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Nonstandard UK home borrowers now more likely to get a loan
More mortgage borrowers are seeing their applications for mortgage loans given the green light as new products emerge to support ‘non-standard’ circumstances, according to new research. Some 26% of brokers reported having no problems sourcing a mortgage for any type of borrower in the second half of 2015, the highest proportion in the post Mortgage Market Review (MMR) era, and a clear sign of improving lending conditions. According to the Intermediary Mortgage Lenders Association (IMLA) report it represents a significant jump from the proportion of brokers experiencing no problems both in the first half of 2015 when it was 15% and the second half of 2014 when it was 16%. However, some areas beyond the ‘mainstream’ mortgage market have been less well-served since 2008/2009, with new regulations introduced to govern lending criteria and fewer products on offer tailored to meet the needs of smaller and less mainstream consumer segments. This includes products to support borrowers seeking lending into retirement, products designed for borrowers with past adverse credit records, and those tailored for self-employed borrowers or those with irregular incomes. However, the IMLA’s research shows fewer brokers are now experiencing problems with sourcing a mortgage for clients in all of these areas, with the most significant improvement seen in sourcing loans for interest only borrowers. The proportion of brokers having difficulties helping this type of client has fallen 15 percentage points year on year to 39%. Similarly, the proportion of brokers unable to source a mortgage for ‘lending into retirement’ borrowers has dropped seven percentage points to 43%. The picture has also improved for self-employed borrowers, with just 40% of brokers reporting problems over the last six months, down six percentage points from a year ago. The most common circumstances where brokers were unable to source mortgages in the second half of 2015 continue to be adverse credit at 46%, lending into retirement at 43%, self-employed at 40% and interest only borrowers at 39% although in each case, the picture has improved. The report points out that these product types are becoming increasingly important, in context of the changing UK demographic. More first time buyers are taking out mortgages with longer terms to spread out their repayments, with 60% now opting for terms that last more than 25 years, meaning more borrowers could be left paying off their debt in retirement. Meanwhile the trend towards more working flexibility alongside sluggish wage growth has boosted self-employment levels in the UK, and 15% of the workforce are now self-employed. Looking ahead, both lenders and brokers identify first time buyers as the market area with the best overall growth prospects for 2016, ahead of other segments. However, when asked about the prospects for product availability, IMLA’s research suggests further improvements could be on their way for other borrower types. More than half of lenders forecast an improvement in mortgage availability for retirement borrowers, near prime borrowers, those who are self-employed or with irregular incomes, and interest… Continue reading
Money and stress are biggest concerns of people selling their home
Money, stress and time constraints are still the biggest fears for UK home owners when selling their home, new research has found. Despite home owners currently enjoying a very buoyant UK property market, securing the right price still tops the list of fear factors, according to a survey from online estate agent eMoov. Some 55% of those asked said not getting the price they wanted or needed was their primary fear when selling, with the stress of the selling process the second biggest fear factor for 46% of home owners. Time constraints completed the top three fear factors, with 43% of home owners afraid they wouldn’t be able to sell their home in the time they needed to. The survey also shows that 36% fear paying too much in estate agent fees, 22% finding a new property to live in upon selling, 14% dealing with the buyer, 12% picking the wrong estate agent in the first place, 10% getting a mortgage for their next home and 4% that their new property might drop in value in the future. ‘Price is always going to be the primary concern home owners and it is only natural that securing the best price will weigh heavy on a seller’s mind,’ said the firm’s founder and chief executive Russell Quirk. ‘Generally speaking, our home is the most expensive asset we are ever likely to own and for the majority of us, our home is our nest egg, setting us up for retirement when we do finally sell and downsize. So it’s understandable that it be the biggest fear during the selling process, as that couple of extra thousand gained or lost, can make a big difference in the grand scheme of things,’ he pointed out. ‘Our previous research found that selling your home is more stressful than your wedding day and so it doesn’t surprise me that this also ranks highly amongst UK sellers. When you add time constraints to an already laborious process, you can see why selling a home in the UK can seem a daunting task and evoke such feelings of fear,’ he explained. ‘I have to say I am a little surprised that paying too much in estate agent fees didn’t make the top three. High street estate agent fees have rocketed in line with house prices over the years despite no additional service being offered, some may argue the service has even declined, and so the dated commission fee structure is one of the biggest obstacles to moving home,’ he added. Continue reading
Over half of UK letting agents think buy let surcharge will push up rents
Over half of UK letting agents believe the new buy to let stamp duty surcharge from April will push up rent costs, new research has found. It could also trigger a decline in the supply of available properties coming onto the rental market, according to the report from the Association of Residential Letting Agents (ARLA). The report also points out that in February demand for rental properties grew to an average 37 per letting agent branch, the highest since February 2015, as supply increased marginally. Some 52% of letting agents reported an uplift in interest from buyers looking to invest in by to let properties before the stamp duty reforms come into effect, up from 47% in January. However, after the 01 April deadline some 63% predict that supply will fall as landlords are pushed out of the market. Some 57% of ARLA members agree rents will be pushed up once the stamp duty reforms have come in to effect, as increased costs for landlords are passed through to tenants. This is especially high in London, where 73% of letting agents expect to see this happening. ‘The stamp duty changes are now imminent, and as well as hitting small landlord’s, they will also impact institutional investors,’ said David Cox, ARLA managing director. ‘Although members are reporting a rush from landlords trying to snap up their buy to let investments now, it’s likely that we’ll see the buy to let market drop like a stone come April and probably not pick up again until next year. This will most certainly cause rents to increase, with supply dropping, as competition for the limited availability of properties intensifies,’ he explained. The report also shows that demand rose by 19% in February, with an average 37 prospective tenants registered per member branch. This is the highest level seen since February last year, when an average 40 tenants were registered per branch. Alongside growing demand, the supply of rental properties on letting agents’ books increased to 176 in February, a rise from 172 in January. ‘The demand for housing continues to intensify as supply remains an issue across most of the country. We are concerned that the government rhetoric of wanting to help people onto the housing ladder does not tally with their action of continuing to target the rental market with additional costs,’ said Cox. ‘Some landlords will simply withdraw from the market whereas others who can take the hit of the extra stamp duty will simply raise rents to cover the extra costs. The dream of home ownership will remain out of reach for many as we move closer towards becoming a nation of forever renters,’ he added. Continue reading
