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UK sees sharp expected drop in home lending in April
Lending for home purchases fell by 40% in April compared with the previous month but experts point out this was a blip due to an unusually high level of borrowing in March ahead of stamp duty change. Home owners borrowed £8.1 billion, down 4% compared to a year ago and took out 47,300 loans, down 31% on March and 5% on April 2015, according to the latest figures from the Council of Mortgage Lenders. First time buyers borrowed £3.9 billion, down 11% on March but up 15% on April last year. This equated to 25,100 loans, down 9% month on month but up 7% year on year. Home movers borrowed £4.3 billion, down 53% on March and 14% compared to a year ago. This represented 22,200 loans, down 46% month on month and 15% on April 2015. Remortgage activity totalled £6 billion, up 25% on March and 40% compared to a year ago. This came to 34,800 loans, up 23% month on month and 30% compared to a year ago. Landlords borrowed £2.5 billion, down 65% month on month and 7% year on year. This came to 16,100 loans in total, down 64% compared to March and down 10% compared to April 2015. Paul Smee, director general of the CML, pointed out that it was not a surprise that lending eased back following the significant rises in activity in March as borrowers looked to beat the second home property stamp duty deadline. ‘We expect the market to take several months to return to its previous levels after the lending surge,’ he added. According to Andy Knee, chief executive of LMS, remortgaging is driving growth in the home loan market. He pointed out that not only were the number of remortgage loans up by almost a third from the year before but it was the greatest number of people remortgaging since July 2009. ‘It’s great to see home owners taking advantage of the favourable environment for remortgaging. Record low interest rates have improved affordability and home owners are sitting on huge amounts of housing equity that they may have been wary of capitalising on previously. The Government is also consulting on seven day switching for faster transactions, the ease of which could drive the incentive for borrowers to revisit their mortgage faster,’ he pointed out. He also pointed out that with prices continuing to rise first time buyers still remain disadvantaged. ‘There are signs of encouragement in the first time buyer market, such as a greater range of high loan-to-value products, but we’ll have to wait patiently for the year to unfold to be able to gauge the impact of this on the market,’ he added. However, Patrick Bamford, business development director for AmTrust Mortgage Insurance, believes that continued low interest rates and a plethora of products mean mortgages are getting cheaper for first time buyers who are spending less of their income servicing their debt. He explained that there was… Continue reading
Lack of supply and cheap mortgages continue to fuel price growth in the UK
Property prices continue to rise in most regions in the UK with growth driven by stock scarcity and cheap mortgages, according to the latest asking price index. Prices in Greater London and Wales dipped 0.4% and in the North East they were unchanged while the East of England led growth with a rise of 1.6% month on month coming on top of a 2% rise the previous month. With prices rising in all mainland UK regions, except Wales and Greater London, overall the mix adjusted average asking price is up a further 0.4% in June, the home.co.uk index shows. At the same time supply has fallen 7% year on year since last month. Only two regions showed small year on year rises, up 2% in Greater London and just 1% in the South East. But according to Doug Shephard, the firm’s director, the main indicators show that the property market is in the best shape it has been since the financial crisis. ‘The slowdown in London may be regarded as a return to a more sustainable market following the frenetic activity observed during 2013/2015,’ he said. ‘Moreover, several regional markets that were left behind in the wake of the Greater London surge are now showing significant activity and price growth. Lack of supply remains a fundamental driver in the current market and the total stock of property for sale continues to be historically very low,’ he explained. He pointed out that the acute supply shortage in the East of England has driven prices ever skyward, up 13.9% since June 2015, and this region is now outpacing London and the South East by a considerable margin in terms of home price appreciation. ‘We anticipate that prices will soon surge in the East and West Midlands in a similar fashion over the next 12 months as the supply of homes for sale has dropped by 13% and 14% respectively year on year,’ Shephard said. He believes that a slower London property market has prompted more modest asking prices. In fact, the mix-adjusted average dipped this month in response to rising marketing times and modest rises in supply and affordability look set to constrain prices going forward. Shephard also pointed out that due to improvements in mean marketing times, the Welsh property market is now the second slowest region, ahead of the North East. ‘Should this trend continue, we may well see prices there rise by more than the mere 1.2% registered over the last year,’ he added. Overall, the current mix-adjusted average asking price for England and Wales is now 6.8% higher than it was in June 2015 and Shephard predicts that this upward trend will continue at least into 2017. A breakdown of the figures shows that in Scotland the average asking price is now £179,131, up 1.1% month on month and up 6.7% year on year, while in Wales it is £184,858, a month on month fall of 0.4% but a year on… Continue reading
Tax change boosts home sales in Scotland
Property tax change had boosted Scottish home sales with a rise in transactions of 11% year on year but prices are down 7.8% compared to 12 months ago, the latest index shows. The index report from estate agents Your Move suggests that prices are down due to a lack of higher value homes on the market with the average house price now £170,667. Prices have increased in Edinburgh and Clackmannanshire but have fallen in the majority of areas throughout Scotland. The index also shows that month on month prices are unchanged despite the new 3% surcharge on additional home sales. ‘After a year of the Land and Buildings Transaction Tax (LBTT), it’s now possible to see its impact across the Scottish housing market. By cutting the cost of purchasing cheaper homes, LBTT has led to an 11% increase in sales over the last year,’ said Christine Campbell, Your Move managing director in Scotland. She pointed out that with 104,344 home sales in the last 12 months, the market has outdone the previous year’s 93,601 sales. ‘These figures confirm that lower purchase taxes for property can significantly boost activity in the housing market, while also making it more affordable for first time buyers to get a foot on the ladder,’ Campbell explained. Indeed, she believes that the Scottish Government should consider lifting the LBTT bands higher, if they want to build on the foundations of this policy, in order to support Scotland’s fragile property and construction sector. She also pointed out that the drop in property values was caused by a spike in high value home sales last year, before the LBTT was introduced, but today’s market hasn’t regained those losses yet. ‘The facts show that since the introduction of LBTT, growth in house prices has been subdued. The average property value in Scotland has only grown 1.74% in the last six months, compared to 3.19% for England and Wales over the same period,’ Campbell explained. ‘The tax has particularly hit homes at the top of the market, as these properties have become more expensive to buy after the introduction of LBTT. So while there has been an upswing in sales, it has come at a cost for some,’ she added. And she said that while sales in March were almost double those in February, sales in April are 66% down on the previous month. However, home sales for the first four months of the year are still well ahead on the same point in 2015, with 4,751 additional property purchases so far in 2016. However, when you look at the local picture, the negative effects of the new surcharge are more obvious, as average house prices have dropped in 20 of Scotland’s 32 local authority areas from the previous month. Moray has felt the worst of the tax hike in April, with property values in the area declining by 4.6% month on month. Edinburgh has seen house prices rise by… Continue reading
