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Mortgage approvals end 2015 on a strong footing, bank data shows
Approvals for home purchases in the UK increased towards the end of 2015 with December being a strong month, according to the latest figures from the Bank of England. The number of loan approvals for buying in December was 70,837 compared to an average of 69,462 over the previous six months while the number of approvals for remortgaging was 41,708, compared to the average of 39,540 over the previous six months But the next few months are likely to be very different, according to David Whittaker, managing director of Mortgages for Business. ‘The next wave of activity will be powered by landlords scrambling to complete transactions before they are hit with extra taxes. This is only just beginning,’ he said. ‘With 01 April marking the point at which Stamp Duty on buy to let properties bites, many investors have been rushing to get their mortgages completed and expand their portfolios before this date,’ he pointed out. ‘Expect this flurry of activity to continue into the first few months of 2016, as investors rush to apply for their buy to let mortgages and lenders do everything in their power to get the good applications completed before the April crunch point,’ he added. Peter Williams, executive director of Intermediary Mortgage Lenders Association, pointed out that December was the busiest month for remortgaging in over two years, with activity growing more than twice as fast as overall approvals. ‘The continued appetite for remortgaging was likely to be a sign of home owners eager to capitalise on market competition and lock into lower rates, especially with US raising interest rates for the time in nine years and expectations the UK would follow suit in the not too distant future,’ he explained. After the Autumn Statement extensions to Help to Buy, and the rock bottom base rate lasting out the year, first time buyers were feeling decisive, and this was mirrored by a clear upswing in house purchase approvals from November to December, according to Peter Rollings, chief executive officer of Marsh & Parsons. ‘This energy has definitely been carried over into 2016, and January has already seen an impressive influx of motivated buyers, eager to progress up the property ladder,’ he explained, adding that 2015 was also the year of remortgaging for many existing home owners and this momentum is showing no signs of dissipating while cheaper fixed rate mortgages remain available. ‘But in the coming months we can expect strong buy to let lending, as the April introduction of higher stamp duty for second homes gives a new sense of urgency for those looking to invest in property or expand their existing portfolio,’ he added. Continue reading
UK first time buyer market saw seasonal slowdown at end of 2015
First time buyer activity in the UK saw a seasonal slowdown at the end of 2015 despite price for this type of buyer falling, the latest property index shows. First time buyer numbers fell in December by 1,300 on a monthly basis, down 4.7%, as the traditional slowdown hit the UK property market but over the course of 2015, the longer term outlook remains healthy for first time buyers, with numbers up by 1.1% between December 2014 and December 2015. The data from the Your Move and Reed Rains first time buyer tracker report also shows that first time buyers find cheaper homes with smaller deposits and secure more affordable mortgages. Also, the average mortgage rate remains at a rock bottom level, with lenders buoyed by recent news that the Bank of England does not intend to raise interest rates for the foreseeable future. According to Adrian Gill, director of estate agents Your Move and Reeds Rains, first time buyers have been buoyed by a positive economic climate and a range of Government incentives such as the reduction of Stamp Duty on lower priced properties, designed to lessen at least the immediate costs of home ownership. ‘They increasingly came into their stride as 2015 has progressed. Some of the credit for this revival in activity should also go to first time buyers themselves. Over the course of the year they have toughened up their act and sought to get the best property they can at the best price and it’s a skill that will serve this group well as they head into 2016,’ said Gill. The cost of an average first time buyer home fell on a monthly basis in December from £153,275 to £152,470, a drop of 0.5%. However, over the course of the year, the average purchase price rose by 3.8%, representing an increase of £5,518 between December 2014 and December 2015. In addition, December saw a dip in the costs of getting on the property ladder. The average deposit put down by a first time buyer in December fell by 0.5% month on month to £25,292. This is indicative of a broader trend of deposit costs falling over the course of the year, with the average cost of a deposit dropping by £2,151 or 7.8% between December 2014 and December 2015. The decline in the burden of the average deposit on a first time buyer is reflected by the fact the proportion of an average first-time buyer’s income that is eaten up by the deposit fell from 64.6% in November to 64.3% in December. Between December 2014 and December 2015 the proportion fell by 6.8%. First time buyers in December also benefitted from a reduction in the regular burden placed on their finances by mortgage repayments. In November 19.3% of a first time buyer’s average income was consumed by monthly mortgage payments, by December this had fallen to 19%, the second lowest figure on record. Meanwhile, the average loan to… Continue reading
US pending homes sales more or less unchanged in December
Pending home sales in the United States were mostly unchanged in December, but inched forward slightly, fuelled by a large increase in the Northeast that outpaced declines in the other three major regions. The latest index from the National Association of Realtors increase by just 0.1% month on month and is now 4.2% above December 2014, the 16th month in a row that it has risen. ‘Warmer than average weather and more favourable inventory conditions compared to other parts of the country encouraged more households in the North east to make the decision to buy last month,’ said Lawrence Yun, NAR chief economist. ‘Overall, while sustained job creation is spurring more activity compared to a year ago, the ability to find available homes in affordable price ranges is difficult for buyers in many job creating areas. With home building still grossly inadequate, steady price appreciation and tight supply conditions aren't going away any time soon,’ he added. According to Yun, although healthy labour market conditions will persuade more households to buy, it's possible overall demand could be somewhat curtailed in coming months. The stock market's sizeable losses since the start of the year and the effect slowing manufacturing activity is having in some areas, especially in the energy sector, could cause some to hold off on buying. ‘The silver lining from the market turmoil in recent weeks is the fact that mortgage rates have slightly declined. Buyers looking to close on a home before the spring buying season begins may be rewarded with a mortgage rate at or below 4%,’ Yun explained. Existing homes sales this year are forecast to be around 5.34 million, an increase of 1.5% from 2015. The national median existing home price for all of this year is expected to increase between 4% and 5%, down from the 6.8% in 2015. Rents, which have far outpaced wages in recent years, are expected to slightly slow to 3.3% growth in 2016 from 3.6% a year ago. Multifamily housing starts are expected to reach 420,000 units this year, the highest level since 1987. A breakdown of the data shows that the data increased 6.1% in the North east in December, and is now 15.3% above a year ago. In the Midwest the index decreased 1.1% to 103.6 in December, but is still 3.6% above December 2014. Pending home sales in the South declined 0.5% to an index of 119.3 in December but are 1% higher than last December. The index in the West decreased 2.1% in December to 97.5, but remains 3.4% above a year ago. Continue reading
