Tag Archives: crisis
Home lending falls in UK month on month and year on year, latest CML data shows
Lending to home owners in the UK fell in February compared to the previous month and compared to February 2014, the latest data from the Council of Mortgage Lenders shows. The number of loans advanced totalled 40,600, down 1% on January and 16% compared to the same month in 2014. These loans totalled £6.8 billion, which was down 3% on January and 13% on February last year. Lending to first time buyers was down 1% month on month and 16% compared to February 2014 with just 18,700 totalling £2.7 billion, which was down 4% on January and 13% down on February last year. Home movers were advanced 21,900 loans, a decline of 2% compared to January and 16% down year on year. These loans totalled in value £4.1 billion, 2% down on January and 13% down compared to February 2014. Remortgage lending also decreased month on month with 21,500 loans advanced, down 16% on January and 14% down on February 2014. The value of these loans at £3.3 billion also decreased month on month by 20% and was down 11% year on year compared to February 2014. Even the buy to let sector, considered to be buoyant at present declined. There were 15,900 buy to let loans in February, down 13% on the previous month but up 11% on the same period in 2014. These loans came to £2.2 billion in value, down 12% compared to January but up 16% on February 2014. Paul Smee, director general of the CML, blamed seasonal factors for dampening house purchase lending activity in February but admitted the general election could be making people wait and see. ‘This typical seasonal trend may also be exacerbated by uncertainty ahead of the general election, but we still expect to see an upturn in the spring and summer months. Buy to let, in contrast, has shown year in year lending increases, due almost completely to remortgaging which is typically strong in the buy to let market. Karen Bennett, sales and marketing director of commercial mortgages at Shawbrook Bank agreed that there could be a general election effect with the forthcoming poll creating a feeling of uncertainty combined with the continued impact of tighter lending criteria on owner occupiers. ‘As part of this, we are seeing the more specialist buy to let market stabilising, with less rapid, but still robust, growth than in previous years. As professional investors continue to expand their portfolios and add value by refurbishing or renovating, the signs are there for a continuing strong mortgage market. In order to ensure market sustainability, brokers should always encourage responsible borrowing by clients,’ she added. Continue reading
UK buy to let landlords increasingly see their properties as their pension
The new pension freedoms that came into force last week in the UK could trigger a huge interest in over 55s becoming landlords for the first time, it is claimed. New research by Property Let By Us, an online letting agent, shows that for 70% of younger landlords, their buy to let portfolio is their only pension fund. The study also shows that just one in five landlords said their property portfolio forms part of their pension provision. A further third of landlords are building their portfolios so that their children can benefit from the investment in the future. Over a third of landlords said their mortgages will be paid off by the time they retire and just 6% claim they will sell their properties on their retirement. What’s more, 28% of landlords plan to expand their property portfolios in 2015 and over a third of landlords use a letting agent to help manage their properties. ‘With mortgage rates at an all-time low and rents rising across the UK, it is no surprise that more and more investors are entering the buy to let market. Our research shows that many landlords see their property portfolios as a long term investment and a major part of their pension planning,’ said Jane Morris, managing director of Property Let By Us. She pointed out that potential new retiree landlords need to choose their property and location carefully. A recent report by estate agents, Chestertons shows that Birmingham has a 6.8% average gross rental yield, while Manchester has 6.4%, Sheffield has 6.3%, Leeds has 6% and Cambridge has 4.6%. ‘Anybody considering becoming a landlord should speak to local estate agents to see what the rental demand is like locally and what monthly rental income they can expect. However, if retires have no experience of the property market, they may be better considering alternative investment options,’ added Morris. Continue reading
Financial barriers preventing US home renters from buying, new research suggests
Many US home buyers can break even in less than two years if they buy a home instead of renting it, but financial barriers and preference are big factors in the decision to continue renting. A new report covering the fourth quarter of 2014 from US real estate data firm Zillow reveals that buyers break even on a home purchase in less than two years in 66% metro areas. It also says that some 20% of renters say they prefer to rent than buy with more than half, 53%, say financial limitations keep them from buying. Of renters surveyed by Zillow some 16% said they can't qualify for a home loan, 18% said they can't afford taxes, maintenance and other costs associated with home ownership, 13% said they don't have enough savings for a down payment and about a quarter said they struggle to pay their rent. According to the survey, 82% of renters are long term renters, and 57% are long term renters who have lived for a long time in the same home. Just 14% said they aren't staying long enough in the same place to buy. Zillow's survey sheds light on why some renters are not buying homes, despite historically low interest rates, prices that remain below peak levels in many areas and rising rents, however, some 20% of renters said they simply prefer to rent. ‘If the buy versus rent decision were about simple maths, we'd likely have millions more home buyers in the market, because the equation is tilted heavily in favour of buying,’ said Zillow chief economist Stan Humphries. ‘But no matter what the numbers say, buying a home is a huge commitment. Every day, Americans make decisions to buy or rent based on any number of personal dynamics, including preference, flexibility needs, family factors and, yes, financial considerations,’ he explained. ‘There is no right or wrong choice, and it's important that America's housing market maintains a number of affordable options for renters and buyers, no matter their preferences,’ he added. The report points out that over the last year, as home price appreciation has slowed down, the length of time it takes to break even on a home purchase grew slightly in most major metros. The breakeven analysis looks at how long it takes to come out ahead on a home purchase versus renting the same home, recouping the costs of buying, including taxes and maintenance. Among the top 35 metro areas, Dallas-Fort Worth had the lowest breakeven horizon, at 1.2 years. Indianapolis and Detroit were next at 1.3 years. The highest breakeven horizons were in Los Angeles, at 5.1 years, Washington D.C. at 4.2 and San Diego at 3.8 years. The national average is 1.9 years. Zillow's breakeven horizon incorporates all costs associated with buying and renting, including upfront payments, closing costs, anticipated monthly rent and mortgage payments, insurance, taxes, utilities, maintenance, and renovation costs. The horizon also factors in home equity growth for buyers, and, for… Continue reading
