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UK home owners find switching mortgages harder, new study finds
There has been a reduction in the number of home owners in the UK finding that it is easy to switch their mortgage since new rules were brought in under the Mortgage Market Review a year ago. New research has found that mortgages are now the hardest financial product to switch among consumers who have shopped around for financial services in the last 12 months. The research, conducted by comparison site Gocompare.com, shows that just 59% of people who recently switched their mortgage provider described the process as easy, a fall from 70% in July 2014 when the same survey was carried out. The firm says that this reduction suggests the Mortgage Market Review, which was introduced at the end of April 2014, is continuing to frustrate consumers. The new system means that anyone needing a mortgage to buy a home, increase a current mortgage or re-mortgage needs to pass a more stringent affordability test, while interest-only applicants need to be able to demonstrate a credible repayment plan. MMR changes have subsequently been blamed for a fall in mortgage applications and delays in processing approvals. ‘It is clear from our research that consumers have taken issue with the changes to the mortgage application process introduced 12 months ago. To put it into context, the recent improvements in bank account and energy switching have failed to register at all on this survey, yet mortgages have slipped 11 percentage points,’ said Matt Sanders from Gocompare.com. ‘It would be fair to say that mortgages were never the most straightforward product to switch, but MMR has added an extra layer of complexity and in many cases led to delays in the process which just frustrates people further,’ he pointed out. ‘MMR has undoubtedly prolonged the process of applying for a mortgage, but a mortgage is still one of your biggest financial outgoings therefore it’s good to know that the importance of affordability is now at the heart of what they offer, which at the end of the day benefits the customer as well as providers,’ he explained.. ‘Even though applying for a mortgage is more complicated, there has never been a better time to shop around and with record low interest rates, the hassle of going through the checks and balances might be worth it to save some cash every month,’ he added. The research found that 90% of customers who switched home insurance providers in the last 12 months found the process easy, followed by 88% for car insurance, up from 84%, and 82% for credit cards. Changing broadband provider was easy for 72% and mobile phones for 70% with mortgages at the bottom of the table. Continue reading
Sales of new homes in Australia at their highest since 2010
The new homes sector in Australia has seen strong growth in March 2015, taking sales volumes to their highest level since early 2010, according to the latest survey. Overall new home sales were up 4.4%. There was an 11.3% rise in multi-unit sales and a 2.6% rise in detached home sales in March, according to the latest new home sales report covering the largest volume builders by the Housing Industry Association. ‘The monthly rise in both the detached and multi-unit segments of the market is an encouraging result. However, the broader trend is that growth over the past year has been driven by multi-unit sales, while detached house sales have tracked sideways,’ said HIA economist Diwa Hopkins. ‘The residential construction sector continues to be the main bright spot in the broader domestic economy, with updates to the sector showing its ongoing strength. Lower lending rates will provide added support to residential construction activity, which is emerging as a key area of growth mitigating the effects of the downturn in mining investment and construction,’ she added. A breakdown of the figures show that detached house sales increased by 5.9% in Victoria, 4.2% in New South Wales and also 4.2% in Western Australia. They declined by 5.8% in South Australia and by 2.3% in Queensland. In the March 2015 quarter, detached house sales increased by 5.2% in Victoria and by 4.3% in Queensland. In Western Australia they fell by 6.4%, in New South Wales by 3.6% and in South Australia by 1.4%. However, the latest renovations report from the HIA shows that this sector of the property market is struggling. Over the past three years the volume of renovations activity has fallen by 15%. The performance of South Australia typified the national trend. Over the 2012/2013 period, renovations activity the state declined from $2.10 billion to $1.78 billion, a drop of 15.1%. ‘The importance of the home renovations market is often underestimated. Valued at $29.66 billion during 2014, the renovations sector accounts for over one third of all residential construction activity and about 2% of GDP,’ said HIA senior economist Shane Garrett. ‘Big ticket expenditure items like home renovation jobs tend to suffer disproportionately at times when economic growth is slow and when unemployment is drifting upwards. The deceleration of wages growth to its lowest rate in almost two decades has also challenged the renovations sector,’ he explained. The report envisages a further decline of 2.8% in renovations activity during 2015. However, activity will experience an 8.2% uplift between 2015 and 2018, as a result of low interest rates and the gradual recovery of economic activity. Continue reading
Improved economy helps UK commercial property markets
The last year has seen a marked shift in the commercial property markets in the UK, powered by improved economic fundamentals which drive the underlying occupier base, according to new reports. The broad based improvement in economic growth, aided by low inflation, has seen improvements in both consumer and business confidence, which should lead to rental growth where demand outstrips supply, says the latest analysis from Cluttons. The firm’s Commercial Property Market Outlook report indicates that the industrial sector is now showing similar performance to offices, as Cluttons predicted last year. Office total returns for the past 12 months are at 23% with capital growth of 16.8%, compared to the industrial sector which has delivered a total return of 22.7% bolstered by capital growth of 15.1%, driven primarily by yield compression. ‘As we forecast last year, sheds are now matching offices for performance. One reason is that prime logistics take-up has improved over the past year, driven by manufacturers, especially in the automotive sector, and retailers with supply constraints in key locations,’ said John Barrett, head of valuations at Cluttons. ‘Apart from the strong supply/demand fundamentals aided by supply shortages due to a lack of speculative development in recent years, the case for investment in the industrial sector is helped by low obsolescence and the squeeze on land supply from higher land value uses. This is especially the case in London and the south east,’ he explained. ‘With prime yields now stabilising across most markets, income growth is replacing yield compression as the primary driver of future performance. Average income return is at 6%, so it's still a good time to invest in property,’ he added. ‘However this is not universal. Tricky' secondary property remains hard to sell across all market sectors and this may present opportunities for investors prepared to take risks for higher returns,’ he concluded. Meanwhile, the latest research from real estate advisor Savills shows that UK commercial property returns continue to remain attractive in comparison to other asset classes as average prime yields stay stable for the third consecutive month at 4.59%. Savills Market in Minutes report found that the average total return on UK commercial property stands at 18.63% to the end of the first quarter of 2015, in stark contrast to oil, copper and gold, which offer returns of -42.57%, -16.4% and -8.9% respectively. The firm predicts that due to the strong level of demand property should continue to outperform many other asset classes this year. The report suggests that against this backdrop of stability, a split between property asset classes is set to emerge over the next three months. At present, in the office market the gap between prime regional yields at 5% and prime city of London yields at 4.25% is historically narrow. Still, it is likely that central London office yields will harden in the near future, primarily due to the weight of money that is targeted at larger office lots in the UK, something… Continue reading
