Tag Archives: crisis
UK mortgage industry welcomes removal of affordability clause from hybrid lifetime loans
The UK home mortgage industry has welcomed a decision by the Financial Conduct Authority (FCA) to remove the need for an affordability assessment on home owners taking out hybrid lifetime mortgage products. The FCA said it has made the modification because it does not consider that an affordability assessment is required where there is no risk of arrears and repossession in the event of missed payments. ‘The modification works by dis-applying the requirement to carry out an affordability assessment where interest payments are anticipated or required, providing that the specific lifetime mortgage allows the consumer to exercise at any time an option to convert the product to interest roll-up,’ the FCA said. Lifetime mortgage contracts that give consumers the option to pay interest for a period became subject to affordability rules based on the requirements of providers following the Mortgage Market Review in 2014. But the Equity Release Council has been campaigning for the FCA to review its affordability assessment of these products and said it is pleased the argument has been taken on board. ‘This has the potential to help more consumers make use of options already offered by equity release providers in later life and encourage further innovation within the market,’ said Nigel Waterson, chairman of the Equity Release Council. ‘The optional payment of interest within a lifetime mortgage is different to that of a residential mortgage with the opportunity for consumers to switch to roll-up when they wish,’ he explained. ‘This change highlights the growing recognition that equity release has an important part to play in the planning of funding for later life and we look forward to continuing to work with the FCA in the future,’ he added. The Council of Mortgage Lenders also welcomed the decision. ‘This may look like a small change, but it is a really significant one that should allow the lifetime mortgage market to develop in a far more sensible and consumer friendly way. It removes one barrier to the provision of sensible, safe and worthwhile lifetime mortgage products,’ said Paul Smee, CML director general. Alice Watson, product and communications manager at Retirement Advantage Equity Release, said she believed that the affordability assessments were an unintended consequence of the Mortgage Market Review (MMR) and added an extra and unnecessary step to the application process. ‘The FCA’s decision is yet further recognition that the equity release market continues to grow and is a serious option for increasing numbers of over 55s across the country. The good news is that ultimately it is consumers who will benefit from this change, which will make access to lifetime mortgages more straightforward for more people and should allow providers to develop even more innovative solutions,’ she pointed out. Continue reading
One in five home sales in UK fall through, latest data shows
The number of house sales failing to successfully complete in the UK fell in the first quarter of 2016, with just one in five house sales falling through, according to new research. Figures from independent home buyer Quick Move Now indicate a house sale fall through rate of 20% in the first quarter of the year, a drop of just under 8% from the final quarter of 2015. The annual year to date fall through, which the firm says gives a greater overview of how the property market is performing generally, was fairly constant throughout 2015 and into the start of 2016 at around 29% and finished the first quarter of 2016 at 29.07%. ‘The start of 2016 has been an interesting time for the UK property market. Strong demand and low supply in many areas has led to a strong financial performance and whilst it is encouraging to see that the number of sales falling through before completion fell in the first three months of 2016, many property owners and would be buyers would still be shocked to learn that one in five sales doesn't go through,’ said Danny Luke, business manager at Quick Move Now. The two biggest reasons why house sales didn't complete in the first quarter of 2016 were the vendor pulling out of the sale for a higher offer and either vendor or buyer pulling out because they felt the sale wasn't progressing quickly, both at 25%. The firm said that many areas experiencing very strong demand and low supply, so vendors are keen to achieve the best possible price for their property so are willing to pull out of an agreed sale if made a better offer. Other reasons included the buyer changing their mind, 18.75% of cases while a buyer being refused lending by a mortgage provider accounted for 12.5%, the chain collapsing, survey issues and a buyer wanting to renegotiate after the initial offer had been accepted all accounting to 6.25%. ‘A lack of properties coming to market has led to prospective buyers having to move very quickly in order to secure a property, and may mean they put an offer in on a less than ideal property due to fear that they'll be unable to find anything else, which accounts for buyers changing their minds and trying to renegotiate after the initial offer has been accepted,’ explained Luke. ‘Some inevitably get cold feet about such a large investment, or find that a survey confirms their fears, and pull out before the sale completes,’ he added. Continue reading
Heating and double glazing top list of UK home buyers must haves
Central heating and double glazing top UK homebuyers’ list of must have property features followed by a garden and secure doors and windows, according to new research. House hunters opt for a good, reliable broadband signal over highly rated schools, off road parking over a garage and a living room big enough for a large flat screen telly over period features. Indeed, the research from comparison website Gocompare, found that only 15% rated access to good local schools an essential factor in buying a new home and buyers are looking for homes with a bath, separate shower, multiple toilets and en-suite bathrooms. However, it is warmth and energy efficiency that are key priorities for house hunters. Some 79% said that central heating is their top must have feature and 74% said it was double glazing. A good energy efficiency rating and cavity wall insulation are also highly rated features, mentioned by 53%. Some 71% said a garden, 70% secure windows and doors, 58% off road parking and 57% a bath. Local shops and amenities were important to 55% and 54% said friendly neighbours was their top priority. A good reliable broadband connection was mentioned by 53%, while 50% said a landline telephone and 49% a good TV connection while 47% want a second shower and 45% at least two toilets. However, only 16% thought an open fireplace or wood burner were a home essential and just 7% favoured period features. Only 15% of those surveyed said access to good local schools was an essential factor in buying a new home. ‘From our research it’s clear that today’s potential homebuyers are putting practical concerns ahead of aesthetics. They are looking for warm, cosy properties, which are energy efficient and well connected to modern amenities rather than ones that are full of character,’ said Gocompare’s mortgages spokesperson Matt Sanders. He pointed out that as the on-going costs of running a home including paying the mortgage, utility bills and council tax are a real concern, it is perhaps unsurprising then well insulated homes and efficient central heating systems are key priorities. ‘The survey also highlights the important role technology and in-home entertainment plays in our day to day lives, from streaming live TV and films to our reliance on mobile phones. For many people, access to both a strong internet connection and a reliable mobile phone service have become modern home essentials,’ he added. Continue reading
