Tag Archives: crisis
Report suggests shared ownership is misunderstood and under used
Shared ownership could help thousands more home buyers in the UK to get onto the housing ladder but research has found that this growing lending sector is under used and misunderstood. With house prices rising at a faster rate than most salaries and people continuing to struggle to get onto the property ladder, shared ownership is a potential solution for many, yet is often overlooked despite having been introduced 30 years ago. The research from the Leeds Building Society has identified a number of key myths around shared ownership including the belief that a shared ownership mortgage is more difficult to place than an ordinary mortgage. It also found that people think that shared ownership properties are in less desirable areas, that it’s more expensive than renting, that it’s difficult to qualify unless you’re on a very low wage, or a key worker and that it is like a consolation prize and not real ownership. ‘In a nutshell, the lack of understanding around shared ownership boils down to these five distinct points,’ said Louisa Sedgwick, head of intermediary distribution for Leeds Building Society. ‘In reality, these beliefs are inaccurate and there is an abundance of information for intermediaries, and the borrowers they serve, available from housing associations, the Government and lenders to help them understand how shared ownership could work for them,’ she added. She pointed out that while many housing developers or associations are linked to specific intermediaries in certain areas, there’s nothing to stop individuals approaching their own broker about shared ownership. ‘At this stage, many clients will have been assessed, certainly in terms of eligibility for shared ownership, by the relevant Housing Association before going to consult an intermediary, meaning the process for the broker can actually be fairly straightforward since they only need to place the mortgage,’ explained Sedgwick. ‘A mistaken public perception exists that shared ownership homes may be badly maintained, poor quality properties in poor, or less desirable, areas. Again, this is far from the truth. London provides an interesting example and showcases the fact many shared ownership properties offer a desirable home and community environment to live in,’ she pointed out. ‘Properties available through the scheme can be found in prestigious and sought after areas such as Notting Hill. What’s more, the availability of shared ownership properties extends far beyond London to desirable areas across the UK including Harrogate, Chester and York. ‘Shared ownership schemes are found across the UK as housebuilders are often obliged to include a proportion of affordable housing, some of which will be for shared ownership, regardless of where they are developing,’ she added. In terms of cost she explained that while many believe the monthly payments required to live in a shared ownership property hover somewhere between those paid for a full mortgage and rent, in reality, monthly payments for shared ownership properties could be lower than either full ownership or private renting. Indeed, a report published by the National Housing Federation in 2013… Continue reading
Less than a third of people with mortgages know what interest they pay
One in three mortgage holders in the UK have no idea what rate of interest they are paying, despite market speculation that an interest rate rise is on the horizon which could increase their repayments. The research from consumer organisation Which? Mortgage Advisers has found 32% of mortgage holders were unaware of the rate of interest on their mortgage with just 29% sure of their exact rate. Some 89%of home owners who knew their exact interest rate felt informed about the impact of a potential rate rise on their finances, yet this fell to only 58% for those who didn't know their mortgage rate. With widespread market and media speculation about a potential increase in interest rates, more and more mortgage lenders are offering fixed rate deals which enable consumers to take advantage of current low rates. Separate analysis by Which? Mortgage Advisers found a 55% increase in the number of fixed rate deals on the market over the past two years, with fixed rate deals now making up 77% of the products on the market. Seeking independent mortgage advice is crucial to finding the best deal for your individual circumstances and there could even be potential savings to be made. According to our survey, 34% of home owners are currently on a standard variable rate mortgage, the default mortgage rate once a fixed rate deal ends. The analysis shows that those people could be in line for a saving of up to £123 a month if they switched to a two year fixed rate deal. ‘With interest rates so low, we have seen a significant increase in the number of fixed rate mortgages available and a surge in households looking to take advantage of these deals ahead of any potential rise,’ said David Blake from Which? Mortgage Advisers. ‘That said, it's important to remember that fixed rate deals typically have higher rates than trackers, for the time being at least, but fixing now could potentially save you money in the long term. Now is the time to seek independent mortgage advice if you are concerned about the impact a rate rise might have on your finances,’ he added. Which? Mortgage Advisers top tips include knowing your interest rate so that you'll have a better idea of how much your repayments could change in the event of a change in the Bank of England base rate. Also, understanding your mortgage deal by making sure you know if you are on a fixed term deal, tracker, or standard variable rate as an increase in the base rate will mean different things for you depending on the type of deal you're on. People should check how long is left on their mortgage deal and if your mortgage is a fixed term deal, check when this rate will end as you will most likely default onto a standard variable rate, generally at a higher interest rate, once it does. It also recommends look at options… Continue reading
Average home buyer £4,500 better off in England and Wales since tax change
The average home buyer in England and Wales is £4,500 better off under the new progressive structure of stamp duty introduced a year ago but the Treasury is collecting a record amount of the tax. Since the change the typical home buyer has paid a total of £3,676 in stamp duty, based on the current average house price of £273,531. Under the previous flat structure, a buyer paying this price would have been subject to stamp duty payments of £8,205, a saving of £4,529. The research from the Halifax, a major UK lender, also shows that the ‘tipping point’ price is £938,000, when a buyer is worse off under the new stamp duty structure and sales above this level in the first six months of 2015 were 10% lower than in the first half of 2014. This decline was exactly in line with the market as a whole, with total sales also down by 10%. This is in contrast to both 2013 and 2014 when the prime end of the market was significantly outperforming the rest of the market. More significantly, sales above £1.5 million, which are more affected by the changes, have seen a bigger impact with a 20% decline, twice the market fall. The research also reveals that increased property prices and a higher number of residential property transactions boosted stamp duty revenues by 16% between 2013/2014 and 2014/2015 to a new record high of £7.5 billion. This comfortably exceeded the previous high of £6.68 billion at the peak of the last housing market boom in 2007/2008 and was more than 14 times as much as the £520 million raised by residential stamp duty 20 years ago in 1994/1995. London alone contributed 40% of all UK stamp duty revenues in 2014/2015 compared with 13% of all property transactions. London’s stamp duty share has risen from 28% in 2007/2008, with revenues raised in the capital increasing by 60% from £1.9 billion in 2007/2008 to £3 billion in 2014/2015. Some 80% of all home purchases in England and Wales between May 2015 and July 2015 were above the starting stamp duty threshold of £125,000 ranging from nearly all sales in London to 55-60% in northern England and Wales. This compares to 71% in 2006 when the starting threshold was initially raised to its current level. The starting threshold would now be £157,000, some £32,000 higher, if it were raised in line with house price inflation since 2006. Nationally, 32% of all purchases by first time buyers were below the £125,000 threshold at which stamp duty becomes payable during the three months from August 2015 to October 2015. ‘The changes made to stamp duty a year ago have been of significant benefit to many buyers. Only those purchasing the most expensive homes are worse off. There is some evidence that the top end of the market has been adversely affected by the changes with sales over £1.5 million falling by twice as much as the… Continue reading
