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Research shows interest only mortgage numbers in UK are falling
Concerns have been growing in the UK over the number of home owners with interest only mortgages who do not have enough finance to cover themselves when their loan comes to an end. But new research shows that over the past two years the total number of interest only loans outstanding has fallen by over a quarter with a 16% reduction in the number of loans over the past year alone. According to the Council of Mortgage Lenders the progress that has been made and the ongoing steps that are being taken by the industry to check that borrowers with interest only mortgages have plans for how they will repay their loans at maturity is encouraging. As at the end of 2014, CML members reported that there were around 1.9 million pure interest only mortgages outstanding, and around 460,000 part interest only mortgages. This was around 300,000 fewer pure interest only mortgages and 160,000 part interest only mortgages than a year earlier. The CML research suggests that a quarter of this reduction is down to natural attrition, which is loans maturing and repaying at the end of their term. Around a third can be attributed to full redemption of loans not set to mature until at least 2028, suggesting that many borrowers are taking action well before problems could arise. This also suggests that a significant group of borrowers are successfully remortgaging onto full repayment terms without falling foul of new affordability rules. Of those loans that have matured, few have failed to repay. In total, there are fewer than 16,000 loans outstanding which have matured but not yet repaid or restructured and previous experience shows that most such loans subsequently redeem within a relatively few months of maturity. However, the CML said there is no room for complacency and members are continuing to think about the options for customers who may not be able to repay their mortgages. This includes more partnering with third party advice providers, including equity release firms, and product innovations that may help some borrowers. The CML also pointed out that it remains a challenge to get borrowers to respond to lender contact designed to help them plan for their mortgage's repayment at maturity. Lenders contacted around 427,000 interest only customers between April and December 2014, about 17% of all interest only borrowers. During 2014, the focus of lender communications moved beyond those whose mortgages are due to mature by 2020, and included borrowers whose mortgages are not due to mature until after this. Response rates by borrowers varied. Around 27% of those contacted whose mortgages are due to mature between 2021 and 2028 responded but only a disappointing 2% of those whose mortgages are not due to mature until after 2028 did. However, where lenders did succeed in getting customers to respond, 86% of those who responded had a repayment strategy, and those who did not appeared responsive to making changes such as switching to repayment terms,… Continue reading
Scottish rents fall nationally for first time since start of 2015
Residential rents in Scotland have fallen month on month for the first time since the start of the year with a 0.5% drop in August, according to the latest buy to let index. This means the average monthly rent in Scotland has dropped £3 from its summer peak of £549 in July to stand at £546 in August 2015, the data from Your Move, one of Scotland’s largest lettings agent networks, shows. Rent growth has also seen an about turn on an annual basis. After an acceleration of annual rent rises throughout the first half of 2015, Scottish rents are now just 1.7% higher than a year ago, marking a downturn since July, when the annual change stood at 2.8%. Brian Moran, lettings director at Your Move Scotland, explained that rents have retreated back from record levels, after an acceleration of rent rises in 2015. ‘This should provide a welcome let up for tenants, after only last month rents hit a new record level. This adjustment has also broken up the forward march of annual rent growth that’s been gathering speed recently,’ he said. ‘But peak lettings season is only around the corner, and this breather may not last for long. The vast discrepancy between demand and supply of available homes to let has not disappeared and this gap will only widen if landlords are scared out of the market by the government’s proposed regulatory changes and draconian rent controls,’ he added. A breakdown of the figures shows that rents are higher than a year ago across four of the five regions of Scotland. The Highlands and Islands continue to show the strongest annual rent rise, up from 5.4% in the year to July 2015 to 6% as of August. As a result, rents in this region have risen £32 over the past 12 months to a new record of £570 per month. Average monthly rents in the South have increased at the second fastest rate over the past year, jumping 4.5% since August 2014. Compared to a year ago, rents in Edinburgh and the Lothians and the East of Scotland have risen a milder 2.6% and 2.5% respectively. Meanwhile, Glasgow and Clyde was the only region to experience a year on year drop in rents in August. Average rents are now 3.6% lower than in August 2014, equivalent to £21 cheaper. On a monthly basis, there has been a more widespread slowdown. Average monthly rents have fallen in three out of the five regions of Scotland in August, up from only one region last month. The biggest monthly drop was in Glasgow and Clyde, where average rents have fallen 1.3% since July. The typical rent in Glasgow now stands at £554 per month, and has fallen considerably from its peak of £575. In the East of Scotland, the typical monthly rent is now… Continue reading
Rental prices in Auckland steady as activity rise, new data shows
Property rental activity is rising across Auckland, New Zealand’s biggest city, while rental values are steady, according to the latest data to be published. The average weekly rent across Auckland in August increased just $4 to $496, up less than 1% on July and just 6% year on year from $467 in August 2014. This compares to a 15% increase in residential property sale prices Auckland wide. ‘This indicates that landlords are not pushing to recover the full current purchase price, presenting Auckland renters with reasonable value for money,’ said Kiri Barfoot, of real estate firm Barfoot & Thompson. Growth in the number of large central city apartments and sizable family homes in the Eastern suburbs were strong drivers behind the overall, albeit minor increase, she pointed out. ‘These large and luxurious apartments in the city and substantial homes to the east are attracting top prices,’ she added. August’s weekly average for a three plus bedroom apartment in the city was $806, while a five plus bedroom home in the Eastern suburbs attracted $1,051 on average. Meanwhile, the more rural areas of Manukau and Franklin were the cheapest areas to rent, offering three bedroom homes for under $400 average, at $395 per week. Auckland rental prices have increased by 6.3% over the last 12 months, from an average of $467 to $496. Compared to August 2014,the average weekly rent for one bedroom properties has risen by 4.2% while two bedroom homes are up by 5.9%, three bedroom by 5.7%, four bedroom by 5.4% and five or more bedroom by 5.3%. Franklin/Manukau Rural remains the cheapest area to rent a property, across all property sizes. The Central City is the most expensive area for one, two and three bedroom properties. The Eastern Suburbs continue to have the highest priced large properties, with four bedroom properties receiving an average of $783, and five plus bedroom properties receiving $1,051. Barfoot also said that the city is seeing a rapid increase in online property rental activity with applications up by 28% in August compared to July. It signals an early start to the traditionally busy spring and summer periods and the August data shows a 61% rise when compared to the early winter month of May. Rental property searches online also increased by 26% between July and August. ‘It’s a typical spring trend, but we are seeing it take hold earlier each year as people try and get in ahead of the crowds. It is likely activity will also peak earlier this year, prior to, rather than after, the Christmas holidays,’ said Barfoot. She said that property managers are reporting that many tenants are thinking ahead to next winter and seeking homes that were warm and dry. ‘Homes with insulation and efficient heating, such as heat pumps, are highly sought after and we encourage our landlords to upgrade their properties in this way,’ she pointed out. To help manage the growing numbers the company has… Continue reading
