Tag Archives: crisis
UK mortgage lending still down compared to a year ago
Home lending levels recovered in May compared to April, but were still down compared to a year ago, the latest figures from the Council of Mortgage Lenders show. First time buyers saw a decline in lending volumes compared to last year, but up slightly on the previous month while home mover lending saw a similar trend with volumes up slightly on April but down year on year. Home owner remortgage activity also declined compared to the previous month and compared to the same period last year. However, buy to let lending continues to grow year on year, mainly driven by remortgage activity and also saw a slight month on month increase due to higher buy to let house purchase lending activity. ‘House purchase lending in May was slightly up on the previous month, suggesting the market might be waking up after a subdued first quarter,’ said Paul Smee, director general of the CML. ‘Activity has broadly been down on last year but we expect it to rise in the summer months as, with historically low interest rates and a competitive lending environment, borrowing conditions are relatively favourable. But we cannot ignore the continuing affordability constraints caused by high house prices relative to earnings which will work in a contrary direction,’ he added. The CML report also shows that, as previously reported, gross lending in May was £15.9 billion, up from £15.8 billion in April but down from £16.8 billion in May last year. Under normal circumstances, a slight increase in the number of loans to first time buyers in May would be a sign that their prospects are on the rise this summer. But Patrick Bamford, director of mortgage insurance Europe for Genworth, pointed out that average deposits have risen significantly over the last year, not just because of rising house prices, but because the squeeze on affordability is disadvantaging buyers without a sizable amount of cash to put towards a house purchase. ‘For many would be home owners, especially those without the Bank of Mum and Dad to fall back on, saving more than 5% is simply not a realistic aim. Despite more high loan to value (LTV) products being available at lower rates, market pressures are preventing lenders from offering these products to those buyers who traditionally rely on this type of loan,’ he said. ‘In order to drive a genuine recovery of the high LTV market, the government needs to introduce a permanent system of private mortgage insurance to accompany its planning reforms. First time buyers will only be able to access affordable homes if we make affordable mortgages permanently available to them,’ he added. However, the CML figures also shows that competitive mortgage rates mean first time buyers are paying a record low proportion of their monthly income to service the capital and interest rate payments of their mortgage. This is the lowest level since the CML began tracking this in 2005. Continue reading
New single UK wide property index set for early 2016 launch
A new official UK wide residential property index is set to be published for the first time in the first half of next year, it has been confirmed. Work on the index has been slower than anticipated due to access to property data delaying the finalisation of the methodology to be used, according to an update report from the Office of National Statistics. Since a consultation was launched last year work has been focussed on securing the necessary approval for implementation of the new house price index, taking forward the legal work to secure access to property attributes data and further investigating the commitments made in the consultation response. The ONS said that good progress has been made in a number of areas. Firstly, each of the departments involved has now had approval for implementation of the new index. Secondly, in response to feedback from the consultation, the use of GOV.UK has been investigated as a central publication point for the new index. Indeed, as a result of this investigation, it is proposed that the new UK house price index will be published via the Land Registry pages of GOV.UK providing a single and central access point for users. Further details will be made available in due course. However, a spokesman explained that securing the access to property attributes data has been slower than anticipated, which has meant the analysis required to finalise the methodology for the new index has been delayed. ‘It is expected that this access should be resolved shortly,’ the spokesman added. Over the next few months the focus of the development work will be to finalise access to the data required for the new index. This will allow the index methodology to be finalised and subsequently an article to be published fully explaining the new methodology and production process for users. Work will also be done to begin testing the production of the new index and start planning the implementation of the new index and the transition for users. Further details regarding the transition for users will be made available later in the year. ‘Whilst there is still a large amount of work to take forward, it is anticipated the new index will be ready for publication in the first half of 2016,’ the ONS spokesman added. Continue reading
Annual house price growth in Scotland twice that of rest of UK
House prices remain resilient in Scotland despite property tax change and are up 10.3% year on year, twice the annual growth seen in England and Wales. The average house prices is now £180,892, according to the latest LSL house price index, but values fell by 2.1% in May which is regarded as being due to the introduction of the new Land and Buildings Transaction Tax (LBTT). Indeed the tax has also put a brake on sales which declined 10% month on month, and again this figure is affected by the LBTT as there was a rush of sales being completed before it was introduced in April. The tax had the most impact on the £1 million plus property sector with only one property in this price band sold in two months. Properties over £750,000 now pay 12% in tax. But generally the market is in good shape, according to the report. In Glasgow, for example, house prices finally surpassed 2007 levels, reaching a new record of £146,286 due to high demand. ‘Two months into Scotland’s new transaction tax regime, and the impact of the overhaul is still reverberating around the property market,’ said Christine Campbell, Your Move managing director in Scotland. She explained that the general election was a fresh source of uncertainty for those considering the best time to move home and it has been an up and down time for buyers and sellers and as a result it is harder to make out the underlying course of the market. ‘Yet the trends that can be gleaned are positive. Scottish house prices are up by more than 10% on an annual basis, and the sentiment from buyers in our branches is upbeat as the stability of the housing recovery shines though,’ said Campbell. ‘There is no denying that the recent tax turbulence has affected property prices in the shorter term, with the latest monthly dip testament to further shock waves of the LBTT, as the market continues to absorb the change. May’s monthly fall of 2.1%, equal to £4,000, is the largest backwards step we’ve experienced for nearly six years,’ she pointed out. However, she also pointed out that this must be considered in the context of following an exceptional leap in March, when prices soared a record breaking £16,000 as a result of frenetic movement at the top end of the housing market, with 84 properties worth £1 million or more changing hands before the stamp duty switchover. ‘But since the new regime was enforced, there’s been only one million pound home sold in Scotland in the past two months, which is reining back current measures of growth,’ she added. During May, it was the most expensive parts of Scotland that saw average property prices slip backwards, in absence of some higher value sales. For example, house prices in Edinburgh have dropped 5.7% since April, while East Lothian saw an 11.2% monthly drop in May. ‘But overall, the… Continue reading
