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Em Morley

Mortgage Lending Highest Since Financial Crash

Published On: September 16, 2015 at 11:50 am

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Mortgage Lending Highest Since Financial Crash

Mortgage Lending Highest Since Financial Crash

Mortgage lending for home purchases grew in July, according to lenders. Lending to first time buyers and home movers was the highest since the financial crash.

In total, 67,800 home purchase loans were advanced, up from 63,100 in June and from 64,700 in July last year.

It was the third consecutive month of growth by volume and value.

By value, lending to first time buyers rose by 7% annually and 5% on a monthly basis.

30,200 loans were granted, up from 29,400 in June and 28,900 in July 2014.

By volume and value, this was the highest level of lending to first timers since August 2007.

Furthermore, 37,700 mortgages were given to home movers in July, the highest level by volume since December 2009 and the highest by value since November 2007.

This data compares with 25,200 loans for buy-to-let, around half of which – 11,800 – were for property purchase and the rest for remortgage.

Remortgaging by homeowners dropped slightly, by 4.4% on the month, but up by a huge 34% annually, the highest of all loans.

The value of remortgages was £5.1 billion in July, higher than that for home purchase and first time buyers.

Nationwide to cut rates on mortgage deals

Published On: September 16, 2015 at 11:32 am

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Nationwide has today announced that it is to cut rates on certain fixed rate mortgage deals, namely at 85 and 90% LTV. This includes 5 and 10 year fixed-rates, which will be reduced by up to 0.45%.

In fact, reductions are to be made on a range of 2,3,5 and 10 year fixed rate deals, with rates for those with a 10% deposit beginning at 2.99% for a 2 year fixed rate, with a £999 fee.[1]

Cuts

For buyers able to raise a 15% deposit, rates begin at under 4% for 10 year fixed-rate products and 2.04% for the 2 year fixed rate deal. Both come with a £999 fee.[1]

Moreover, there are reductions to selected deals in the Flexclusive range, which are available to consumers with a Nationwide current account. The 4 year fixed rate mortgage deals, with a deposit of 15%, begin at 2.94%.[1]

Just last week, the building society launched a new range of fixed rate 95% LTV mortgage deals, beginning at under 4%. These products are removed from any scheme, such as Help to Buy and are available to both first-time buyers and home movers. This was the first time that Nationwide has offered 5% deposit mortgages that are not conjoined with any scheme to all customers since 2008. In addition, the new mortgage deals will be offered through brokers and directly through Nationwide themselves.[1]

Nationwide to cut rates on mortgage deals

Nationwide to cut rates on mortgage deals

Competitive

Henry Jordan, Nationwide’s Head of Mortgages, commented, ‘following the launch of Nationwide’s new range of mortgage products for those with a 5% deposit, we are now reducing rates for those with slightly larger deposits of 105 and 15% who are looking for competitive rates and payment security over the short, medium and longer term.’[1]

‘First-time buyers will also continue to qualify for a £500 cashback irrespective of which product they choose. This is in addition to the benefits available on the Flexclusive range of mortgages, including £250 cashback or the option of free valuations and legal fees,’ Jordan added.[1]

[1] http://www.propertyreporter.co.uk/finance/nationwide-announces-cuts-to-ftb-fixes.html

 

 

Interest Rate Rise Would Cause Decline in Property Markets

Published On: September 16, 2015 at 10:58 am

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The property markets in the North of England and Wales would experience substantial declines if the Bank of England (BoE) increases interest rates in the near future, believes an industry expert.

The Director of Home.co.uk, Doug Shephard, announced this warning following the release of the firm’s Asking Price Index, which highlights the widening gap between prices in the north and south of the country.

The index revealed that the average asking price of a home in England and Wales is now £282,744, a 0.4% rise on August and up 6.5% over the year.

Interest Rate Rise Would Cause Decline in Property Markets

Interest Rate Rise Would Cause Decline in Property Markets

The report also states that buyer demand and a lack of supply in London and the South of England are continuing to push up the national average prices across most of the country.

However, it reveals a significant difference between the overall finances of the north and south. While prices in the capital are up by more than 50% over the past five years, they have dropped in the North East over the same period.

The price of a home in Greater London has risen by 12.8%, or £60,000, over the past year.

This is partly caused by the supply of stock continuing to drop, with record lows in August, down 59% since August 2007 and a 10% annual fall.

House price growth in the South East is outperforming even Greater London, rising by 6.1% in the last six months.

Shephard observes: “With prices in London up 53.3% and the North East down 0.4% over the last five years, it is clear that the northern and southern property markets are poles apart.

“We maintain that, in view of such diversity of fortunes across the country, it is near impossible how the BoE can realistically raise interest rates any time soon.

“Property markets in the north and Wales remain very fragile and would suffer significant declines should the cost of borrowing rise, causing negative equity and devastation of mortgage lenders’ balance sheets.”1

The average house price in the North East is now £153,776, a slight increase of 0.4% on August, but down 0.2% on this time last year.

In Yorkshire and the Humber, prices were up by 0.5% monthly and by 0.3% in Scotland.

Prices grew by just 0.1% in the North West, similarly to the West Midlands. In the East Midlands, they were up by 0.2%.

However, in the East of England and the South East, prices increased by 0.9% on the month. In Greater London, they rose by 0.2% and by 0.3% in the South West.

1 http://www.propertyindustryeye.com/interest-rate-rise-would-mean-significant-decline-for-north-and-wales/

 

Average FTB deposit rises to £32k

Published On: September 16, 2015 at 10:23 am

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Prospective first-time buyers have been dealt a further blow, with the news that the average deposit for a home has risen to £31,807.

The latest Genworth/Moneyfacts Mortgage LTV Tracker shows that the average deposit for initial purchasers rose to 20% at the end of Q2. This was the largest amount for 12 months. The average first-time buyer house is now valued at £159,035.[1]

Decrease in lending

Despite the assistance offered by the Help to Buy scheme, lending is decreasing, with the average deposit up from a low of 16% recorded in October last year. Analysis by private mortgage insurer Genworth found June’s average deposit of 20% to be the same as that in June 2013, before the Help to Buy scheme was launched.

When house price increases over the past two years are considered, the average deposit has grown by 9%, or £2,557, up from £29,250.[1]

Currently, the average deposit size is equivalent to 81% of an average first-time buyer’s annual income of £39,065, showing the difficulty that many face in saving up for a home.[1]

For all buyers, the typical LTV for house purchase loans also fell by 2%, from 77% in May to 75% in June. This means that an average deposit of 25% is required as access to growing LTV lending has an impact on not only first-time buyers, but also those looking to move up the housing ladder.[1]

Narrowing

Gaps between 75% and 95% LTV mortgage have also narrowed since the beginning of the year, as a result of tumbling interest rates. In January 2015, the price difference was 71%, but this has since dropped to 69%.[1]

However, this figures remains high and means that those who cannot save for a larger deposit will have charges 69% higher than those who have access to a 25% deposit.[1]

For a typical first-time buyer property of £159,053, those with a 25% deposit are faced with a fixed payment of £500 per month. This is in comparison to £846 for those who can raise just a 5% deposit.[1]

Average repayments, based on a house purchase worth £159,035 were found to be:

75% LTV loan 95% LTV loan Extra cost/saving at 95% LTV (%)  Extra cost/saving at 95% LTV (£)
Deposit £39,763 £7,953 80% saving £31,811 saving
Loan £119,290 £151,100 27% extra borrowing £31,811 extra borrowing
Interest rate 1.9 4.57 – –
Monthly fixed payment £500 £846 69% £346
Fixed term cost £12,000 £20,307 69% £8,307

[1]

Rising products, falling rates

More evidence of the dominance of low LTV lending is apparent with the number of products for those with bigger deposits growing at a quicker rate than the total of new high LTV products. The number of products at 75% and 80% LTV increased by 280 and 200 respectively in the year to August. This was in comparison to 580 to 860 75% LTV products and 593 to 793 for 80% LTV mortgages.[1]

Comparatively, the total of 95% LTV mortgages increased by just 42, to 192 products over the same timeframe. Despite this slower growth, the number of 95% LTV mortgages in August is the highest since March 2015.[1]

Average FTB deposit rises to £32k

Average FTB deposit rises to £32k

‘Despite record low interest rates over the past few months, the lingering price gap between 75% and 95% LTV mortgages means those unable to stump up a 25% deposit-averaging almost £32,000-face far higher monthly costs,’ said Simon Crone, Genworth Vice President-Mortgage Insurance Europe. ‘For many, a deposit of more than 5% is simply not an option and failure to encourage lending at this level is resulting in a massive shortfall in first-time buyers,’ he continued.[1]

‘Rising house prices and a lack of supply are exacerbating the situation and leave hopeful first-time buyers scrambling to save a deposit as quickly as possible, before the dream of homeownership gets any further out of reach. Help to Buy has encouraged greater availability of high LTV products but a rise in the average first-time buyer deposit shows limited take up and a lack of enthusiasm to offer high LTV mortgages from many lenders. While building societies in particular are doing more than their fair share in this part of the market, it requires a concerted effort and commitment from right across the lending fraternity. Help to Buy 2 is due to finish at the end of 2016 at which point lenders will no longer be incentivised to lend at this level; unless a long-term solution can be found the shortfall in first-time buyers is set to increase,’ Crone added.[1]

Affordable

Crone believes that, ‘the only way to overcome this and support the ambitions of homeownership is affordable mortgages-those requiring just 5% or 10% deposits-are made available permanently through greater use of private mortgage insurance by transferring the Help to Buy scheme to the private sector.’ He went on to suggest that, ‘through use of private mortgage insurance, more building societies have already been able to support many first-time buyers by increasing the number that are able to access 95% LTV mortgages.’[1]

‘Before Help to Buy comes to an end, this needs to extend to banks, who are typically more reliant on the government scheme, so that access to these loans does not tail off,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/hero/avererage-ftb-deposit-now-32k.html

 

 

House Prices Up by 5.2% Annually

Published On: September 16, 2015 at 9:57 am

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The Office for National Statistics (ONS) has released its latest house price figures, showing a monthly increase of 1.8% in July.

In the year to July, prices rose by 5.2%, down from growth of 5.7% in the year to June.

Around the UK, prices increased by 5.6% yearly in England, by 0.3% in Wales and by 7.4% in Northern Ireland.

House Prices Up by 5.2% Annually

House Prices Up by 5.2% Annually

However, prices dropped by 1.3% annually in Scotland.

Prices in London rose by 5.5% in the year to July, up from 5.3% in the year to June, but down on the national average.

Excluding London and the South East, prices grew by 4.4%.

The ONS reports that the increases in England were fuelled by an annual rise in the East, of 8.3% and in the South East, of 6.7%.

In the capital, the average house price was £525,000 in July, contrasting to the average price in the North East of £156,000.

The average mix-adjusted house price in England was £295,000, £173,000 in Wales, £154,000 in Northern Ireland and £196,000 in Scotland.

The average UK mix-adjusted price excluding London and the South East was £215,000.

Chief Executive of housing charity Shelter, Campbell Robb, states: “Not addressing our dramatic shortage of homes is pushing house prices higher and higher, and a stable home further out of reach for millions of young people and families. Instead, they’re trapped in expensive and insecure private renting, or stuck in childhood bedrooms.

“Current Government schemes, like Help to Buy or Starter Homes, don’t help the ordinary families on average wages who are struggling to keep up with sky-high housing costs.

“The autumn spending review is the Government’s last chance to show they’re serious about turning around the housing crisis, by investing in the genuinely affordable homes we desperately need.”1

However, the ONS data, taken from mortgage figures, continues to differ from Land Registry statistics, which put the average house price at £183,861 – more than £100,000 less than the ONS mix-adjusted average.

The ONS says that the difference is due to Land Registry using a repeat sales methodology and including cash sales.

A spokesperson claims that the ONS and Land Registry are working together to develop a joint house price index that will replace the current two in mid-2016.

1 http://www.propertyindustryeye.com/house-prices-rise-by-5-2-in-year/

 

 

 

 

Industry Hits Back at Claims the Number of Agents is Dropping

Published On: September 16, 2015 at 8:55 am

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Categories: Landlord News

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Industry professionals have been forced to hit back at claims that the number of people working as estate agents is dropping.

Data from the Office for National Statistics (ONS) reveals that in April to June this year, there were 50,000 estate agents and auctioneers in Britain, compared to 55,000 in the same period last year.

The figures show that on top of the 5,000 agents who have allegedly lost their jobs, a further 16,000 people who worked in the industry, but did not describe themselves as agents, have also left their positions. These include roles such as back-office staff, signage contractors and receptionists.

However, the validity of the statistics has been questioned.

The ONS reported that there is currently 35,000 people employed full-time as estate agents and 7,000 part-time, but put the total at 41,000, rather than 42,000. It said a further 7,000 are self-employed, but put the total at 8,000.

A spokesperson said the numbers were “rounded”, so the part-time and full-time figures did not always match up.

Industry Hits Back at Claims the Number of Agents is Dropping

Industry Hits Back at Claims the Number of Agents is Dropping

In last weekend’s Sunday Times, an article read: “Just as they’ve been getting used to their shiny new premises, the great boom in estate-agency jobs seems to be coming to a standstill.

“If you see a sad figure in a sharp suit and a garish tie lurking round a job centre, the chances are that he is one of the 21,000 people who, according to the ONS, have left the industry in the past 12 months. Of those, 5,000 were agents.”1

However, the Managing Director of recruitment firm Property Personnel, Anthony Hesse, says that the statistics couldn’t be further from the situation he is witnessing.

He states: “It’s the total opposite. We have been inundated with clients looking for staff. That’s across the board, from junior level right up to the top. Lots of our clients are having to take on new blood.

“In 2009-2010, people were losing their jobs in this industry, but not now. Maybe this is just another example of people wanting to knock estate agents.”1

And Joshua Rayner, the Managing Director of recruitment company Rayner Personnel, agrees: “The market is inundated with jobs and there aren’t enough good people to go around.

“The most sought-after individuals are those with 18-24 months’ experience who can fee earn from day one and ideally list.”1

This argument appears to be reinforced by the number of agents appealing for staff through social media platforms, while Rightmove has reported growth in membership to a record high of 19,590.

The ONS data claims that following the recession, there were as few as 33,000 people employed as agents in 2009. This fell to 28,000 in 2010, but rose to 41,000 in 2011. It steadily increased up until 2014, but seems to have dropped slightly since last year.

The ONS admits that the statistics are open to interpretation.

A spokesperson says: “The figures do indicate a 5,000 drop, but this could well be accounted for by sampling variability, so I would be careful about drawing too many conclusions based on just two snapshot periods.”1

The Property Ombudsman, Christopher Hamer, says several factors should be considered when analysing the data.

He explains: “As in any industry, technology will have an impact. Prospective buyers and sellers now use the internet first to see what is available and to check prices.

“The Sunday Times article refers to estate agency staff, which could cover both those actually marketing the property who carry out viewings and negotiations, but also back-office staff.

“A reduction in staff looking after sales progression and dealing with any dissatisfaction during that process may impact more on the consumer than a reduction in those tasked with the marketing duties.”1

The ONS Labour Force data from 2011-15 can be found here: http://www.ons.gov.uk/ons/rel/lms/labour-force-survey-employment-status-by-occupation/index.html

1 http://www.propertyindustryeye.com/industry-rubbishes-claims-that-number-of-agents-is-falling/