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Mortgage approvals increased in UK in May but still below six month average
The number of mortgages approved for buyers in the UK increased in May compared to the previous month but are still below the high level recorded in March due to stamp duty changes. The data from the Bank of England’s Money and Credit Report shows that there were 70,553 approvals for house purchases in March, 66,205 in April and 67,042 in May. This compares to an average of 70,598 over the previous six months. The data also shows that the number of approvals for remortgaging was 42,919, compared to the average of 41,019 over the previous six months. According to Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), stamp duty changes for buy to let properties and second homes meant there was an air of inevitability about the April dip in mortgage approvals, which has now been followed up by a modest recovery in the lead-up to the UK’s referendum on its European Union membership. ‘House purchase activity hasn’t quite returned to the heightened levels of early 2016, but the homebuyer market has visibly strengthened over the last 18 months. The data also shows record remortgage activity with almost 43,000 approvals in May, the highest of the post-Mortgage Market Review (MMR) era,’ he said. ‘A resurgence in remortgaging has been underway for the last six months, with more than 40,000 loans approved every month since December. It reflects growing opportunity for consumers to use the equity in their homes to switch to a new deal, and growing awareness of the savings on offer while rates are low and lender competition is high,’ he pointed out. Williams also explained that a year ago, the UK mortgage market was about to experience a post-election bounce and it seems unlikely that last week’s EU referendum result will produce a similar effect this time round. ‘However, despite inevitable uncertainty as some buyers and sellers wait to see how the dust settles, lenders will be maintaining business as usual. Mortgage rates continue to look attractive and the housing supply shortage means homes appearing on the market are still likely to be subject to considerable demand,’ he added. David Whittaker, managing director of Mortgages for Business, explained that investors’ desire to complete before the 01 April deadline meant that business was brought forward into February and March, which then resulted in dampened approval figures for April. ‘However, following this, it is now clear that the number of purchase approvals did increase between April and May, as property investors came to terms with the new normal this tax year,’ he said. ‘May feels like an age ago. Now, there is little doubt that the rest of the year will be dominated by the events of the last seven days. Following the Brexit vote, anecdotal evidence suggests that many are holding off on transactions until a more detailed picture of the economic and political fallout emerges. This could make for a quieter third quarter,’… Continue reading
Warning over implications of changes in Renters’ Rights Bill in UK
The Association of Independent Inventory Clerks (AIIC) is urging the Government to re-evaluate its Renters' Rights Bill, which includes measures to stop letting agents charging tenants for an inventory check. The industry body says that these costs will simply be passed to landlords who will then incorporate them into tenants' rent. Earlier this month, the Renters' Rights Bill, which also includes measures to ban agents charging tenants registration fees, admin fees, reference check fees, renewal fees and exit fees, was given an unopposed second reading in the House of Lords. The Private Members' Bill was set up by Baroness Grender and has received strong support from Labour and the Liberal Democrats and it is thought the Bill has a strong chance of success as it now runs alongside a petition against agent fees charged to tenants, which has been gaining support since March and has now received well in excess of 250,000 signatures. ‘Here at the Association of Independent Inventory Clerks, we're strongly opposed to the banning of inventory fees charged to tenants by letting agents,’ said Patricia Barber, chair of the AIIC. ‘We envisage that if banned these charges would continue to be charged to tenants through the unspecified and unclear means of a higher rent,’ she explained, adding that not being able to charge tenants a fee may encourage some letting agents to bypass inventories altogether, something which could be extremely costly for all parties involved. ‘A detailed inventory helps landlords, agents and tenants to determine exactly how the property's condition has changed over the course of the tenancy, what can be deemed fair wear and tear and what needs to be replaced and therefore deducted from the tenant's deposit,’ Barber pointed out. ‘We totally understand that some fees charged to tenants are too high and complicated, but we believe that if fair and worthwhile fees like inventory checks are made clear to the tenant then there should be no problem in them being charged,’ she said. ‘The vast majority of letting agents are transparent in the fees they charge to tenants. Banning fees altogether and particularly inventory check fees is certainly not the answer and could contribute to more deposit disputes and property damage further down the line,’ she added. She also pointed out that the Renters' Rights Bill remains some way off becoming law as it still has to pass through the House of Commons before receiving Royal Assent. Its next stage is the Committee stage in the House of Lords, a date for which is yet to be announced. The AIIC is the UK's largest membership organisation for independent clerks and recently announced that it has joined the Property Redress Scheme. Continue reading
Over half a million have taken up UK flagship home buying savings product
Over 500,000 people have opened Help to Buy ISAs, which offer government bonuses of up to £3000, as they save towards buying a home, the latest data shows. Figures also show that since the launch of the Help to Buy equity loan, mortgage guarantee and ISA schemes over 160,000 completions under the schemes have taken place, with 80% having been made by first time buyers. The average house price being purchased with support from the Help to Buy schemes is £189,795, significantly below the national average and 94% of Help to Buy completions have taken place outside London. The figures also show that over half of Help to Buy completions have been for new build homes. The Help to Buy schemes continue to benefit first time buyers overwhelmingly, with 129,000 households buying their first home thanks to the scheme. This is 80% of overall Help to Buy buyers, demonstrating that the scheme is successfully helping people get on the housing ladder. The highest number of homes completed through both the Help to Buy: ISA and mortgage guarantee schemes has been in the North West region. The equity loan, a scheme for new build properties, is particularly popular in the South East region. First time buyers and second steppers have been supported further by the London Help to Buy scheme launched in February 2016. The scheme supports purchases of new build homes in the capital by offering a 5% deposit backed by an equity loan of up to 40% from the government. There were 256 completions in London between 01 February 2016 and 31 March 2016 using the equity loan. Help to Buy was designed to support responsible lending and the figures show that the average house price for the three schemes combined is £189,795, significantly below the national average house price of £292,000. The average house price-to-income multiple under the mortgage guarantee scheme is capped at a four and half times ratio to ensure responsible lending. More than 1,000 households a month on average have purchased their own home through Right to Buy since the scheme was reinvigorated in 2012, over 52,500 households in total. The latest quarterly figures show more than 3,250 people bought under the Right to Buy scheme between January and March 2016. In total, more than 309,000 households have now been helped to purchase a home through government backed schemes since 2010, that’s 141 new home owners a day and around 4,350 a month. ‘It’s hugely encouraging that over 500,000 people have already opened Help to Buy ISAs. The Government’s Help to Buy schemes offer responsible lending, and the vast majority of those who are benefiting are first time buyers,’ said Chancellor of the Exchequer George Osborne. Anyone who aspires to own their own home should have the opportunity to do so, wherever they are in the country, according to Communities Secretary Greg Clark. ‘Today's figures clearly show how we’re helping people realise home ownership dream, with… Continue reading
