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UK house prices up 2% in first month of 2015, latest index sho
House prices in the UK increased by 2% between December and January, the biggest rise for January since 2009, according to the latest property index figures. The data from the Halifax also shows that in the three months from November to January prices were 1.9% higher than in the previous three months and the quarterly rate of change increased for the first time since July 2014. But it remains below the rates recorded between June and September last year and overall the Halifax expects a moderation in house price growth during 2015. It predicts that house prices nationally will increase by 3% to 5% compared with 8% in 2014. Prices in the three months to January were 8.5% higher than in the same three months a year earlier. This was an increase from 7.8% in December. This measure of annual house price growth was at its highest since October 2014 when it was 8.8%, but remains significantly below the peak of 10.2% in July 2014. It points out that sales increased by 15% in 2014 but despite this annual rise, sales peaked in the first quarter before steadily declining during the course of the year with sales in the final quarter 5% lower than in the first quarter and 1% lower than in the third quarter. ‘This bounce-back in house price growth in January coincides with reports of the first rise in mortgage approvals for six months in December. These improvements may indicate that the recent declines in mortgage rates, the reform of stamp duty and the first increases in real earnings for several years are providing a modest boost to the market,’ said Martin Ellis, Halifax housing economist. ‘It is, however, too early to draw any firm conclusions. The monthly figures in January can be particularly volatile due to the lower volumes of activity at this time of year and there have been unusually large rises on occasion in the past, such as in 2007 when it was 2.3% and 2.4% in 2009,’ he explained. ‘Housing demand should continue to be supported by an expanding economy, continuing low mortgage rates and a boost to households’ spending power resulting from lower consumer price inflation and reduced fuel bills. Nonetheless, we expect the overall downward trend in house price growth seen since last summer to continue over the coming months. Nationally, house prices are predicted to increase in a range of 3 to 5% in 2015 compared with 8% last year,’ he added. According to Rob Weaver, director of investments at property crowdfunding platform Property Partner, the figures confirm that the property has still got some punch. ‘A strong January and the first quarterly rise for six months could suggest another buoyant year but I suspect we are more likely to see a period of gentle and sustained growth,’ he said. ‘It's hard to see how the property market could under-perform in 2015. Undershoot 2014, yes, but under-perform, no. Economic conditions at home… Continue reading
Over 55s boost property equity release in UK to record high
The total value of equity release lending in the UK reached almost £1.38 billion in 2014, the highest since records began in 1992, according to the latest industry figures. The 2014 total was up 29% from 2013, bringing the equity release market back above pre-recession levels, the data from the Equity Release Council also shows. It points out that home owners aged 55 and over are increasingly use their housing wealth to boost their finances and help with living costs in later life. On a quarterly basis the value of equity release lending totalled £365.7 million in the final quarter of 2014, an increase of 18% year on year and it reached £741 million for the second half of the year. There was also a six year high in new customer numbers with more than 5,700 over 55s releasing equity from their homes in the last three months of 2014 and there were 5,712 new customers in the final quarter of the year, the largest amount in a single quarter since the fourth quarter of 2008. It pushed the total number of new equity release customers in 2014 to 21,336, a 13% increase from 2013 and the largest yearly figure since 2008. Customer numbers have now grown for four consecutive years since the recession. The average value of equity release lending also hit a new milestone in 2014, reaching £64,787, up 14% from the previous year and exceeds the previous record of £60,504 in 1998 by 7%. Some 66% of new equity release customers chose drawdown products in 2014, in contrast to just 25% of customers in 2006. Lump sum products now account for 34% of new plans while home reversion account for less than 1%. However, drawdown products account for a smaller share of the market by value at 60% or £825 million during 2014, as these products allow retirees to take smaller sums as and when they need them, often allowing more of their housing wealth to be preserved. ‘These lending figures show that 2014 was truly a record breaking year for the industry. Equity release is proving to be a crucial tool for financial planning in retirement, and is allowing retirees to improve their standard of living and give them more flexibility to support themselves or family members,’ said Nigel Waterson, chairman of the Equity Release Council. ‘Many retirees have more wealth tied up in property than anywhere else, so it is only logical that this forms part of their plan to enjoy a comfortable retirement. The new pension freedoms won't change the fact that many people do not have enough savings for later life. There is a danger that people's pension pots will be here today, gone tomorrow, but housing wealth is the one constant that many in this generation can rely on for support,’ he explained. ‘Increasing awareness of the available products and their benefits means that equity release will continue to thrive in 2015… Continue reading
UK landlords can choose from record number of buy to let mortgages
Record number of buy to let mortgages are now available in the UK with landlords able to choose from 817 different products, up 16% quarter on quarter, the latest index shows. Lower LTV fixed rate mortgages are now cheaper than equivalent tracker products, even before rates rise, according to the latest Buy to Let Mortgage Costs Index from Mortgages for Business. Mortgage charges have fallen further for lower LTVs while landlords at higher LTVs pay extra fees. However, the cheapest mortgage rates and lowest fees have been reserved for low loan to value ratios. ‘This unprecedented pick up reflects the huge increase in demand as well as the wider importance of the buy to let industry,’ said David Whittaker, managing director at Mortgages for Business. ‘Looking at total lending in 2014 the trend is clear. For a second consecutive year the value of the buy to let market grew by almost a quarter. We anticipate further growth in 2015 but at a slower rate as the market takes an inevitable breather after such a huge sustained spurt,’ he added. The research suggests that fixed rate mortgages are proving to be better value than their respective tracker counterparts, particularly for lower loan to value borrowers. Low LTV mortgages now outperform their tracker equivalents at two, three and five year periods. Likewise, at medium LTVs, the costs for a two year fixed rate is 4.4% compared with 4.7% for the tracker equivalent, while for three year products the costs are the same and only 0.3% higher than the tracker products for five years. Even for fixed rate high LTV mortgages, the current cost of borrowing is only marginally higher than tracker products. To fix for five years at a high LTV is just 0.4% more than the corresponding tracker. Only one in a hundred landlords now opts for a one year initial mortgage term. More widely, the popularity of short term mortgages continues to wane as 52% opted for a two year deal, down from 57% six months ago despite the very attractive two year rates on offer. By contrast longer term mortgages are growing in popularity, with the proportion choosing five year mortgages rising from 15% in the second quarter to 18% in the fourth quarter. ‘It’s astounding that fixed rate mortgages are already better value than their respective tracker counterparts. Again the real advantage is for the ‘safest’ landlords with the lowest LTV loans. But even though tracker products are a little bit cheaper at higher LTVs, in these cases too it soon won’t be enough to compensate for the likely increase in cost of trackers when rates inevitably rise,’ said Whittaker. ‘If customers are paying only a few percentage points above the negligible Bank base rate, then if this jumps it could mean a huge proportional increase in future costs. Capital markets are still reeling from tumbling inflation and a dovish outlook from the Bank of England that no one would have predicted… Continue reading
