Tag Archives: crisis
Over half a million UK home owners plan to pay off mortgage with pensions pot
Just over half a million people, some 631,000, in the UK intend to use all or part of their pension to help repay their mortgage balance, new research has found. While the majority of 40 to 70 year olds with mortgages, 71%, intend to continue to meet their obligations via monthly repayments and 25% through additional lump sum contributions, up to 9% or 631,000 intend to use their retirement savings to repay their mortgage. The research from financial firm Paternership, shows that this is lower than the figure recorded last year when it was 14% and said that more people are looking to more traditional methods to repay the outstanding balance on their mortgages. It also shows that 8%, or 561,000 people, say that they intend to rely on an inheritance to repay the outstanding balance on their property and 7% or 491,000 confess they don’t know how they will meet their obligations. ‘While it is still shocking that over half a million people in the UK intend to use all or part of their retirement savings to repay their mortgage, it has fallen from over a million in 2014,’ said Andrew Megson, managing director of retirement at the firm. ‘This is fascinating as it suggests that the Pension Freedoms which allow people to access their entire pension in cash have encouraged people to take a more holistic view of how they use their pension rather than focusing on one off expenditure. This in turn appears to have focused peoples’ minds on paying off their home loan before they retire,’ he explained. ‘The work that the lenders have done in communicating with interest only mortgage customers about their options and obligations is also likely to have had a positive impact as it will have encouraged more people to move to capital repayment. That said, while a debt free retirement is the ideal, some people may find they reach traditional retirement age with an outstanding balance,’ he pointed out. ‘Using their pension may well seem like an option but it is not the only option as working longer, downsizing or considering a lifetime mortgage may be more appropriate. Ideally, pension savings should be used to provide an income in retirement, and with the state pension only providing a very basic safety net, making this choice could lead to hardship in later life,’ he added. Continue reading
UK regional office market sees demand increase
Occupier demand in the UK regional office market increased 51% in the first quarter of 2015 compared with the previous quarter, with total investment at its highest level since 2007. This growth totalled a combined take up of 2.08million square feet and 49% above the five year quarterly average, according to the latest data from real estate firm Knight Frank. Birmingham saw the top performance in the second quarter with take up of 521,136 square feet which was boosted by a number of large transactions, the most significant being the 212,000 square feet pre-let to HSBC at Arena Central. Pre-letting activity also increased in the second quarter of the year, impacting on new and grade A availability which is down by 17% year on year collectively to 2.2 million square feet. In the investment market some £2.09 billion of regional office assets changed hands in the first half of 2015, the sector’s strongest first half year since the second half of 2007. Bristol, Manchester and Birmingham were the main focus of investment activity, accounting for over half of total investment turnover. Bristol in particular saw some sizeable transactions, including the off market purchase of Templeback by Orchard Street Investment Management in June 2015 for £58.5 million, reflecting a net initial yield of 5.34% and Aviva Investors’ acquisition of 66 Queen Square for £32.7 million, at a net initial yield of 4.94%. ‘Improved occupier confidence has led to a surge in pre-letting activity and high levels of take-up across the main regional office markets in the second quarter,’ said Stephen Hodgson, head of regional offices at Knight Frank. The firm anticipates that this will be reflected in rental growth and further starts on new development schemes over the next 18 months. ‘On the investment front, despite the fact that yields are approaching historic lows we also feel that there is scope for further yield compression,’ added Hodgson. Continue reading
US housing values drop for first time in almost four years
The housing market in the United States is slowing down, with home values falling month on month for the first time in almost four years, according to the latest index data. Prices fell 0.1% in July compared to the previous month and year on year growth was 3%, down from 3.4% in June, the Zillow real estate market report shows. The report says that nationally home value appreciation is levelling off after its rapid pace in the early years of the recovery. Of the 517 metros covered by the Zillow index, 204 saw a slowdown, including major metros like Washington, DC and Cincinnati. Zillow says that the slowing appreciation is a sign that the market is returning to normal and economists have expected to see growth flattening out as the recovery continues. Even strong markets like Denver, Dallas, San Jose and San Francisco, which had double digit annual home value growth in July, saw their monthly appreciation rates ease compared with June. ‘This slight dip in home values is a sign of the times. Many people didn't think it was happening, but it is. We've been expecting to see a monthly decline as markets return to normal,’ said Zillow chief economist Svenja Gudell. ‘However, this is not like the bubble bust. We're not going to see 10% declines. The market is levelling off, and it's good news, particularly for buyers, because it will ease some of the competitive pressure,’ Gudell added. She explained that slowing home values could provide more opportunities for hopeful buyers who have been waiting on the side lines for the market to cool off. ‘More homes may be coming online as home owners who have been watching strong home value growth decide to list their houses as appreciation slows and smaller gains are expected. This could help ease the constrained inventory the market has been facing for the past several months,’ she pointed out. Meanwhile, the index also shows that residential rents continue to grow at a rapid pace, up 4.2% from last July to $1,376. With no sign of rents slowing down and the potential for more homes for sale, conditions may be right for buyers to enter the market, the firm suggests. Continue reading
