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Poll suggests UK first time buyers see peer to peer lending as way to fund deposit
Over half of first time buyers in the UK expect to reduce the wait to own their home by at least six months by using peer to peer lending, it is claimed. A poll of customers by peer to peer lending service Zopa, found that two thirds aged 18 to 40 who don't own a home are using it to help raise a deposit and over half expect it to reduce the time it will take to reach buy a home. Some 34% of those surveyed said it will shave more than a year off the time until they can buy and a further 21% say it will reduce their waiting time by six months. The poll also found that 22% are hoping to buy in less than a year, whereas 47% hope to purchase a home between one and three years’ time. Of those looking to buy, over half are cutting back on clothes and other purchases and more than two out of three people are eating out less, going on fewer or cheaper holidays and choosing cheaper options for household essentials to boost their savings. In contrast, one in four people are making no lifestyle changes at all. Of those who weren’t saving for a deposit, 33.8% said it was because house prices are too high and almost a quarter said they have other savings priorities at present. The firm said it is alarmingly that over 40% of people are aiming to save a deposit of over £40,000, but this rises to 55% of people in London who are waiting to buy. This stands in stark contrast to those who brought 10 years ago, when only 2% of savers aimed for a deposit of £40,000 or above. The survey also found that 18% are receiving help from government schemes, such as Help to Buy but 55% expect to receive no financial assistance from their families in reaching their deposit target. For those first time buyers that have had financial assistance, the size of parental contributions is actually getting larger as deposit amounts increase. For those who brought their houses more than 10 years ago, only 8% of parental contributions were over £45,000. This percentage rises to 28% for people who brought less than a year ago. ‘Buying a home is a major milestone in many people’s lives and saving a deposit is getting harder each year as prices and the amount required increases,’ said Zopa’s executive chairman Giles Andrews. Continue reading
US home owners wary as housing market slows
Home owners in the United States are wary of where the housing market is going, while rising prices in some markets are driving renters away from home ownership aspirations, a new report has found. Overall, home owners are confident about the current state of the housing market, but they are less exuberant about future market performance, according to the mid-year results of the Zillow Housing Confidence Index (ZHCI). Millennials are ready to buy in slowing housing markets, but they are dialling back their plans to buy in red hot tech markets like Denver, Seattle, and San Francisco, the index report points out. Also, some 4.9 million renters say they plan to buy in the next year, down from 5.2 million in January, the survey of 10,000 renters and home owners also shows. That is down from 12.1% to 11.4% in the first six months of this year. A smaller percentage of those surveyed said it was a good time to buy. The percentage of those surveyed who believe people who have recently bought a home will be better off in 10 years fell from 61% to 59%, the data also shows. ‘The housing market is slowing down, and Americans' confidence in the future of the market is understandably fading a bit, too. Despite remaining quite confident overall, homeowners are less confident about the future than they are about the present,’ said Zillow chief economist Svenja Gudell. ‘Seeing still stronger than normal home value appreciation in markets like San Francisco and Seattle might remind them of the last housing bubble. But the good news is things are levelling off with no crash in sight. If incomes rise to keep up with home values people can count on home ownership in their future, even in hot markets,’ added Gudell. The report says that home value growth has slowed in almost all housing markets this year, giving homebuyers some breathing room. In those markets with marked slowdowns, many more buyers are looking to buy their first home. For example, 8% of Philadelphia renters said they planned to buy within a year in the January survey, when home values were rising at a 3.1%. In July, when Philadelphia home values were flat, 18% said they planned to buy within a year. And many of those new potential buyers are millennials. Just 1% of 18 to 34 year old Philadelphia renters surveyed in January planned to buy within a year, but that had increased to 23% in the July survey. The opposite occurred in markets where home value growth, despite having slowed overall, is still well above national norms. Here, renters are less optimistic about their buying prospects. In San Francisco some 18% of 18 to 34 year old renters planned to buy a home within a year when asked in January. At that point, San Francisco home values were rising at a 7.9% annual rate. In July, home values were up 11% year on year, and only 5%… Continue reading
UK lenders and brokers concerned about new European mortgage directive
Almost three quarters of mortgage brokers in the UK, some 74%, are worried about the impact of the incoming European Mortgage Credit Directive (MCD) on overall lending activity over the next year. A similar number of lenders, 71%, take the same view as MCD implementation approaches, with a six month window from 21st September to 21st March to adopt the new rules, according to new research from the Intermediary Mortgage Lenders Association (IMLA). Unlike last year’s Mortgage Market Review (MMR), many of the MCD changes are of a technical nature involving new approaches to disclosure and documentation rather than major changes to advice, affordability criteria or lending decisions for residential mortgage borrowers. Nevertheless, 40% of brokers believe a smooth implementation of the MCD will be more challenging for the industry as a whole than MMR, including 11% who believe it will be significantly more challenging. The majority of lenders, 71%, believe it will be at least as challenging for industry to implement MCD and this includes 21% who believe it is more of a challenge, although 28% feel it will be less challenging. The UK government has openly questioned the benefits of MCD to UK consumers beyond the high level of protection offered by the existing FCA regime, and its approach to the negotiation and implementation of the MCD has been to minimise the impact on the UK market as far as possible. And the IMLA research also shows industry remains sceptical about a number of incoming changes in the lead up to implementing the MCD. Just 5% of brokers felt the introduction of a second APR will benefit the UK mortgage market, while 70% disagreed, as did 86% of lenders. Similarly, just 9% of brokers feel that replacing the Key Facts Illustration document (KFI) with the European Standard Information Sheet (ESIS) is a beneficial move while 68% disagree. Lenders were again stronger in their opposition with 86% disagreeing that the switch from KFI to ESIS will benefit the market. The research also shows that broker sentiment about market conditions at the midway point of 2015 was broadly consistent with the start of the year, with 50% feeling conditions are improving, compared with 51% in January. This is slightly improved from July 2014 when 46% felt the same. The report notes that 67% of lenders feel conditions are currently improving, up from 53% at the turn of the year and just 44% last summer. IMLA’s research suggests ‘standard’ borrowers and first time buyers have both benefitted from improving access to mortgage finance as the market has adjusted to the MMR requirements. During the first half of 2014 some 34% of brokers had been unable to find a suitable product for at least one standard borrower, but just 25% have reported the same in the first half of 2015. Similarly, 28% had been unable to help at least one first time buyer enquiry in the first six months of last year, but just 20% had this… Continue reading
