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Em Morley

Professionals Think the Housing Market is Being Held Back

Published On: May 20, 2015 at 12:00 pm

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Categories: Landlord News

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Most property professionals in the UK think that the residential housing market is being held back, naming lack of supply as the main reason, found a survey from conveyancing services firm myhomemove.

A huge 90% of respondents believe the market is being supressed, with 47% saying the shortage of homes for sale is the biggest cause.

This indicates that improved confidence from vendors following the general election result could increase stability and predictability that will drive the amount of house sales up.

Professionals Think the Housing Market is Being Held Back

Professionals Think the Housing Market is Being Held Back

The research reveals that 24% of experts blame a lack of mortgage availability, possibly due to the stricter lending rules on older borrowers. 16% think that a shortage a new build homes is restricting the market, highlighting the need for developers to build more.

Professionals are supporting an extension of the Help to Buy scheme for new build properties to 2020. A high 80% of those surveyed back the system, compared with just 8% who do not.

Additionally, 65% support the Conservative Party’s starter homes scheme, outlined in its manifesto, with only 3% opposing it.

However, the experts were divided on another main housing policy, the issue of reducing inheritance tax on family homes. 42% support this and 38% are opposed.

Furthermore, 38% think that the target of building 200,000 new homes is achievable. The new Government pledged to build this number for first time buyers.

The professionals believe the Conservatives will find it easy to apply its right to buy scheme for housing association tenants. 43% think this is realistic and 27% are not sure.

There was a higher proportion of professionals who think the Government will struggle to implement its right to build scheme, with 26% saying this is achievable and 41% unsure.

CEO of myhomemove, Doug Crawford, says: “Property professionals are clearly concerned about the obstacles that are holding back property transaction numbers. The good news is that the decisive election result could provide a confidence boost to consumers that will mean more properties are put on the market.

“The main housing policies outlined by the new Conservative Government in its manifesto are, for the most part, popular within the industry. The question now is whether the Government can deliver on its promises and how quickly it can do so.

“Some policies, like extending Help to Buy, are far simpler to deliver than others, like the proposed right to build scheme. This will undoubtedly be a big topic of debate at our conference, just one week before the Government sets its policy agenda in the Queen’s Speech.”1

1 http://www.propertywire.com/news/europe/uk-property-housing-supply-2015051810518.html

 

 

Rental arrears rise in first quarter of 2015

Published On: May 20, 2015 at 11:12 am

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A report assessing the first-quarter of 2015 has indicated that more tenants struggled to pay their rent.

The investigation by agency chains Your Move and Reeds Rains found that the number of tenants in rent arrears of more than 2 months was up 4% on the same period one year ago.

Arrears

This means the number of homes facing extreme rent arrears during the first three months of this year was 70,900, an increase of 2,700 on twelve months ago.[1]

Eviction orders were also up, by 2.3% on the last quarter of 2014. It is estimated that 28,900 tenants face losing their homes.[1]

Director of Your Move and Reeds Rains, Adrian Gill, believes that tenants’ earnings had reached a, ‘crunch point.’ He believes that a number of households are on increasingly modest wages, and therefore face difficulty finding sufficient rent every month.

Rental arrears rise in first quarter of 2015

Rental arrears rise in first quarter of 2015

 

Mr Gill also pointed out that there are now more arrears, due to the simple fact that there are more people renting then ever before.

Election relief

Landlords will be delighted with the outcome of the general election, as many were fearful of rent controls being implemented under Labour rule. Gill added that, ‘in the longer term, tenant finances are the most effective limit on rents. Tenants must be able to afford rent for any landlord to realise their financial plans on paper. In this way, landlords depend more on the prosperity of their tenants than on any particular policy or political environment.’[1]

[1] http://www.propertyindustryeye.com/more-tenants-in-rent-arrears-as-they-struggle-on-low-pay/

 

House Prices Rise 10% in a Year

Published On: May 20, 2015 at 11:09 am

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Categories: Property News

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House prices soared by 9.6% in the year to March 2015, up from 7.4% in the previous month, the Office for National Statistics (ONS) revealed.

This is the first time the annual growth figure has risen since last summer. From September 2014, yearly property price inflation decreased slowly every month, from a record high of 12.1%.

However, the most recent increase was not caused by the spiralling London housing market as it was last summer. This year, Scotland experienced the fastest price rises of 14.6% in March.

The East of England was second at 11.4%, and then the South East and London with 11.2% growth.

Not including London and the South East, UK property prices rose by 8.1% in the year to March 2015; much higher than usual growth, indicating that values are strengthening around the country.

This increase made the average house price £273,000 in March, found the ONS data. This is £4,000 higher than February and only £1,000 off the sky-high value recorded

House Prices Rise 10% in a Year

House Prices Rise 10% in a Year

in August 2014.

Annual property price growth was 9.4% in England, 5.7% in Wales and 7.5% in Northern Ireland. Scotland’s huge 14.6% increase was the highest yearly rise north of the border since July 2007.

The boom in March has caused some regions of the country to witness record high house prices, including the East of England, East Midlands, West Midlands, South East and South West.

London’s values are still slightly less than the prices seen in August 2014.

But now that the general election is over, prices could be pushed up higher in the next few months. The ONS index is a month behind other studies.

Managing Director of online estate agent House Tree, Tom Harrington, says: “The ONS data is pretty historic, as the housing landscape has changed dramatically since March.

“Now that the general election is out of the way, and all the uncertainty surrounding it, which saw buyers and sellers alike sit on their hands, the handbrake has been released on activity and confidence.”1

Chief of online estate agent House Simple, Alex Gosling, says: “Buyer interest has picked up noticeably in the past week. We will have to wait and see if this is just a slingshot effect of the general election. The issue over the past few months has never really been about demand, because the buyers have always been there.”1 

The Halifax’s latest monthly property index revealed the average house price is now a record £196,412, up £3,084 compared to March this year, when prices had risen by a slower monthly rate of 0.6%.

Annually, prices were up 8.5% in the three months to April, compared with 8.1% growth in the three months to March.

A separate study by the Council of Mortgage Lenders (CML) indicates that in the first quarter (Q1) of 2015, first time buyers took out 61,300 mortgage loans, a decrease of 24% from Q4 2014 and 11% down on Q1 2014.

Those moving home took out 70,400 loans, a 25% drop on Q4 2014 and a fall of 11% yearly.

Chief of mortgage broker SPF Private Clients, Mark Harris, says: “Mortgage lending got off to a slow start this year, but started to pick up by March and with the uncertainty created by the election now resolved, we expect that trend to continue.”1

The ONS found that in March, first time buyers paid 7.8% more for their property than a year previously. This rose by 10.3% for existing homeowners.

1 http://www.dailymail.co.uk/money/mortgageshome/article-3087544/Annual-house-price-inflation-rises-time-summer-average-home-adding-4k-month.html?ITO=1490&ns_mchannel=rss&ns_campaign=1490

 

 

 

Parents Using Their Children as Guarantors

Published On: May 20, 2015 at 10:24 am

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Older mortgage borrowers who have been refused a deal from their lender have to rely on their sons and daughters for help.

More and more over-50s are asking their children to be guarantors on their mortgage, after they failed the strict new lending rules when remortgaging.

Parents Using Their Children as Guarantors

Parents Using Their Children as Guarantors

Guarantors are in place to meet the costs if the borrower defaults on their mortgage repayments.

Experts say that parents have to “demean themselves”1 because banks are reluctant to lend into retirement, as they worry borrowers’ pensions will not be sufficient to cover the payments.

Recent research from the National Association of Estate Agents (NAEA) revealed that a third of its agents have seen clients experiencing age discrimination from lenders.

This shocking fact arrives after the introduction of tougher lending rules in April 2014, when mortgage providers were required to prove their customers could afford their loans.

But some banks have taken these requirements too far and are now discriminating against older borrowers, even when they have a solid pension.

Mortgage broker John Charcol’s Ray Boulger says: “Often we find that the parent can actually afford the mortgage, but the lender will not take their income into account simply because of age.”1

Lisa Harris, of retirement specialists Saga, insists: “These rules need an urgent review.”1 

However, banks say they need clarity on which lenders they can approve loans for, as lending into retirement can be risky.

1 http://www.dailymail.co.uk/news/article-3087045/Now-s-bank-son-daughter-Parents-increasingly-turning-children-mortgage-help-ageist-lenders-turn-down.html

Buy-to-let mortgages for 85 year olds

Published On: May 20, 2015 at 10:05 am

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The buy-to-let mortgage battle has taken another twist with the news that a leading lender is to increase the maximum age of a borrower at the end of a mortgage term to 85 years old.

Fleet Mortgages say that they are to change their age from 75 in the face of the more relaxed pension laws. They argue that will pensioners now having the ability to use some or all of their savings for one-off purchase, such as a property, then there will be more numbers of retirees wishing to invest in the buy-to-let market.

Having only started to lend to borrowers at the back end of last year, Fleet have stated that since the launch of the product, almost 50% of their clients have been aged over 50. During the first quarter of this year, the firm received £145m worth of buy-to-let revenue in their system, with loan sizes for all products totalling £245,000.

Buy-to-let mortgages for 85 year olds

Buy-to-let mortgages for 85 year olds

Bob Young, chief executive of Fleet Mortgages, believes that the change in maximum age shows their support for embracing change. Young said that his company is committed to, ‘evolving and enhancing our criteria in order to ensure it is fit for purpose in a changing marketplace-this is why we have increased our maximum customer age at the end of loan, up from 75 to 85 years old.’

Continuing, Young said that, ‘we recognise, for instance, that people are living longer, that landlords want to hold their properties longer into retirement plus there is a growing appetite amongst people over 50 wanting to invest in property.’

Record Low Mortgage Rates Disappear

Published On: May 20, 2015 at 9:46 am

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Categories: Finance News

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Those buying a home with a mortgage have run out of time to take advantage of the lowest ever long-term fixed rates.

Mortgage lenders have started taking their cheapest deals off the market, driving the best rates on a five-year fix over 2% again. The lowest five-year fixed rate mortgage is now 2.14%, up from 1.99%.

Lenders have been competing recently for the best offers on fixed rates. HSBC introduced a record low five-year fix of 1.99% in April, but this has since disappeared.

Woolwich also launched the same rate for a limited time last week, but this expired today.

Record Low Mortgage Rates Disappear

Record Low Mortgage Rates Disappear

These deals have been pulled due to the cost of funding on the wholesale markets – known as swap rates – increasing recently. Lenders use these rates to price their mortgages and they have a huge impact on the cost of lenders’ fixed rate mortgage funding.

In the middle of April, swap rates dropped to 1.46%, but reached 1.73% last week before declining again to 1.66%.

Swap rates are climbing after the bond markets became chaotic. Yields on UK Government bonds, called gilts, have been driven up.

Lenders will also bear in mind that the Bank of England’s (BoE) latest inflation report claims interest rates will increase in mid-2016.

The best rates

After Woolwich pulled its 1.99% five-year fix today, Chelsea Building Society now has the best deal, a 2.14% rate with a 40% deposit and £1,675 fee. A 25-year £150,000 mortgage on this would cost £646 per month and £40,438 over the five years.

If borrowers are looking for smaller fees, Yorkshire Building Society offers a 2.19% rate with a £975 fee. On the same mortgage, this would be £649 a month, but £479 cheaper over the five years at £39,959.

Yorkshire Building Society has also released a range of fee-free mortgages this week, with £1,000 cashback. Borrowers could get a five-year fix at 2.54% costing £675 per month on the average home loan and £40,557 over the term.

This deal becomes cheaper than the others when considering the cashback, which takes the overall cost down to £39,557.

For borrowers with smaller deposits, Post Office Money has a five-year fixed rate at 2.49% with a £999 fee and 25% deposit. A 25-year £150,000 mortgage would be £672 a month and £41,329 over five years.

Leek United offer a 3.59% rate for a £495 fee and 10% deposit. This would cost £758 per month on the same mortgage and £45,986 for five years.

The Help to Buy mortgage guarantee scheme provides a five-year fix from Post Office Money at 4.89% with no fee. The same mortgage would cost £867 a month and £52,037 over five years.