Tag Archives: crisis
UK home buyers unlikely to see mortgage costs rise in short term
Home buyers in the UK are set to see mortgage rates remain at historic lows for some time yet despite original forecasts that they might rise by the end of this year. The Bank of England has indicated that the current 0.5% base rate is likely to be around for some time yet with a rise not looking likely until well into 2016 or even 2017. Rates have now been this low for 80 months. But there are concerns that home buyers will get too used to low interest rates and this could backfire in the future when interest rates do rise. According to James Jones, head of Consumer Affairs at Experian, buyers need to work out what they can afford, and plan ahead for unforeseen costs that may make repaying debts harder over the years ahead. A survey of people who had failed to secure a mortgage last year suggests that many are failing to do the basic research needed to get proper control of their finances. Some 13% did not know how much money they have left over at the end of the month and 18% did not know what monthly repayments they could afford. The research also found that 14% did not have a big enough deposit for the property they wanted and 12% were unable to secure the size of mortgage they needed. Another piece of research has found that almost three quarters of home owners with interest only mortgages are worried they may not be able to repay their loan. Interest only deals mean borrowers pay the interest on the loan during the life of the mortgage and then must repay the capital when the mortgage term ends. Just 31% of those interest only borrowers questioned said they have a separate investment policy in place, such as an endowment or an ISA, to pay the capital, according to the research by mortgage broker Ocean Finance. While 16% said they plan to switch to a repayment mortgage before their current loan ends, 31% said they expect to have to sell their home to settle the outstanding capital. And a fifth of home owners said they don’t have a plan in place to repay the capital. ‘Interest only has become a time bomb because so many people took out the products to cut the cost of their mortgage, with no view of how they would repay the capital element. Borrowers who have an interest only mortgage with no repayment plan need to take action,’ said Gareth Shilton, Ocean’s spokesperson. ‘It’s advisable to seek advice on whether they can overpay on their current interest only deal, switch to a repayment mortgage, or use an ISA or pension to settle the capital payment,’ he added. Interest only mortgages became popular in the 1990s as a way for consumers to afford homes at a time when property prices were soaring. Lenders often agreed interest only loans without confirming borrowers could repay the capital owing… Continue reading
Mayor of London approves planning of major new homes development
A planning framework which will deliver more than 25,500 new homes and create up to 65,000 jobs at Old Oak and Park Royal has been approved and adopted by the Mayor of London. Old Oak in West London is set to become a new home to a world class High Speed 2 (HS2) and Crossrail Station by 2026, handling 250,000 passengers a day and acting as a super hub between London and the rest of the UK, Europe and the world. The Mayor believes this presents the opportunity to create tens of thousands of new homes and could provide almost 14% of Greater London's employment needs up to 2031, with early estimates of a £7 billion annual contribution to the UK economy. The Old Oak and Park Royal Development Corporation was launched by the Mayor in April and will drive the planning and regeneration of the site that straddles the London boroughs of Hammersmith and Fulham, Brent and Ealing. Earlier this year, the Mayor published an Opportunity Area Planning Framework for consultation, which sets out his long term vision for the area. Following the conclusion of that consultation, the Mayor has now approved the document which sets the strategic planning direction for the area. ‘London urgently needs new homes and commercial space to meet its ever growing population and there can be no doubt that the regeneration of Old Oak represents a real opportunity to meet those needs,’ said Sir Edward Lister, Deputy Mayor for planning and chairman of the Old Oak and Park Royal Development Corporation,. ‘This strategy will mean we can plan for the future of this vast site as we work to create a new, thriving and sustainable part of the capital, where people will love to live, work, play and visit,’ he added. The planning framework aims to create a new urban neighbourhood at Old Oak, supporting a minimum of 24,000 new homes with an additional 1,500 in non-industrial locations in Park Royal. It will see the creation of the new High Speed 2/Crossrail and National Rail interchange to regenerate the area and contribute significantly to London's competitiveness and protect and enhance Park Royal as a strategic industrial location. The Mayor has identified 38 Opportunity Areas across the capital. Opportunity Areas are London's major source of brownfield land with significant capacity for new housing, commercial and other development linked to existing or potential improvements to public transport accessibility. By establishing Opportunity Areas, and working closely with London boroughs and partner agencies, the Mayor will be best able to deliver significant social and economic regeneration. Continue reading
Prime central London prices still falling
Prices in central London’s prime residential market fell 0.3% in October, the steepest monthly decline since the summer of 2010, and annual growth slowed to 1%, the lowest rate since October 2009. This latest data from real estate firm Knight Frank means that the firm has revised 2016 forecast for the sector down to 2% from 4.5%. According to Tom Bill, Knight Frank’s head of London research, even although it has been 11 months since the Chancellor raised stamp duty for properties worth more than £1.1 million, the consequences have only come into sharper focus in recent weeks. ‘The spring selling season was overshadowed by the general election and, after a seasonal lull in the summer, the autumn market has been the first reliable test of sentiment since the stamp duty increase. Autumn is typically a more active time of year but the final months of 2015 have been marked by a standoff between buyers and sellers,’ he explained. ‘There is a degree of nervousness around global economic events such as the China slowdown and the fact some markets have experienced strong price growth in recent years, but the stand-off primarily comes down to the arithmetic of higher stamp duty rates,’ he said. ‘Buyers calculate it will take them longer to recover the extra stamp duty expense in house price inflation and expect a lower asking price, something vendors are not always willing to concede,’ he added. The figures also shows that the number of exchanges in the three months to September was 17% lower than in 2014. Meanwhile, the number of new prospective buyers was 30% down on the same period in 2014. ‘However, despite the stand-off, there are signs some vendors have realised demand has cooled since the stamp duty increase and where asking prices have come down the market is operating in a normal manner and tapping into underlying demand that remains resilient,’ Bill concluded. Continue reading
