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Scotland sees strongest first quarter for home lending since 2008
Home lending in Scotland increased by 7% in the first quarter of 2016, the strongest first three months of a year since 2008, new figures show. A breakdown of the data from the Council of Mortgage Lenders shows that on an unadjusted basis home owners borrowed £1.8 billion, down 22% quarter on quarter but up 1% year on year. They took out 13,500 loans, down 22% on the previous quarter but up 7% compared to the first quarter 2015. First time buyers borrowed £660 million, down 24% on the fourth quarter 2015 but up 10% on the first quarter last year. This totalled 6,200 loans, down 23% quarter on quarter but up 11% year on year. Home movers borrowed £1.1 billion, down 21% quarter on quarter and down 4% compared to a year ago. This totalled 7,300 loans, down 22% quarter on quarter but up 4% on the first quarter of 2015. Remortgage activity totalled £780 million, down 1% on the fourth quarter 2015 but up 13% compared to a year ago. This came to 6,400 loans, down 5% quarter on quarter but 5% up compared to a year ago. ‘Seasonal factors often affect lending levels in the first quarter of the year, but there are encouraging indicators in Scotland, as all lending types showed growth year on year,’ said Carol Anderson, CML Scotland chair. She pointed out that 2016 saw the strongest first quarter in a year for house purchase lending since 200. ‘With affordability conditions continuing to be favourable, we would expect gradual year on year growth in Scotland to continue throughout 2016,’ she added. While the figures show that it was the highest total borrowed for house purchases in the first quarter of a year since 2010 in Scotland, it was also the highest total borrowed for remortgage in the first period of a year since 2011. The CML report says that this was mainly driven by home movers who took out the highest amount of loans for house purchase in a first quarter of the year since the first quarter of 2008. Affordability metrics for first time buyers in Scotland remains better than for the UK overall. The amount borrowed this quarter compared to the previous was £97,795 compared to £130,500 in the UK overall, from £100,000. The average household income of a first time buyers was £33,381 compared to £40,000 in the UK overall, from £34,066 meaning income multiple in Scotland was 2.97 down compared to 3.01 the previous quarter and the UK average of 3.46. Affordability metrics for home movers in Scotland also remains better than for the UK overall. The amount borrowed this quarter was £136,000 compared to £172,295 in the UK overall, from £135,789 the previous quarter. The average household income of a home mover was £51,149 compared to £56,104 in the UK overall, from £50,815 meaning income multiple in Scotland was 2.68 down compared to 2.73 the previous quarter and the UK average of 3.2. Continue reading
US homes values growing faster than expected, latest data shows
Home values in the United States are appreciating faster than experts expected, rising almost 5% over the past year, according to the latest index report. The April real estate market report from Zillow also shows that there are 3.4% fewer homes for sale than there were 12 months ago and home values are currently appreciating at 4.9%, almost 3% faster than Zillow predicted a year ago. The real estate report suggest that a smaller number of homes on the market will make it harder for first time buyers. The number of entry level homes for sale is down almost 8% over the past 12 months. Stiff competition and high demand, in addition to low inventory, stronger wage growth and low mortgage rates, are driving up home prices across the country, especially for entry level homes, which is forcing many aspiring home owners into bidding wars. Markets with the tightest inventory have some of the fastest rising home values. Over the past two years Portland has seen an almost 405 decrease in the number of homes for sale, with home values up 15% over the past 12 months. Similar patterns hold true in hot markets like Dallas, Seattle, and Denver, where inventory is down more than 20% and home value growth is in the double digits. In addition to low inventory, home values are rising in response to a strong job market, higher than expected wage growth and persistently low mortgage rates, the report also points out. Those looking to purchase a home will find more homes to choose from in the condo and luxury markets. Inventory is improving in these two markets due to high end construction, with the number of homes for sale close to hitting positive growth. Buyers searching for a single family home, or in the bottom or middle of the market, will have less to choose from. ‘New construction has been sluggish over the past year. We're building about half as many homes as we should be in a normal market. There still aren't enough homes on the market to keep up with the high demand from every type of home buyer,’ said Zillow chief economist Svenja Gudell. ‘In many markets, those looking to buy a home in the bottom or middle of the market will need to be prepared for bidding wars and homes selling for over the asking price. This summer's selling season's borders will most likely be blurred again as many buyers are left without homes and will need to keep searching,’ she explained. Homes in the top third of the housing market have more frequent price cuts than homes in the bottom and middle of the market and some 16% of top tier homes had a price cut over the past year compared to 11% of bottom tier homes and 13% of middle tier properties. Almost 125 of condos had a price cut over the past year, driven by more availability in the luxury condo… Continue reading
Remortgaging in UK hits seven year high of £6.4 billion in April
The value of remortgage lending in the UK has increased 48% year on year and is the largest amount recorded since November 2008, the latest data shows. The figures from LMS also show that the number of borrowers remortgaging exceeded 39,300 and is the highest since July 2009 while affordably improved markedly with typical remortgage repayments falling to a record low. This represents a 36% increase from the £4.7 billion n recorded in March and a 48% uplift from April 2015’s figure of £4.3 billion. The number of remortgage loans also increased by 41% from 28,000 in March to 39,353 in April. This is 47% more than April 2015 when 26,700 borrowers remortgaged. This is the greatest number since July 2009 when 39,500 remortgaged. Low interest rate has resulted in mortgage affordability improving sharply. Now remortgage payments as a percentage of income are at 16.79%, a record low, down from 18.4% the previous month. Andy Knee, chief executive of LMS, pointed out that March saw the market overwhelmed by second home owners and buy to let investors looking to push through transactions before changes to stamp duty came in, but as April arrived, existing home owners were able to remortgage and capitalise on the great rates currently available. ‘The average amount people are withdrawing through remortgaging fell to a 13 month low, suggesting household budgets are not as constrained as previously. Home owners can also celebrate that as a result of such low mortgage rates and rising incomes repayments as a percentage of income have fallen to a record low, boosting family finances,’ he said. But he also pointed out that the forthcoming referendum on the UK’s place in the European Union will continue to dominate headlines until the vote on 23 June which could have an impact on the mortgage rates that banks offer as well as household finances if the result is to leave. The data also shows that mortgage interest rates fell to 2.49% in March, down from 2.51% in February and the sum of annual remortgage repayments fell from £8,593 in February to £8,344 in March as a result of lower interest rates, while average household income rose by 7% from £46,605 to £50,000 in the same period. This meant that annual remortgage repayments as a percentage of income fell from 18.4% to 16.7% month on month, a record low. Average mortgage payments as a percentage of income also fell, from 21.2% to 19.7% between February and March, but this remains 3% more than remortgage costs. Continue reading
