Blog Archives

Cheap mortgage rates attract first-time buyers and those remortgaging

17.05.2017

The number of first-time buyers and those remortgaging rose in March compared with February and the same period last year, according to figures from the Council of Mortgage Lenders (CML).

As one would expect, March was a better month for the housing market than February as we move into traditionally what is a busier time of year. First-time buyers borrowed £4.9bn, up 29 per cent on February and 9 per cent on March 2016, as the Bank of Mum and Dad continues to step up to the plate, while lenders offer competitive rates at high loan-to-values.

Remortgage activity was up 13 per cent by value and 14 per cent by volume on February as homeowners took advantage of record low mortgage rates. With lenders still keen to lend and overall transaction levels fairly subdued, they will have to continue offering competitive deals in order to drum up business, which is good news for consumers.

As always, meeting lenders’ affordability criteria can be tricky which is where good independent mortgage advice comes in.

Jonathan Harris
Posted by
Jonathan Harris

What next for the housing market in 2016?

22.12.2015

The dust has settled on the housing market: the general election is out of the way, along with the threat of a mansion tax, and the stamp duty changes announced at the end of 2014 have had time to bed in. Towards the end of 2015, we have seen a pick up in number of transactions at the top end of the market – a trend we expect to see in 2016.

The stamp duty changes were devastating for the £2m-plus market but where vendors are prepared to meet the buyer halfway, deals will be done. Many vendors had unrealistic expectations in terms of what prices could be achieved after the election and those who are serious about moving will need to negotiate in 2016.

Older borrowers will be at the top of the agenda, with pressure on lenders to be more flexible. We are likely to see more bridging among older homeowners, using this as a way of trading down – enabling them to buy a smaller property, move in and then sell their original home without time pressures, before repaying the bridging facility.

We are still awaiting the first interest rate rise in several years but we still don’t think it will happen in 2016. With lenders keen to lend we expect to see a continuation of the competitive mortgage products borrowers have enjoyed this year. We expect the year overall to be a strong one, with an increase in lending volumes on 2015.

Following considerable growth in property values, 2015 will be more subdued but we still expect growth of around 5 per cent across the mainstream UK market.

Jonathan Harris
Posted by
Jonathan Harris

Strong finish to the year on lending front, says CML

17.12.2015

November’s lending volumes are likely to be lower than what was an incredibly busy October but are still well up on the same period last year, pointing to a sustained recovery in the market, according to the latest figures from the Council of Mortgage Lenders (CML).

While some other indices are pointing to aggressive growth in the housing market over coming months, the CML forecasts a gentle improvement in activity. This is more realistic and is likely to be more sustainable. Fundamentals remain strong, such as low inflation, rising wages, more jobs and competitive mortgages, which will support the market.

However, borrowers are likely to become increasingly concerned about rate rises, particularly with the Fed finally taking the plunge and increasing rates. This will focus the minds of those who may have been delaying remortgaging and we expect more people to opt for a fixed rate in the first half of the year.

The biggest challenge for borrowers is meeting lenders’ affordability criteria, as property prices continue to rise in many areas while wages fail to keep up. First-time buyers will find it difficult to get themselves in a position to buy unless they have assistance from the Bank of Mum and Dad. This should keep a lid on the market and ensure we don’t return to runaway growth.

Jonathan Harris
Posted by
Jonathan Harris

Election result is the ‘right’ one for property market

08.05.2015

The Conservative victory in the election by a small majority is good news for the housing market. Uncertainty is bad news for housing with people reluctant to make such a momentous decision as buying or selling a property if they are concerned about potential upheaval.

We have had clients get in touch today ready to make a move, who had been holding back while they waited on the election result. This is particularly true at the upper end of the market, where the spectre of a mansion tax if Labour were to be elected had dominated people’s thoughts and decision-making.

It is also good for foreign nationals who will continue to see London and the UK as a safe haven for their money and choose to come here rather than other countries, further boosting our economy with their spending.

It could mean a further uplift in prices in London and the outer areas in particular, although London values have already risen a considerable amount over the past year or so.

With lenders retaining an appetite to lend, and offering some excellent mortgage deals, plus certainty returning to the housing market, now could be a very good time to buy.

Jonathan Harris
Posted by
Jonathan Harris

Mortgage approvals rise for the first time since June

25.02.2015

Mortgage approvals rose in January for the first time since June, according to the British Bankers’ Association, but were still 20 per cent down on a year ago.

This illustrates the slowdown in the housing market in the second half of 2014. Yet lenders are still keen to do plenty of lending so expect mortgage rates to continue to be extremely low, despite Swap rates starting to rise.

While mortgage pricing is cheap and lenders continue to compete on rate, an unwelcome development over the past few weeks has been the introduction of loan-to-income caps by several banks, with TSB the latest to restrict borrowing to 4.5 times income – down from 5 times – from today. LTI caps are a very blunt tool; the introduction of the mortgage market review and closer attention paid to affordability was supposed to be a more refined model for assessing how much someone can borrow.

Adrian Anderson
Posted by
Adrian Anderson

Housing market cooling, says CML

11.11.2014

The number of first-time buyers and home movers declined in September for the second consecutive month, according to the Council of Mortgage Lenders (CML). This suggests a growing lack of confidence among buyers.

However, it is not all bad news with remortgaging activity rising in September compared with August. Borrowers are finally beginning to realise what excellent rates are available to them as lenders cut their fixed-rate mortgages. There are also growing fears of an interest rate rise, which is a strong motivator in getting people off their lender’s standard variable rate and onto the security of a fix.

Jonathan Harris
Posted by
Jonathan Harris

Managing your mortgage as part of your overall financial planning

03.03.2014

The housing market continues to go from strength to strength with a 57 per cent increase in mortgages taken out for house purchases and 51 per cent increase in remortgaging in January compared with the same month last year, according to the British Bankers’ Association.

This jump in lending is partly due to Government initiatives plus the rise in number of high loan-to-value products available outside the Help to Buy scheme. This is making it easier for first-time buyers to get on the housing ladder, while rising property values are enabling homeowners to remortgage and buy their next property.

Remortgaging is growing in popularity as the Funding for Lending money has enabled lenders to offer some of the lowest ever five-year fixed rates. Borrowers sitting on high standard variable rates have locked into lenders with more competitive pricing. More borrowers are overpaying on their mortgages, taking advantage of ultra-low interest rates in order to improve their equity stake before a possible interest rate rise next year.

The Mortgage Market Review will be introduced at the end of April and we expect lenders to further tighten up their criteria in response. Lenders are already looking at how borrowers manage their finances, which will affect how much they will lend you. It will also have an impact on the rate you pay: if you are a good risk and have a sizeable deposit then the most competitive rates will be available to you. If not, you may have to pay a higher rate.

Anderson Harris is happy to advise on the best way to get personal financial circumstances in order. Please get in touch.

Adrian Anderson
Posted by
Adrian Anderson

Mortgage lending continues to edge higher

24.05.2013

Mortgage approvals for purchases and remortgaging edged upwards slightly in April, according to the British Bankers Association (BBA), as banks continue to offer a range of competitive mortgage rates. The BBA expects this to continue, with first-time buyers in particular benefiting from cheaper rates via the Funding for Lending scheme in coming months.

However, many borrowers continue to overpay on their mortgages, taking advantage of record low interest rates, and pay down debt where they can. This makes sense – why leave savings languishing in accounts paying such poor rates of interest when you can reduce your borrowing instead? There is also a reluctance to take on extra borrowing because of the uncertain economic and jobs climate.

This trend also illustrates that we remain some way off a sustained recovery in the housing market as caution continues to prevail. However, mortgage brokers and estate agents report the highest level of enquiries seen since the downturn so we expect this to feed through to improved official figures in coming months.

Adrian Anderson
Posted by
Adrian Anderson

Why Clegg’s pension pronouncement is wrong for property

25.09.2012

We try and steer clear of politics in this Blog as it’s supposed to be about mortgage lending and all matters related. But on occasion, politicians have been known to suggest daft things that, if implemented, would have an impact on the housing market. Nick Clegg’s recent pronouncement suggesting that parents and grandparents should be dipping into their pension pots to help their children or grandchildren onto the housing ladder is a very good example of this.

There is very little detail, surprise surprise, so it is not easy to dissect exactly what is being proposed. As we understand it, Clegg is suggesting that some of the tax-free lump sum – equal to 25 per cent of the pension pot – the parent expects to take on retirement could be used as a guarantee to help a family member get a mortgage. The Lib Dems expect that only those with £40,000 or more in savings would be likely to take part. If we use a £40,000 pot as an example, that would equate to a lump sum of £10,000, so we are not talking about a great deal of money.

While £10,000 towards a deposit would no doubt be useful, what of the pensioner who is parting with a significant proportion of their retirement income? £40,000 doesn’t buy much of a pension as it is. Clegg is suggesting that even those pensioners who are not wealthy could dip into their retirement income to help out their offspring. Yet not that long ago the government was telling us that we need to save more for retirement, which is the idea behind auto-enrolment in pension schemes. Now it is being suggested that the money we do save could be used to prop up the property market.

It is all a bit confused, particularly as it is already possible to take the lump sum from the age of 55 so highly likely that many parents and grandparents are already contributing some of this towards their child or grandchild’s deposit fund.

Many people already see property as a pension, whether it’s their own home, a second or holiday home they let out, or a buy-to-let. To muddy the waters by suggesting that money saved in a pension should also be ploughed into property runs the risk of making that classic investment mistake: putting all your eggs into one basket.

More needs to be done for first-time buyers. Parents are already using savings and equity in their own homes to help with deposits. Dipping into pension pots as well? That could create a whole other host of problems.

Jonathan Harris
Posted by
Jonathan Harris

Caveat emptor? No, caveat seller

22.05.2012

In our latest guest Blog, buying agent Henry Pryor warns sellers against overpricing their homes.

With any competition, for there to be winners there must be losers, and so it is with the housing market. That’s fine if you’re only interested in winners but if you ask about the losers, this can make you unpopular.

I haven’t always been a buying agent. For 22 years I sold homes, working for some of the smartest estate agents. During these years I talked the market up, suggesting that house prices and demand only ever increased.

Ever since I started buying houses for people in 2006 I have been aware that this is a one-sided view. For every seller there has to be a buyer and it isn’t in the buyer’s interests if property is getting more expensive. I discovered early on that people don’t like to hear that prices might be over-cooked. Estate agents did not want to imagine that the bull market might come to an end.

Yet it was clear that the market was overheating. Who thought that 110 per cent mortgages such as those given out by Northern Rock were sensible? Yet it was considered blasphemy to question it.

Since the credit crunch first hit in October 2007, asking prices have bounced back and are 44 per cent higher in London. However, average sale prices are only 14 per cent higher, even in Kensington and Chelsea, according to the Land Registry. In other parts of the UK prices have fallen considerably: in Wales, they are 30 per cent lower since the credit crunch. More than a million people have seen the typical 5 per cent equity that they put down when they bought their home wiped out. Lenders now prefer 25 per cent deposits, leaving these borrowers trapped.

Lately, I have been exposing sellers and agents who think they can ask too much for a house and that it won’t matter. Well, I have news for them. When looking on behalf of a buying client I sniff out homes that have got stuck and reduced in price. The problem is buyers often assume there is an issue if a property doesn’t sell quickly and give it a wide berth. Recently, this has enabled me to buy two properties at serious discounts to the original asking prices. I know about these properties because Google tracks your every move.

So, if you are planning to sell, don’t listen to the agent who thinks a high valuation will tempt you to list with him. Don’t think your house is worth what it might once have been. These days you leave a digital footprint when you market your home and there are folk like me who love buying properties at a discount. Caveat emptor? No, caveat seller.

www.housingexpert.net

The views expressed in this article are those of the author and not necessarily those of Anderson Harris

Adrian Anderson
Posted by
Adrian Anderson