded 12 months ago.
“It is too early to say whether consumer confidence is in a sustained recovery. There are still strong downward pressures, not least higher than hoped for inflation and continued concern around employment, whilst recent announcements of large domestic energy price hikes are likely to dampen consumer mood.
“We would need to see consumer confidence continue to rise over the coming months, for us to be able to say that the economic recovery is truly being felt by the British public.
“For this to happen we will probably have to see a real improvement in employment and wages, or a fall in inflation that would help to boost the purchasing power of people’s take home pay.” Planned household spending increases for third month in a row
“The Spending Index rose by 16 points to 79 in May, the biggest monthly increase in the history of the Index, but still 19 points down on its May 2010 level of 98.
“Although there was a slightly bigger rise in the percentage of people who believe that now is a good time to make a major purchase, such as property or a car – there remains a greater proportion of people who believe now is a good time to purchase smaller household items such white or brown goods, at 30% – six percentage points higher than in April.
“In fact the intention to purchase smaller household goods has risen for three months in a row. It is likely that the initial shock of January’s VAT rise has died down and more consumers believe it is a good time to buy, aided by various promotions from retailers keen to get their tills ringing again.”
7th June 2011
House prices to stabilise later this year say the Halifax
House prices in the three months from March to May were 1.2% lower than in the preceding three months, reports the latest Halifax House Price Index.
This measure of the underlying trend shows that prices are in modest decline as has consistently been the case over the past 12 months. The average UK house price in May of £160,519 was 1.4% lower than in December 2010 on a seasonally adjusted basis.
On an annual basis, prices in May were 4.2% lower as measured by the average for the three months to May against the same period a year earlier. Modest improvement in the balance between supply and demand.
The ratio of house sales to the stock of unsold properties on surveyors’ books edged up for the third successive month in April, according to the latest RICS monthly survey. This ratio is a measure of market conditions that has historically proved to be a good predictor of short-term house price movements.
Evidence of a slight tightening in market conditions suggests that there may be an improvement in the house price trend over the coming months.
House sales remain subdued. The number of properties sold in the first four months of 2011 was 5% lower than in the same period last year – 279,000 against 293,000 – according to the latest figures from the HMRC.
But tentative signs of an improvement in activity. The number of mortgages approved to finance house purchase is a leading indicator of completed house sales. Industry-wide approvals in the three months from February to April were 2% higher than in the preceding three months on a seasonally adjusted basis, according to the latest Bank of England figures.
A slowly improving economy and continuing low interest rates should support housing demand. GDP increased by 0.5% between the final quarter of 2010 and the first quarter of 2011, offsetting a similar sized decline in the previous quarter, according to the ONS.
Commenting, Martin Ellis, housing economist, said:
“House prices continue to drift modestly downwards as measured by the underlying trend. Prices in the three months to May were 1.2% lower than in the previous three months; unchanged from April. There was a 0.1% rise in prices in May following April’s 1.4% decline.
“Low earnings growth, higher taxes and relatively high inflation are all putting pressure on household finances. Confidence is also weak as a result of uncertainty about the economic and employment outlook. These factors are probably constraining housing demand and applying some downward pressure on prices.
“Overall, we expect a moderate improvement in the economy during the remainder of 2011, which combined with continuing low interest rates, is likely to support housing demand. This should prevent a further marked fall in prices and help to stabilise property values later in the year.
2nd June 2011
Lending rises £1.2bn
Total lending to individuals rose £1.2 billion in April, in line with the average increase during the previous six-months, report the Bank of England.
The twelve-month growth rate remained unchanged at 0.8%.
Within total lending, lending secured on dwellings rose £0.7 billion, compared to the previous six-month average increase of £0.8 billion. The three-month annualised growth rate decreased 0.3 percentage points to 0.7% and the twelve-month growth rate remained unchanged at 0.7%.
Gross lending secured on dwellings was £11.2 billion in April, similar to the previous six-month average of £11.3 billion. Repayments in April were £11.2 billion, slightly higher than the previous six-month average of £11.0 billion.
The number of loan approvals for house purchase (45,166) fell in April and was lower than the previous six-month average (46,179). Approvals for remortgaging (28,091) and other purposes (19,970) also fell in April and were lower than the previous six-month averages (32,534 and 21,138 respectively).
Consumer credit rose by £0.5 billion in April compared to the previous six-month average increase of £0.4 billion.
The twelve-month growth rate increased 0.3 percentage points to 1.5%, the highest figure since June 2009 (1.9%). Within consumer credit, credit card lending rose £0.3 billion while other loans and advances rose £0.2 billion in April.
Brian Murphy, head of lending at independent mortgage brokers, Mortgage Advice Bureau, said:
“The raft of Bank Holidays and the Royal Wedding inevitably skewed the April data, so an overall drop in the number of loan approvals and remortgages comes as no surprise. The nation went on holiday.
“During May, activity bounced back and returned to the steady growth trajectory of February and March, albeit one that is naturally still at historically low levels.
“The ongoing drop in the number of remortgages reflects how people increasingly believe that an interest rate rise is unlikely in the short-term and that, if one does come, rates overall will remain very low for the foreseeable future.”
16th March 2011
Optimism returns to the housing market
February saw a flurry of activity as the number of residential mortgage valuations conducted rose by nearly a quarter compared to a year ago, according to Connells Survey and Valuation.
This is the third successive month in which residential mortgage valuation activity has risen year on year. However, the increase wasn’t solely an annual rise. In February, the total number of valuations for residential property increased by 53% compared to the previous month following the end of the seasonal lull.
In part, increasing activity has been driven by a strong growth in the number of vendors entering the market and looking to move. In February, there were one fifth more valuations for homeowners moving home than a year ago – a rise of 81% month on month.
With 35% of all valuations conducted on behalf of home movers, this is the highest proportion of all Connells’ valuations since June 2010.
Paul Staley, Corporate Services Director of Connells Survey and Valuation, comments:
“It’s too soon to say the market has turned the corner, but there is certainly a growing optimism following a strong February, and talk of a ‘double-dip’ in the housing market has died away. In particular, the upper tier of the market has been uncharacteristically active as home movers look to buy or sell million pound properties before April’s stamp duty hike comes into play.”
Following the end of the seasonal lull, the number of first-time buyers on the market increased by 55% compared to January. Despite this monthly increase, there was an 11% fall year-on-year, highlighting the difficulty first-time buyers still face when seeking a mortgage.
“It’s encouraging to see a slight month-on-month improvement for first-timers, but they still face an uphill battle to get their first home. First-time buyers are the lifeblood of the housing market. Without more affordable mortgage products for them, we won’t see a sustained recovery.
“To help this we have teamed up with Skipton to offer a 95% LTV mortgages to target first-timers, but we need to see even more initiatives from other players in the market. It’s imperative that lenders take action to encourage more on to the property ladder by offering more affordable mortgage deals.”
The number of valuations for prospective buy-to-let landlords rose for the third successive month, with 12% more valuations conducted in February than a year ago.
Remortgaging also played a pivotal role in the uplift in activity in February, increasing by 52% month on month. In fact the number of valuation surveys conducted for remortgagors has doubled since February 2010 (+107%), albeit from a very low base.
Paul Staley concludes:
“Buy-to-let has bounced back in the last few months as landlords look to exploit the current high rents – and strong demand from tenants who cannot get the finance they need to buy. Remortgaging too, has played its part in the surge of valuation activity in February.
“Nevertheless, much hinges on the decision of the MPC this month. If they send a clear signal that they are taking steps to counter inflation by hiking the Bank Rate – we will see a flurry of remortgaging activity as remortgagors act immediately before rates are substantially higher.”
12th March 2011
House prices and transactions rise
February saw monthly house prices increase by 0.3%, reveals the latest LSL/ Acadametrics House price index.
Although annual prices have fallen by 0.5% as the strong gains of early 2010 drop out of the figures. Signs of a recovery in mortgage lending as the proportion of low LTV product numbers hits a 2-year low.
The number of transactions in February increased by 2.4% to 41,200 – but this is still only 61% of the long term average.
Richard Sexton, business development director of e.surv comments:
“After falls throughout the final quarter of 2010, prices have been bolstered by strong demand in London and the South-East. The best performance has been in the market for prime property in London and the south-east, but there are also encouraging signs from the mortgage industry which could bring about a more widespread and sizeable recovery.
“The proportion of mortgage products requiring more than a 25% deposit is at a 2-year low and many of these new products are for high LTVs. Nevertheless, product numbers alone can be misleading.
“Lending is still constraining demand as mortgage lenders are concerned about the possibility of rising unemployment as the public spending cuts continue. These concerns are particularly focused on areas with high levels of public sector employment, such as northern England and Wales.
“However, the fact that prices are rising shows there is plenty of pent-up demand in the market. Currently, a large proportion of buyers are those able to muster sizeable deposits, but if the economic horizon clears and the barrier of tight lending criteria is lifted, we could see both demand and prices pick up relatively quickly.
“As the big price gains seen at the beginning of 2010 have dropped out of the figures, annual growth has slipped into negative territory and until mortgage lending gathers pace we can expect further falls in the annual rate of growth in 2011.”
David Brown, commercial director of LSL Property Services, comments:
“Despite the uncertain economic outlook, there does seem to be a newfound sense of optimism returning to the housing market. Mortgage lending is still well down on historic levels, although there have been signs that more products, with higher LTVs, are entering the market.
“This has alleviated some of the built-up demand from some frustrated buyers. Nevertheless, for the average first-time buyer, finding mortgage remains a real hurdle.
“This is placing the private rental sector under increasing stress as it accommodates a growing population of would-be buyers – and we should expect rents to continue to grow this year as competition heats up for each rental home.”
Dr Peter Williams, housing market specialist and Chairman of Acadametrics, comments:
“The average price of a home in England & Wales rose by a modest 0.3% in February to £222,456 building on the 0.2% rise in January. Over the last twelve months, prices have risen in six months, fallen in five and remained flat in one. On an annual basis, this month’s figure is down £1,037, or -0.5%, on the average price of February 2010.
“In the intervening months between February last year and this, we have seen the average house price fluctuate between £224,072 and £221,249, a maximum change of £2,823, or 1.3% over the year.
“Given that in the last six months of 2008, during the depths of the housing recession, average prices were falling by a monthly rate of -1.7%, we can see how relatively stable the current market has become, with little change in house prices being observed month on month.
“This month’s annual rate of change in house prices of -0.5% is the first time we have seen the rate go negative since October 2009. However the negative figure this month is more to do with a large monthly increase of 1.6% seen in February 2010 dropping out of the statistics, to be replaced by the more modest 0.3% increase this year, than with any significant turnaround in the market.
“We anticipate that the annual rate in the change in house prices will fluctuate around zero for at least the next few months.
“As ever the movement in the ‘average’ house price for England and Wales as a whole masks the different behaviour patterns occurring in the regions. Prices in the north of England, Wales, the Midlands and East Anglia are now falling, whilst in London and the south of England they continue to rise but at a slowing rate.
“For January, we reported that four regions were recording price falls on both a 3 monthly and annual basis. In February, there were seven regions where this was the case – the North, North West, Yorkshire and Humberside, East and West Midlands, East Anglia and Wales.
“Only Greater London, the South East and the South West are now showing annual price increases. There is a sense here of a gathering momentum around a falling annual index; however fluctuations around zero % are likely to become the norm for most of the regions as the effect of strong growth recorded in early 2010 drops out of the figures. Any further prognosis must be on the downside.
“Our analysis of London Boroughs, Unitary Districts and Counties gives a clear sense of the varied movements in prices and transactions across England and Wales. London remains a strong performer compared to other areas although, exceptionally, Tower Hamlets as well as some 52 districts and counties are now recording price falls on an annual basis.
“This month’s special analysis concerns the market for flats and this very clearly highlights the importance of flats in the London market (51% of sales in the 3 month period November 2010 to January 2011) with these flats making up over 38% of the overall sales of flats in England and Wales during this period.
2nd February 2011
House prices increase 0.3%
Tuesday, March 01, 2011
Published by MILLIE DYSON
Economy | 0 Comments
House prices increased by 0.3% in February. Prices 0.1% lower than one year ago, reveal Nationwide.
Robert Gardner, Nationwide’s Chief Economist, said:
“House prices increased by 0.3% month-on-month in February, leaving prices 0.1% lower than the same month a year ago. The overall picture is still one of a market treading water.
“Indeed, the three month on three month measure of house prices, a better measure of the underlying trend, was basically flat in February at -0.1%.
“This shouldn’t come as too much of a surprise. Housing market trends are closely linked to wider economic prospects. Given that the recovery hit a soft patch at the turn of the year and looks set to remain sluggish in the year ahead, the property market is likely to follow suit, with relatively low transaction levels and prices moving sideways or modestly lower through 2011.
“Demand for homes has levelled out, supported by historicallylow interest rates and some stabilisation in the labour market. The continued uncertain outlook for the economy is likely to keep many potential buyers on the sidelines for some time yet.
“Nevertheless, there are few signs of a glut of unsold homes building up on the market. Sellers remain reluctant to accept lower prices to secure a sale. In fact there are tentative signs that the volume of homes coming onto the market is slowing.”
First time buyers under pressure
First time buyers play a crucial role in housing market dynamics. With the supply of housing fixed in the short term, the flow of new buyers into the market has a major impact on prices and activity.
Therefore, the fact that first time buyer numbers are well below the levels prevailing before the financial crisis casts a shadow over the outlook for the wider market. The key questions are: what lies behind the decline in first time buyer numbers and what are the prospects for the period ahead?
More resilient than you might think
The first thing to note is that low first time buyer numbers appear to be a function of challenging conditions in the wider economy.
Indeed, the proportion of first time buyers has remained fairly constant in recent years – they accounted for around 37% of house purchases in recent months, compared to around 40% in 2007 and an average of 36% in the four years before the financial crisis struck.
This is surprising since, in a number of respects, the headwinds facing first time buyers have been even stronger than for other sources of demand in the housing market. First time buyers tend to be younger, and labour market conditions for younger people have been more difficult.
For example, 18 to 24 year olds account for around a fifth of first time buyers and the unemployment rate for this group has increased from 12% in 2007 to over 18% at the end of 2010, while for the population as a whole it has increased from 5.3% to 7.9% over the same period.
Graduates fared even worse with their unemployment rate doubling from 10% to 20%. Income growth has also been under more pressure. Real wages (average earnings after taking account of inflation) fell 6% between 2007 and 2010 for 22 to 29 year olds, while for all workers the decline was a more modest 3.7%.
Affordability remains a major constraint
Weak labour market conditions aren’t the only factor at play. In the wake of the financial crisis, mortgage lenders have become more conservative – a shift that has a greater impact on those
taking their first steps into the housing market.
For example, the average deposit on a home has increased from 10% of the property’s value to 21%. This means that, for an average worker earning an average salary saving 15% of take home pay, it would take eight years to put down a typical deposit to buy the average house.
However, the more fundamental issue is that housing is still expensive on a number of metrics, which is keeping potential buyers on the sidelines. House prices are currently around five times average incomes, compared to the long-run average of four.
A typical mortgage payment for a first time buyer accounts for 30% of disposable income, slightly above the long-term average of 29%, even though interest rates are still close to historic lows.
Supply side also needs to respond
Part of the reason for stretched affordability lies on the supply side of the housing market. The rate of building has not been sufficient to keep up with the growing number of households in recent years. Between 1992 and 2000, house building broadly kept pace with household formation, with 145,000 homes being built in England each year. Between 2004 and 2008 there was a cumulative building shortfall of about 300,000 homes.
The pace of building was even more subdued over the past two years, with the number of completions at around 100,000 a year in 2009 and 2010. This is providing underlying support to house prices, which is turn, is reducing affordability and limiting the scope for first time buyers to enter the market.
Looking forward, the number of first time buyers is only likely to increase substantially when labour market conditions strengthen. With the UK economic recovery set to remain fairly modest, the improvement in employment and wages is likely to be slow going.
This in turn suggests that first time buyers will be slow to return to the market, further reinforcing our view that the housing market will remain sluggish through 2011. The most likely outcome is that wages will outpace house price growth over many years, gradually improving affordability over time.
Over the longer-term, the supply side of the housing market also needs to respond if affordability is to improve on a sustained basis – the housing stock needs to grow at least as fast as the number of households. A near-term loosening of credit conditions would not solve the problem and could ultimately prove counterproductive.
Indeed, since the supply of housing is fixed in the short-term, a sharp increase in demand would put further upward pressure on prices, making the fundamental affordability constraints even more pronounced.
Nicholas Ayre, a director of buying agents, Home Fusion, said:
“The Nationwide are right that, overall, the property market is treading water, but in some areas of the country the market is drowning not waving. The marginal increases and decreases we are seeing from month to month reflect a market unsure of its buoyancy.
“Also, the fact that nearly one million 18-24 year olds are unemployed will raise questions about the longer term prospects for the property market with first-time buyers such a crucial element of the property chain.
“Demand for property remains weak due to concerns about unemployment, rising living costs and interest rate rises, which may not be too far off given the minutes of the Monetary Policy Committee’s latest meeting.
“The effects of rising unemployment and interest rate rises will vary from region to region but in some areas even the smallest rate rise could cause the property market to unravel at a rate of knots. Increasingly, people are questioning whether now is the best time to buy and this, coupled with the still difficult borrowing conditions, is stopping the property market in its tracks.
“Many prospective buyers are putting their purchases on hold, as highlighted by the Land Registry’s figures out earlier in the week showing a decline in the number of property transactions. Expect this trend to accelerate in the months ahead.
“For much of the past year, a two-tier market has been forming. At the top end, where demand is still high and mortgage finance not an issue, properties are still commanding good prices. At the lower end, where people are more cautious and mortgage finance more expensive and harder to secure, house prices are under a lot more pressure.
“The London market continues to be supported by low supply and relatively high demand. Prices in the capital won’t experience the same downward pressure that other areas of the country are likely to come under during the course of 2011.
“In certain boroughs of the capital prices are likely to be higher come the end of the year than they were at the beginning. As with the UK generally, the higher end of the London property market is proving resilient, while the lower end is under pressure.”
Eric Stoclet, CEO of Crown Mortgage Management said:
“The nation’s property owners will be encouraged by today’s figures from Nationwide, but this small growth in prices shouldn’t be taken to mean that prices have turned the corner permanently.
“Transaction numbers are currently running at around two thirds of the long term average and this means that small fluctuations in supply and demand will have a greater impact than usual on prices. The time for homeowners to get excited about rising prices will be when mortgage finance becomes more widely available.
“Currently lending criteria are very tight and this has forced many buyers to keep their powder dry and continue in the private rental sector. If you want to know when we will see an enduring recovery in the property market, look first at what’s going on in the mortgage market.”
26th January 2011
Interest rate panic has gripped homeowners who are scrambling to bag a cheap fixed rate. Higher than expected inflation figures have sent shockwaves through the market as borrowers fear it could spark a series of rises in the Bank of England base rate. This is already being reflected by lenders as thirty five lenders lenders have increased rates in the last two weeks. At the end of December 2010 there were nine lenders offering 5 year fixed rates below 4.00%, today only two are offering them. A five year fixed rate re-mortgage was available at 3.99%, offering a free valuation, free legal fees and no lenders arrangement fee. This same deal is now 4.49%, a rate rise of 0.5%, a sure sign of the direction of interest rates are expected to go.
This is not an easy decision for someone to make who is currently benefitting from a very low tracker or variable rate, but it is certain interest rates can only go in one direction. What a lot of people do not understand is that the mortgage markets in setting rates will take a view on what they expect rates to do before it actually happens, hence the increase in fixed rates that we are currently seeing. The risk in taking no action is that many homeowners will almost certainly miss the best possible deals and in hindsight they will wish they had done something sooner.
4th January 2011
HOUSE PRICE ACTIVITY AT THREE YEAR HIGH
The number of houses sold in the UK in December 2010 was the highest December figure for three years according to the latest Agency Express Property Activity Index.
It showed that despite a fall in monthly UK house sales of 26.7% in December compared to November – in line with the historic trend of a significant dip in house sales activity at the year end – the number of sales agreed in December were up 8.2% on December 2009 and 56.5% greater than December 2008.
Encouragingly, December house sales were 32% up on January’s, meaning the end of 2010 was much healthier than the beginning.
It was a similar story for the number of properties being put up ‘For Sale’. Although there was a 41.3% decrease in December compared to November – the fourth consecutive monthly fall – this was in line with what has usually occurred in previous years but still 22.5% higher than December 2009 and 37.1% better than December 2008.
Stephen Watson, Managing Director, Agency Express, said:
“2010 has certainly been a fascinating year for house sales activity. So many factors have had an effect on home owner and house buyer sentiment that it’s difficult to draw too many firm conclusions about what 2011 will bring. However, the contraction in supply of houses on the market could mean that there will be a stabilisation of house prices after the recent falls that may lead to renewed confidence returning to the market.
“With the impacts of the Government’s austerity measures still to be fully felt in the economy, the increase in VAT and the expected continuation of very low interest rates, 2011 will undoubtedly be another interesting year for the property and mortgage markets.
“January has traditionally seen a significant uplift in properties being put on the market so we will be closely monitoring the findings of our Index for signs of evidence of an increase in activity over the next few weeks”.
The North East, Wales and Central England fared best in December for house sales with falls of 13.0%, 18.8% and 19.6% respectively. The worst hit regions were Scotland down 36.6%, Yorkshire down 35.2% and the South East down 30.7%.
Milton Keynes was the only UK city not to see a fall in the number so sales agreed in December seeing the same level as November’s. Nottingham only experienced a 4.2% drop with Exeter seeing a 4.4% decrease. At the other end of the scale Coventry had the worst monthly decline in the number of house sales at -53.3%. Glasgow saw a drop of 43.7% and York had a 42.5% fall.
In terms of new properties coming onto the market there was a pretty consistent contraction across all regions. The West Midlands saw a 33.9% decrease with the East Midlands having the worst drop of 51.9%.
Of the UK cities, Bristol, Birmingham and Leeds held up the best with declines of 20.0%, 22.1% and 25.3% respectively. Newcastle saw the most striking fall in the number of properties being put up ‘For Sale’ with a 59.1% fall with Glasgow -55.8% and York 52.4% not far behind.
29th December 2010
First Time Buyer affordability at 12 year high
Mortgage affordability for those looking to take their first steps onto the property ladder is at its most favourable for 12 years, according to Halifax.
The proportion of disposable earnings devoted to mortgage payments by a potential new first time buyer stood at 27% in September 2010; the lowest since December 1998 and almost half of the peak level of 50% in September 2007.
This significant improvement in affordability over the past three years has been mainly driven by a combination of lower house prices and declining mortgage rates.
In 2010, 40% of local authority districts (LAD) across the UK were ‘affordable1′ for the average first time purchaser, a considerable improvement from 2007, when only 6% of areas were affordable, although this is less than half the proportion of the affordable LADs in 2000 (82%).
The North East is the most affordable region in the UK for first time buyers, 83% of local authority districts here are affordable to FTBs, more than in any other region.
Only 5% of first time buyers paid stamp duty between April and November 2010 as a result of the temporary increase in the stamp duty threshold for FTBs from £125,000 to £250,000 announced in March.
Nationally, 39% of home purchases made by FTBs have benefitted from the increased allowance. First time buyers in the South East have benefited most from the change, almost three quarters (73%) of FTBs in the region not paying stamp duty due to the increase.
Martin Ellis, housing economist at Halifax, commented:
“The ‘noughties’ were a difficult period for many looking to get onto the property ladder. The substantial rise in house prices over much of the decade prevented many potential first time buyers from entering the market, however, affordability has improved significantly over the past three years.
“Whilst the tightening in lending criteria experienced across the mortgage industry since the onset of the credit crunch in 2007 deterred first-buyers from trying to secure mortgage finance, there are now encouraging signs of a modest improvement in mortgage availability.
11th November 2010
BTL market shows signs of recovery
Buy-to-let lending rose by 12% in the third quarter, according to data published today by the Council of Mortgage Lenders
Supported by ongoing demand for rental property against the backdrop of a dysfunctional owner-occupier market.
There were 26,900 buy-to-let loans advanced in the third quarter, worth £2.8 billion. This quarterly rise of 8% by volume and 12% by value is the second consecutive quarterly increase in lending.
Compared to the third quarter of 2009, the volume of lending was up 14% and the value up 33%, from 23,700 and £2.1 billion respectively. Buy-to-let lending is low by historical standards – running at levels last seen in 2002 – and the market will likely continue to show growth into 2011.
At the end of September, there were 1.29 million buy-to-let mortgages outstanding, an increase of 7% from the previous quarter. The proportion of loans in arrears of more than 1.5% of the balance remains broadly unchanged at 1.45%, while repossessions (at 0.12%) and the appointment of receivers of rent (at 0.10%) were also virtually unchanged from the previous quarter.
Buy-to-let demand appears likely to increase, which is unsurprising in an environment where the demand for rental property will be boosted by the access problems that first-time buyers face in the owner-occupier market.
Commenting on the figures, CML director general Michael Coogan said:
“We would expect buy-to-let demand to pick up further if current rising rental trends continue and house prices remain broadly stable. However, there is short term uncertainty as a result of the unresolved debate on housing benefit and landlords’ response to new limits.
“The bigger question is whether there will be sufficient supply side capacity to meet that demand, as the number of buy-to-let lenders dwindled in the credit crunch after 2007 and is yet to be fully restored.
“However, it is clear that in a market where access to home-ownership has become more difficult, the private rental sector is experiencing, and will continue to benefit from, high levels of demand for good quality housing
10th November 2010
House prices to rise 16%
CEBR expects by 2014, UK average house prices will be 16% higher than on average in 2010.
Annual house price growth will drop from 6.9% year on year in 2010 to only 2.2% in 2011 according to the latest forecast from the Centre for Economics and Business Research (Cebr) – one of the country’s leading economics consultancies and respected commentators on the UK housing market.
Pulling house prices down will be squeezed disposable income and higher unemployment as public sector cuts take effect. But on the other side, continued record low interest rates and the likelihood of more quantitative easing will work to reduce long term interest rates and household borrowing costs. In addition, continued constraints on housing supply in the UK will work to offset the impact of weak disposable incomes.
Owen James, one of the report’s authors and economist at Cebr said:
“We see a tough outlook for disposable incomes over the coming 3 years, especially in 2011 with the VAT rise and the hangover effect of commodity price rises. But it is highly likely the MPC will follow the Federal Reserve Bank with quantitative easing.
“This should reduce the cost of borrowing and lead to an expansion of bank lending into the mortgage market. By 2014 we expect the number of monthly mortgage advances to reach 77,000 from a current level of 47,000. While this will be far below the 2006 peak of 119,000, it should be sufficient to keep the market moving upwards.”
Douglas McWilliams, chief executive of cebr added:
“Quantitative easing is a very powerful medicine and is likely to have a strong impact on the housing market eventually.
“House prices may not move much during 2011 but they are likely to rise significantly in the following three years on the back of quantitative easing to offset the impact of the fiscal retrenchment. This is how QE works to boost the economy.”
25th October 2010
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18TH October 2010
Double-dip recession has been exaggerated.
The UK economy has bounced back from recession and should avoid a double dip, according to the latest Ernst & Young ITEM Club quarterly forecast.
However, following a surprisingly strong first half of the year, the UK is heading for a ‘soft patch’ over the winter as the pace of recovery loses momentum.
Domestic and overseas markets have recovered nicely and the Ernst & Young ITEM Club predicts GDP growth of 1.4% this year and 2.2% in 2011. However, ITEM cautions that the outlook remains very uncertain, with opinion divided over the future prospects for the UK economy.
With businesses and consumers preparing for the government’s five year fiscal deficit reduction programme and further evidence that exports are levelling off due to a decline in global demand, it’s hardly surprising that the MPC is wrestling over the prospect of a second round of quantitative easing.
Concerns for the future of the UK economy ‘exaggerated’
Yet despite the obvious tensions within the economy, ITEM says that the concerns which have arisen on the risks of the UK economy overheating, or suffering a bout of deflation, have been exaggerated.
ITEM predicts that CPI inflation will move below target from January 2012 as the VAT increase finally drops out of annual calculations, and holds firm on its view that interest rates will not go up again until 2014.
Peter Spencer, chief economic advisor to the Ernst & Young ITEM Club, says:
“The economy is likely to slow over the winter following a surprisingly positive first half of the year, but I think this will be a soft-patch, not a double-dip.”
29th September 2010
Paragon returns to the Buy to Let market, the well estabished and respected Buy to Let lender Paragon Mortgages has made a return to the mortgage market after an absence due to the credit crunch. This is a strong indication of confidence returning to the lending sector and is a very welcome sign to the mortgage broker market. Paragon are recognised as a specialist provider of Buy to Let mortgages to professional landlords and residential property investors. They will lend to individuals and Limited Companies, on Houses of Multiple Occupancy, property portfolios, to professional landlords and on semi-commercial properties. They will lend up to 75% loan to value, with rates starting from 4.30%.
Brokers vital when it comes to mortgage selection
Tuesday, September 21, 2010
The mortgage market and the amount of business being written may only be a fraction of what it was back in the heady days before the banking crisis, say Moneynet.co.uk.
Andrew Hagger of Moneynet.co.uk comments:
“But that doesn’t mean that the job of finding the right mortgage has got any easier. There is still a vast array of home loans to choose from and even if you’ve already worked out whether it’s a variable rate or fixed rate product that you’re going to plump for, you still need to fathom out which is the cheapest mortgage for you.
“Unlike savings accounts, personal loans or credit cards the answer isn’t as simple as referring to a best buy table on a comparison website or in the paper, although some lenders still launch attention grabbing interest rates, hoping that it will be sufficient to win custom from those who don’t take the time to shop around or use the services of an Independent Financial Adviser or mortgage broker.
“Unfortunately a number of lenders continue to bypass the broker community and sell their products directly via branch networks or increasingly online, a situation which has hit the intermediary market hard.
“The marketing departments of banks and building societies continue to develop products with profit margins based on various rate and fee combinations, and whilst it may work for them, for the man on the street it’s just a big headache.
“One of the biggest problems for consumers is working out which is the most appropriate mortgage based on the total cost, i.e. not just the interest rate but also the associated fees which can vary enormously between lenders and individual products.
“If you take a look at three of the two year fixed deals currently available, you’ll see what I’m getting at, so which do you think is the best of these? – Coventry Building Society 2.49% with a £199 booking fee and 1.5% arrangement fee, Lloyds TSB 2.94% and £1895 fee or Yorkshire Building Society 2.99% with £995 fee.
“It’s not a two minute job to pick the cheapest and that’s the problem, it’s not a case of one mortgage fits all, the best deal will also depend on the amount you’re looking to borrow too.
“Having crunched the numbers, if you were only looking to borrow £50,000 then the Coventry Building Society works out as the cheapest on a total cost basis, however if you’re looking to borrow £200,000 then due to the 1.5% arrangement fee which would set you back a hefty £3000, the same deal suddenly becomes the most expensive of the three.
“If you’re looking to borrow £120,000 or £200,000 then it’s the Yorkshire Building Society deal that works out cheapest over the two year fixed term, but without access to a mortgage calculator it would be almost impossible to choose.
“You can use some comparison websites to search for mortgages based on total cost, however many people still prefer to sit down face to face with an independent professional adviser to carry out the calculations on their behalf.
“When you consider that your mortgage is likely to be the biggest financial transaction you’ll undertake in your lifetime, it certainly makes sense to seek advice to ensure you don’t make what could be a potentially expensive mistake.
“We need to see more lenders supporting the intermediary market as there’s the danger that without it we will see a depleted broker market suffer further. Unfortunately for the consumer, it’s those very brokers that would be the first to point out the real cost of some of these attractive looking offers.”
FSA mortgage lending data shows recovery
Tuesday, September 14, 2010
The Financial Services Authority has published its latest mortgage lending data for the United Kingdom covering the period Q2 2010.
The total value of outstanding loans is now £1,209bn, little changed from last quarter. New advances in the quarter totalled £36bn, 14% higher than in Q1,and 8% higher than the amount advanced in Q2 2009.
New commitments totalled £41bn, 20% up on the previous quarter. The share of lending for house purchase recovered from the dip last quarter, to account for 61% of new advances and 63% of new commitments in Q2.
The proportion of new lending done at an LTV of more than 90% accounted for just over 2% of new advances. New lending with a combination of high LTVs and high income multiples rose slightly and accounted for just over 1% of new lending in Q2.
The proportion of loans to borrowers with an impaired credit history has been unchanged for the past year and now stands at 0.33%. The number of new arrears cases has been on a downward trend for the past six quarters, with a further reduction in the number in Q2 to 37,200 (-8%).
The total number of accounts in arrears has also continued to fall, for the fourth successive quarter, with a decrease of 3% in the latest quarter to 351,000. Consequently, the proportion of the residential loan book that is in arrears, and hence not fully performing, also fell and now stands at 3.11%.
The number of new possessions in the quarter continued to decline, decreasing by 5% to 10,000, the lowest figure for over two years
House prices rise 0.2% in August
08 September 2010
House prices increased by 0.2% in August. This was the second successive monthly increase following a 0.7% rise in July, say Halifax.
House prices in August were 4.6% higher on an annual basis as measured by the average for the latest three months against the same period a year earlier. This was slightly below the 4.9% increase in July, continuing the recent downward trend and compares with a high of 6.9% in May.
Prices in July were marginally lower (-0.5%) than at the end of 2009. The current average house price of £167,953 is 9% above its April 2009 low, but remains 16% below its August 2007 peak.
Housing market activity broadly stable. Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase in the three months to July – a leading indicator of completed house sales – were slightly higher (1%) than in the previous quarter, on a seasonally adjusted basis.
The number of approvals has been remarkably stable this year, keeping within a range of 46,000-50,000 per month. In total, the number of approvals during January to July was 9% higher than in the same period last year.
The improved economy, strengthening labour market and low interest rates are all supporting housing demand. GDP increased by 1.2% between the first and second quarters of 2010. The recovery in economic activity – whilst unlikely to be sustained at this pace – helped to boost the number of people in employment by 184,000 between Quarters 1 and 2, according to the latest ONS figures.
The combination of lower house prices compared with mid 2007 and interest rate reductions has created a significant improvement in affordability for those buyers wanting to take their first steps onto the property ladder. Indeed, the proportion of a potential new first-time buyer’s disposable earnings devoted to mortgage payments has almost halved from a peak of 50% in mid 2007 to 28% – below the 34% average over the past 25 years.
Improving home affordability has helped to boost the number of first-time buyers, which was 28% higher in the first half of 2010 compared with the same period last year – 94,600 against 74,000 – according to the latest CML figures
2nd September 2010
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12th August 2010
Buy-to-let market continues to grow, say CML
12 August 2010
The freezing up of the buy-to-let mortgage market that emerged as an unwelcome side-effect of the credit crunch appears to have eased a little, according to the latest buy-to-let survey results from the Council of Mortgage Lenders
11th August 2010
Fixed rate mortgages gained in popularity in June
48% of new borrowers took out a fixed rate mortgage in June, the highest proportion so far in 2010, according to new data from the Council of Mortgage Lenders.
Fixed rates had proved unpopular this year compared to the last several years due to an historic low bank rate with little prospect of the rate rising. But with fixed rate prices falling they are starting to find favour again.
House purchase lending increased significantly in June. There were 52,000 loans advanced (worth £7.6 billion), up 19% in volume (23% in value) from May 2010 and up 14% in volume (27% in value) from June 2009. This is now the twelfth consecutive month in which lending has been higher than its year-earlier levels.
Lending for remortgage also increased, though only modestly, in June. There were 27,000 loans for remortgage, worth £3.4 billion, up from 26,000 (worth £3.2 billion) in May 2010 but down from 34,000 (worth £4.2 billion) in June 2009.
For the second quarter as a whole, there were 136,000 house purchase loans, worth £19.7 billion. This is 20% higher (by volume and value) than the last quarter and up 17% (by volume) and 30% (by value) than quarter two 2009.
For remortgaging, the second quarter saw 77,000 loans (worth £9.6 billion), up 2% by volume, with no change in value, from the first quarter, but in stark contrast to house purchase lending, the figure was down 20% (by volume) and 19% (by value) from the second quarter of 2009.
There were 52,200 loans (worth £6.2 billion) to first-time buyers from April to June, up from 43,400 (worth £5 billion) from January to March and 85,300 home mover loans (worth £13.5 billion), up from 70,700 (worth £11.2 billion).
Credit criteria have become a little more fluid in recent months but remain tight overall, in the context of continuing business and market constraints.
10th August 2010
July bounce-back sees market recovery trend restored
The housing market experienced one of its strongest months of the year so far in July, according to the National Association of Estate Agents.
The NAEA’s monthly market report found that demand for housing had increased, more sellers were putting property onto the market and the average agent made more sales than in June. The average agent in July had 292 registered house hunters, up from 279 in June.
Supply was also up, with agents reporting an average of 68 properties on their books, compared to 59 in June. The percentage of sales being made to first time buyers (FTBs) also increased from 21% to 26%, suggesting that the decision to raise the threshold of Stamp Duty Land Tax to £250,000 is translating into sales.
Michael Jones, President of the NAEA, said the market report showed that the fragile recovery that has defined the market in 2010 was continuing.
“Demand and supply both increased in July, which is great news for the housing market.
“However we should not get carried away – what we are seeing is a slow, steady and patently fragile recovery. One thing which is interesting is that consumer confidence in the market appears to be high, despite apparent uncertainty elsewhere about the future of the economy.”
Mr Jones said that agents typically expected a slower month in August, as families put aside housing plans to enjoy the holiday. And he warned that lenders are still being too restrictive.
“One message that estate agents throughout the country are giving us is that the market needs more lending.”
10th August 2010
Prices fall for the first time since July 2009, say RICS
The July RICS Housing Market Survey shows more surveyors are now seeing falling rather than rising prices, with the headline price balance slipping from +8 to -8, the first negative reading since July 2009.
The weaker trend in prices is being driven by increasing new vendor instructions (supply) and falling new buyer enquiries (demand). Indeed, the new instructions balance increased from +28 to +33, the highest reading since May 2007.
Anecdotal evidence from surveyors suggests the rise in new instructions is primarily related to homeowners testing the market following the abolishment of HIPs in late May, rather than due to distressed selling.
Meanwhile, the new buyer enquiries balance fell for the second consecutive month from -6 to –10. Transaction levels remained more or less unchanged with the agreed sales balance edging down from +3 to +1.
The average number of properties on surveyor’s books rose by 4.1% on the month to 69.1. At the same time, the average number of sales per surveyor remained essentially flat at 16.6 (down 0.1% on the month). As a result, the sales to stock ratio – an indicator of market slack- fell to 24%, the lowest level since June 2009.
Given the amount of slack in the market, it is not surprising that price expectations turned more negative, with the balance falling from -6 to -28. Sales expectations remain positive overall, but surveyors turned less optimistic than last month, with the balance slipping from +17 to +8.
In terms the regional picture, more surveyors are still reporting price increases than decreases in London and the North West. The picture is stable in Scotland and the South West. Elsewhere, including Northern Ireland, more surveyors are seeing price falls.
4th August 2010
Former Bank of England deputy-governor, Sir John Gieve has warned that interest rates will have to rise earlier and more sharply than expected to keep inflation under control, speaking at a forum Sir John said he “would’nt be at all surprised to see interest rates at 2.5% a year from now”.
4th August 2010
House prices rise by 0.6% in July, say the Halifax. Prices in July were 4.9% higher on an annual basis as measured by the average for the latest three months against the same period a year earlier. Banks are now also reporting healthy half yearly profits, are these signs of stability now returning to the market a stabilisation of the UK’s recovery ??
29th July 2010
House prices up 8.4%, the June data from the Land Registry’s flagship House Price Index shows an annual price increase of 8.4 per cent. This is the eigth month in a row in which the annual figure has been positive and takes the average house price to around the same levels as they were in the summer of 2006.
23rd July 2010
The UK economy grew by a faster-than-expected 1.1% in the second quarter of the year, according to official data.
The figure – a preliminary estimate from the Office for National Statistics (ONS) – was almost double the 0.6% growth rate expected by economists.
It was the fastest quarterly expansion since 2006, and marked a sharp pick-up in pace from the 0.3% growth of the first three months of the year.
Much of the growth came from the key services sector.
Within the services sector, which accounts for about three-quarters of the UK economy, business and finance posted its strongest rise in almost three years, rising by 1.3% over the quarter.
There was a big contribution from the construction industry, which grew at its fastest pace since 1963, in part because bad weather at the start of the year meant builders were catching up on work that should have taken place then.
“There are going to be some big swings in the quarterly numbers before the true pace of the recovery becomes clear”
The only sector to register a fall was transport and communications – down 0.7% on the quarter following the impact of Iceland’s volcanic ash cloud in April.
The ONS said the last time the UK had growth of more 1.1% in any quarter was in 1999.
The Chancellor, George Osborne, said the figures proved his plan to cut the public sector was right.
He said: “In the Budget, I set out a plan to restore confidence in our economy by dealing with the deficit, starting this year, and to rebalance growth from the public to private sector.
“Today’s figures show the private sector contributing all but 0.1% of the growth in the second quarter, and put beyond doubt that it was right to begin acting on the deficit now.”
His predecessor, Alistair Darling, said the figures owed more to his government’s policy. He said they vindicated the “measured and balanced” approach taken by the Labour government.
The BBC’s economics editor, Stephanie Flanders, said it was always important not to read too much into one set of figures – however striking.
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19th July 2011
Green shoots of recovery for First Time Buyers more
18th July 2011
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18th July 2011
Beware of lender direct deals ( see NEWS)
15th June 2011
STOP PRESS – Fantastic news (see NEWS)
15th June 2011
Latest rates (see NEWS)
15th June 2011
Confidence index shows largest ever increse (see NEWS)
7th June 2011
House prices to stabilise later this year say the Halifax (see NEWS)
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