Blog Archives

Lending numbers continue to rise as borrowers opt for fixed rates


The overall value of outstanding residential loans increased in the third quarter of 2014 by 0.5 per cent compared with Q2, according to the Bank of England and the Prudential Regulation Authority.

The third quarter was stronger from a lending perspective than the second as heightened activity in the housing market in the first half of the year filtered through into the lending figures.

The vast majority of borrowers are opting for a fixed rate which is a no-brainer; while an interest-rate rise may still be some way off, fixed rates are just too good to turn down and continue to fall as lenders compete for business. The average interest rate on total mortgages outstanding also decreased, suggesting that borrowers aren’t overburdening themselves and will be able to cope with a rate rise when it comes, particularly if they have opted for a fixed rate.

Buy-to-let continues to grow as lenders offer cheaper rates and more relaxed criteria to attract investors. With more people having to rent for longer until they can save up a deposit, the prospects for the sector continue to be strong and we expect it to perform well next year.

The proportion of first-time buyers decreased slightly although the value of loans taken out by them over the quarter rose to the highest quarterly amount since Q3 2007. With lenders offering higher loan-to-values and rates falling across the LTV bands, it is slightly easier for first-time buyers although the Bank of Mum and Dad is still being called upon significantly to help.

Income multiples decreased slightly, which is likely to be a knock-on effect of the Mortgage Market Review and stricter affordability criteria. It is good to see that borrowers are not over stretching themselves; however, some easing of the rules with regard to older borrowers in particular is essential.

Jonathan Harris
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Jonathan Harris

Autumn Statement: Archaic Stamp Duty system finally reformed


Chancellor George Osborne has announced that he will be reforming the stamp duty land tax from tomorrow.

Buyers will pay no stamp duty on property purchases up to £125,000;
2 per cent on the part of the property price between £125,001 and £250,000;
5 per cent on the part of the property price between £250,001 and £925,000;
10 per cent on the part of the property price between £925,001 and £1.5m
and 12 per cent on anything above £1.5m.

Reforming the unfair slab Stamp Duty system is long overdue. However, doing it practically immediately is not fair as it will hit some people hard who are part way through a transaction but not able to exchange by midnight.

We would have liked to see an amnesty for those who have made a decision to buy based on current legislation. What does it mean for people who don’t have the extra cash they are now required to pay?

We have clients nearing exchange who won’t be able to achieve it before the deadline. Given a week or two amnesty, things would have been different.

The good news is that some private banks seem prepared to be flexible when it comes to extending the borrowing to accommodate the higher stamp duty charge. If you find yourself facing a higher tax bill, it is worth getting in touch with us to discuss your options.

Jonathan Harris
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Jonathan Harris