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UK first time buyers sales at their highest since the recession
The number of first time buyers in the UK reached their highest level in July since the recession, paying an average of £161,985, some 8.9% more than a year ago, according to the latest index. There were 29,700 sales of homes to first time buyers, some 4.9% above June with demand judges to be rising to an expected interest rate rise in the New year and despite the fact that the average first time buyer now needs a deposit of £27,975. July’s sales figure also represents a 28% rise on April 2015, amounting to a 6,500 increase over the last three months, the latest First Time Buyer Tracker index from Your Move and Reeds Rains also shows. Average deposits have increased by 10% compared with July 2014’s figure of £25,429 which in cash terms, this equates to a rise of £2,546. The cost of a deposit as a proportion of a first time buyer’s average income reached 71.6% in July, up 3.1% in one month alone and rising 5.4% from a year ago. Equally, the average first time buyer Loan to Value ratio (LTV), which represents the proportional size of an individual’s loan compared to the value of the property they are buying, is steadily dropping. This means first time buyers are having to pay more up front, in the form of larger deposits. July’s rate of 82.7% represents a 0.5% decrease on LTVs in June and a 0.2% decrease on a year ago, as the size of the average deposit rises. A similar picture emerges in the latest Mortgage Monitor from e.surv. The data revealed a decline in the number of small deposit loans given approval in July, dropping 5.9% compared to June and 7.1% compared to July 2014. According to Adrian Gill, director of estate agents Your Move and Reeds Rains, the post general election bounce has given way to a more stable optimism as first time buyers realise that the property market is at no immediate risk of being tampered with by the government. ‘Incentives attractive to first time buyers such as the Help to Buy schemes are running along steadily, while further low cost housing development is being encouraged to entice more people onto the ladder,’ he said. ‘This month’s particularly high transaction rate is also partially due to expectations that the Bank of England may announce a rate rise sooner rather than later. The thought of months of rock-bottom mortgage rates being brought to an end is encouraging many wavering first time buyers to jump on the property ladder before repayment costs shoot up,’ he pointed out. ‘Some may have held back briefly when considering the rising deposit costs. But real wages have been growing too, and first time buyers are able to shoulder the short term burden of a slightly higher deposit to spare the risk of losing out on a good mortgage deal,’ he added. Despite some lenders starting to withdraw their cheapest deals, the… Continue reading
US pending homes sales up 0.5% in July, latest index shows
Pending home sales in the United States increased by 0.5% in July and are now 7.4% higher than the same month last year, according to the latest index data. The Pending Home Sales index from the National Association of Realtors (NAR), a forward looking indicator based on contract signings, has increased year on year for 11 consecutive months and July is the third highest reading of 2015. According to Lawrence Yun, NAR chief economist, the housing market began the second half of 2015 on a positive note, with pending sales slightly rising in July led by a solid gain in the Northeast. ‘Contract activity in most of the country held steady last month, which bodes well for existing sales to maintain their recent elevated pace to close out the summer,’ he said. ‘While demand and sales continue to be stronger than earlier this year, realtors have reported since the spring that available listings in affordable price ranges remain elusive for some buyers trying to reach the market and are likely holding back sales from being more robust,’ he explained. Looking ahead, with inventory shortages likely to persist into, Yun expects the national median existing home price to increase 6.3% in 2015 to $221,400 and forecasts total existing home sales this year to increase 7.1% to around 5.29 million, about 25% below the prior peak set in 2005 when it was 7.08 million. ‘In light of the recent volatility in the stock market, it's possible some prospective buyers may err on the side of caution and delay decisions, while others may view real estate as a more stable asset in the current environment,’ said Yun. ‘Overall, the prospects for ongoing strength in the housing market remain intact for now. The US economy is growing, albeit at a modest pace, and the labour market continues to add jobs,’ he pointed out, adding that uncertainty in the equity markets, even if short term rates rise in September, could stabilise long term mortgage rates and preserve affordability for buyers. The PHSI in the Northeast increased 4% to 98.8 in July and is now 12.1% above a year ago. In the Midwest the index remained unchanged at 107.8 in July, and is now 5.7% above July 2014. Pending home sales in the South increased slightly by 0.6% to an index of 124.2 in July and are now 6.5% above last July. The index in the West declined 1.4% in July to 103, but is still 7.5$% above a year ago. Meanwhile, new home sales increased by 26% from one year ago and Yun said that it is further proof of the housing market strengthening. ‘Amid stock market gyrations residential real estate appears a very safe place to invest particularly given the current housing shortage in America,’ he said. The data shows that new home sales, which are not closings but rather contract signings on a newly constructed home, reached 507,000 annualised sales pace in July. Sales are up solidly… Continue reading
Over half a million UK home owners plan to pay off mortgage with pensions pot
Just over half a million people, some 631,000, in the UK intend to use all or part of their pension to help repay their mortgage balance, new research has found. While the majority of 40 to 70 year olds with mortgages, 71%, intend to continue to meet their obligations via monthly repayments and 25% through additional lump sum contributions, up to 9% or 631,000 intend to use their retirement savings to repay their mortgage. The research from financial firm Paternership, shows that this is lower than the figure recorded last year when it was 14% and said that more people are looking to more traditional methods to repay the outstanding balance on their mortgages. It also shows that 8%, or 561,000 people, say that they intend to rely on an inheritance to repay the outstanding balance on their property and 7% or 491,000 confess they don’t know how they will meet their obligations. ‘While it is still shocking that over half a million people in the UK intend to use all or part of their retirement savings to repay their mortgage, it has fallen from over a million in 2014,’ said Andrew Megson, managing director of retirement at the firm. ‘This is fascinating as it suggests that the Pension Freedoms which allow people to access their entire pension in cash have encouraged people to take a more holistic view of how they use their pension rather than focusing on one off expenditure. This in turn appears to have focused peoples’ minds on paying off their home loan before they retire,’ he explained. ‘The work that the lenders have done in communicating with interest only mortgage customers about their options and obligations is also likely to have had a positive impact as it will have encouraged more people to move to capital repayment. That said, while a debt free retirement is the ideal, some people may find they reach traditional retirement age with an outstanding balance,’ he pointed out. ‘Using their pension may well seem like an option but it is not the only option as working longer, downsizing or considering a lifetime mortgage may be more appropriate. Ideally, pension savings should be used to provide an income in retirement, and with the state pension only providing a very basic safety net, making this choice could lead to hardship in later life,’ he added. Continue reading
