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Research shows sneaky fees and charges make it hard to get best mortgage deal
UK borrowers could be paying over the odds on their mortgages and with sneaky fees and charges making it harder for people to find the best deal, it is claimed. Research from consumer champion Which? reveals that there are more than 40 fees and charges across the market, including set up fees, arrears fees and final repayment fees. Providers using different names for the same or similar fees. For example, a booking fee can also be called a reservation or application fee. There is also duplication with some lenders charging more than one set up fee. The research reveals increases to the cost of some fees. The average arrangement fees have almost doubled in the last five years, from £878 in 2009 to £1,588 in 2014 and there is a wide variation between lenders in the cost of the same fees, suggesting that fees don't always reflect the true cost the lender incurs. Which? also highlights a lack of clarity which makes it difficult for borrowers to tell if the fees are avoidable. The research shows that consumers borrowing £100,000 over two years could save as much as £1,503 if they took into account the set up fees rather than choosing the product with the lowest interest rate. This vast array of confusing fees and charges, which aren't always reflected in the standard APR (Annual Percentage Rate of Charge), means the total cost is not clear to borrowers leaving them unable to easily find the best deal. The research found just 3% of people could correctly rank the cost of five two year fixed rate mortgage deals when displayed using typical information, including APR. This rose to 36% when presenting the total cost of the mortgages over 24 months. With mortgage repayments the biggest monthly expense for most homeowners, and the prospect of future interest rate rises adding to this, Which? is calling on the Chancellor George Osborne to use his Autumn Statement to make it easier for people to find the best mortgage deal, working with the FCA, industry and consumer groups. ‘Home owners could be paying over the odds for their mortgage because of the complex range of fees and charges that prevent them from finding the best deal,’ said Which? executive director, Richard Lloyd. ‘The Chancellor must act now to stop sneaky fees and charges and end mortgage confusion for consumers. The government and the regulator should also explore better ways of presenting the total cost of mortgages,’ he added. Suggestions for change include making mortgage price comparison easier. Which? says given the limitations with APR, the government and the Financial Conduct Authority should explore other ways to present the total cost of a mortgage. It also suggests making the full cost of a mortgages clearer. For example, all compulsory fees payable throughout the deal period should be expressed as a total of fees and included in the advertised costs. It should also be clear which fees payable over the life of the mortgage are compulsory and which are… Continue reading
House sales falling in Canada, latest data shows
House sales in Canada are falling nationally, seeing the first monthly fall since the beginning of the year, according to the latest data from the Canadian Real Estate Association (CREA). The figures reveal that national home sales fell 1.4% from August to September but actual (not seasonally adjusted) activity stood 10.6% above September 2013 levels. The data also shows that the number of newly listed homes declined by 1.6% from August to September and the national average sale price rose 5.9% on a year on year basis in September. A breakdown of the figures show that activity was down in about 60% of all local housing markets in September, led by monthly declines in Calgary, Edmonton, Central Toronto, Kitchener-Waterloo, London and St. Thomas, Windsor-Essex, and Ottawa. Home sales rose on a month on month basis in Fraser Valley, Vancouver Island, the Okanagan region, Mississauga, Durham and York regions of the Greater Toronto Area, Sherbrooke, and the Northern region of Nova Scotia. ‘Affordably priced single family homes are in short supply in some of Canada’s hottest housing markets, which contributed to the monthly decline in national sales activity in September,’ said CREA president Beth Crosbie. ‘That said, there are other markets with ample supply but sellers there are holding firm on price. There is a lot of variation in housing market trends depending on the type of housing, neighbourhood and price segment,’ she added. September sales were up from year ago levels in about 80% of all local markets, led by Greater Vancouver and the Fraser Valley, the Okanagan region, Calgary, Greater Toronto and Montreal. The increase reflects activity in September 2013 that was handicapped by the occurrence of five Sundays, since that day is the lowest volume trading day for home sales. Sales activity for the year to date in September was 5% above where it stood in the first nine months of 2013, and remains broadly in line with the 10 year average for the period. The number of newly listed homes declined by 1.6% in September compared to August. New supply was down in just over half of all local markets, led by Calgary, Edmonton, Greater Toronto, Kingston and Ottawa. The number of months of inventory is another important measure of the balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity. There were 5.9 months of inventory nationally at the end of September 2014, up slightly from 5.8 months in August and slightly below the six months reported in May, June and July. Price growth has been steady at about five to 5.5% since the beginning of the year and year on year price growth accelerated slightly for two storey single family homes and slowed further for apartment units. Price gains for one storey single family homes and townhouse/row units were little changed compared to August. Two storey single family homes continue to post the biggest year on year price gains with… Continue reading
Residential development land growth in England and Wales moderates
Residential development green field land prices in England and Wales rose by 0.2% in the third quarter of the year but the growth rate is moderating. According to the latest figures from Knight Frank the annual increase in the third quarter of the year was 3.7%, down from the 5.6% annual rate of growth in the second quarter of 2014. The firm says that while the appetite for the best sites is still strong, rising material costs and a shortage of skilled labour is starting to weigh on prices. Prices in London are still advancing faster than the rest of the country, the average annual rate of growth for sites in prime central London slowed from 18.9% to 18.7% in the third quarter. ‘While house price growth is starting to slow, there is still room for more growth in development land, especially in commuter zones around London and other key cities,’ said Grainne Gilmore, head of UK residential research at Knight Frank. ‘However the disparity between the best sites and those that are compromised may become more entrenched and competition for good development sites remains strong throughout the country. But there is no doubt that developers are becoming more selective about the sites they consider,’ she explained, adding that this has been reflected by a slight slowing in sales volumes in recent months. Mirroring the trend in house prices, there has been a ripple effect from central London, with sites in key commuter towns close to the capital proving the most alluring for developers. ‘While planning remains a thorny issue for developers and house builders, these concerns have been somewhat overshadowed of late by the rising cost of construction and the difficulties in sourcing workers with suitable skills to build out sites,’ said Gilmore. ‘Shortages of material have contributed to rising prices, and this, a well as the shortage of labour, can be dated back to the financial crisis, when construction activity all but ground to a halt,’ she pointed out. ‘The very moderate growth in house building in the years following the zenith of the financial crisis were not enough to power up the industry for the sharp rise in activity seen over the last 18 to 24 months. So the delivery of materials and a workforce with the necessary skills is now proving problematic,’ she added. The report also shows that there has been a sharp rise in the number of respondents to the RICS survey saying that labour shortages and rising material costs are limiting levels of construction activity. These factors are now starting to weigh on development land prices, with developers being cautious about future material and labour costs in such an environment. ‘While the rising cost of materials will directly impact margins, difficulties in accessing suitable labour could add to the length of time that elapses before units can be sold, which will also, in turn, push up costs,’ said Gilmore. ‘As a result, buyers are applying downward pressure to offers for development land…. Continue reading
