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UK needs more home lending solutions for retirement, research suggests
More than one in three equity release customers in the UK are still paying off mortgages highlighting the growing need for retirement lending solutions, new research suggests. A study from national specialist Bower Retirement Services shows that 36% of over 55s seen by advisers are still paying home loans and advisers are seeing a surge of inquiries from customers with interest only loans. The firm’s quarterly Adviser Tracker Research report also shows that 68% of equity release specialists have seen a rise in customers with interest only loans looking for solutions. Advisers are also reporting an increase in customers who have considered downsizing as a solution but then decided not to go ahead. Some 23% of clients who looked at downsizing did not go ahead with key reasons including staying near family and friends and not being able to find a suitable home. Around 75% of those who did not go ahead said they wanted to stay near family while 54% could not find a suitable home. Bower believes the recent launch by Santander and Legal & General of a partnership to offer lifetime mortgages as an option to customers facing the possibility of repayment shortfalls demonstrates the growing need for new solutions. ‘The Legal & General and Santander deal is a significant move for the launch of retirement lending but much more needs to be done. Significant numbers of people aged over 55 are paying off mortgages but do not have the range of options they need,’ said Andrea Rozario, chief corporate officer at Bower Retirement Services. ‘Downsizing will be appropriate for many but it is also clear that many want to stay in their existing home for emotional and financial reasons and should be able to do so as long as it is in their best interests,’ she pointed out. She added that one potential problem for clients is their home not being worth what they thought and around 18% of advisers say clients who went ahead with equity release found their house was valued at lower than they had expected. Continue reading
PwC forecasts marked slowdown in UK housing market but no major crash
The UK should avoid a house price crash or a severe recession despite growth downgrades following the decision to leave the European Union, new research shows. UK growth had already eased from around 3% in 2014 to around 2% before the EU referendum due primarily to slower global growth, but the vote to leave the EU is likely to lead to a significant further slowdown. UK GDP growth is forecast to decelerate to around 1.6% in 2016 and 0.6% in 2017 according to PwC’s main scenario in its latest UK Economic Outlook report. Quarter on quarter GDP growth could fall to close to zero in late 2016 and early 2017 in this main scenario, but is then projected to recover gradually later in 2017 as the immediate post referendum shock starts to fade. The UK would avoid recession in this scenario, although the report notes that uncertainties around this central view are significant, with alternative scenarios showing GDP growth in 2017 of anywhere between growth of 1.5% and a fall of 1%. But even this latter relatively pessimistic scenario would not be a severe recession of the kind seen in the early 1980s or in 2008/2009. The main reason for the slowdown is projected to be a decline in business investment, particularly from overseas in areas such as commercial property. Construction companies and capital goods manufacturers could also be relatively exposed to this kind of short term cyclical slowdown, the report says. PwC anticipates a marked slowdown in house price growth, but no major crash. In PwC’s main scenario, UK house price growth is expected to decelerate to around 3% in 2016 and around 1% in 2017. After this initial dip, however, projected house price growth picks up again to around 4% in 2018 and an average of around 5% to 6% per annum in the longer term as persistent supply shortages keep house prices rising faster on average than earnings. PwC estimates that average UK house prices in 2018 could be 8% lower than if the UK had voted to stay in the EU, although this would still leave them 8% higher on average than in 2015. The estimated impact of Brexit varies by region. The report says that average house prices in London could be around £60,000 lower due to Brexit than they would otherwise have been by 2018, in contrast to a reduction of £10,000 in Scotland and just £8,000 in the North East. ‘We think there are four main reasons why the Brexit vote will lead to a slowdown in the housing market in the short term: the deterrence of foreign investment, uncertainty regarding the future of EU nationals living in the UK, a reduction in consumer confidence and turbulence in the banking sector,’ said Richard Snook, senior economist at PwC. ‘While these factors will weigh heavily on the market in the short term, we expect a gradual recovery from 2018 onwards as market… Continue reading
Asking prices down across England and Wales post Brexit vote
The price of property coming onto the market in England and Wales has fallen by 0.9% or £2,647 with momentum continuing due to a supply shortage, according to the latest asking price report. Activity is within usual expectations for the run-up to the summer holiday season and buyer demand in the two weeks since the European Union referendum result is consistent with 2014 although down on 2015. The monthly report from property portal Rightmove points out that the same period in 2015 benefitted substantially from a post general election boost so enquiries this year are down 16% compared to that period. It adds that as 2014 was not distorted by the election it is a better basis for comparison, and buyer enquiries are at the same level as the like for like two weeks in 2014. Since 2010 the month of July has recorded average price falls of 0.4%. The Rightmove data shows that new seller asking prices fell by 1.2% or £7,407 this month in Greater London while in inner London they fell by 2.3% or £19,051. The seven cheapest inner London boroughs all saw price of newly listed property falling while asking prices in outer London were unchanged. Asking prices fell by 0.7% month on month in the North East, taking the average to £147,251 but are still up 0.3% year on year. In the North West they fell by 0.5% month on month to £176,277 and are 3.6% higher than a year ago and in Yorkshire and Humber they were down 2.1% month on month to £172,412, and up 1.3% year on year. In the West Midlands month on month prices were down 1.6% to £200,129 and still up by 3.6% year on year while in the East Midlands they were down 0.2% month on month to £190,192 and are up 3.9% year on year. The East of England saw asking prices fall by 0.7% to £313,255 but they are 7.3% up compared to a year ago. In the South East they fell 0.6% to £386,988 and are up 6.7% year on year while in the South West they were down 0.4% to £286,155 and up 5.2% year on year. In Wales asking prices fell by 2.3% month on month, taking the average price of a newly listed home to £177,280 but prices are 2% up compared to July 2015. According to Rightmove, most agents report market momentum continuing due to shortage of suitable property for sale, buyers fearful of missing out on scarce choice, and affordability and availability of low mortgage rates. Sellers seem undeterred as compared to the same period last year, the two weeks pre-referendum saw the number of new properties coming to market down by 8%, and the two weeks post referendum saw them up by 6%. Overall the figures covering the last four weeks, two weeks before and two weeks after the referendum, give an early but reassuring view into the short term effect of the political turmoil… Continue reading
