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UK estate agents see surge in home hunters as supply remains low
The number of house hunters recorded by estate agents in the UK is at the highest level in nearly 10 years as supply is at a 12 year low. The latest figures from the National Association of Estate Agents shows that in September its members reported an average of 405 house hunters per branch, the highest since October 2004 with each agent averaging 511 buyers. The September Housing Market report also reveals that 82% of homes sold for less than the original asking price, suggesting that sellers still need to be flexible when it comes to pricing. While supply of housing increased slightly from last month, from 49 houses available in August to 51 in September, this figure is seasonally low for September. The last time that supply levels were lower for September was in 2002, when 43 houses were available per NAEA member branch. The NAEA says that it is promising to see that first time buyers now account for 30% of all sales estate agents reported for the month of September, compared to 28% in August and 20% in July. ‘The report demonstrates to us that people are ready to get on or move up the housing ladder, but the supply levels do not match demand,’ said Mark Hayward, NAEA managing director. ‘September is a notoriously busy month in the housing market. The kids have gone back to school after the summer and people want to get sorted before Christmas, however it seems a lack of affordable and quality housing has been a problem this month. Now that the economy is picking up and Brits are in more comfortable financial situations, more people will want to buy and sell homes, but may be restricted,’ he explained. Despite high volumes of house hunters, the majority of houses are being sold for under the sellers’ original asking price. Only 4% of properties sold in September were sold for more than the original asking price, and a stark 82% were sold for less than asking price, some 16% more than in July, when this was last reported on. The report also shows that 70% of estate agents agreed that the impending interest rate rise set for 2015 is already effecting demand in the housing market, this is up by a quarter from September when only 39% thought that the rise was already effecting demand. ‘There’s still a visible gap in the number of house hunters, and the number of properties available and the impending base rate rise is likely to have an effect on this, with almost three quarters of agents reporting evidence of the rise affecting demand already,’ said Hayward. ‘All of our research does emphasise the need for the government to take action and ensure measures are in place for more homes to be built in order for supply to eventually meet the growing demand,’ he added. Continue reading
Falling buy to let mortgage costs benefiting UK landlords
UK landlords are benefitting from tumbling mortgage charges and longer fixed rate deals with fees falling for all except the highest LTV loans, new research shows. Short term fixes are now less prevalent as longer initial terms form a growing proportion of mortgages and almost one in five of all available buy to let mortgage products (19%) are now five year fixed rate deals, says the latest index from Mortgages for Business. It says that overall competition is driving buy to let lenders to cut their charges and fees as well as to offer longer term fixed rates. On average the effect of fees and charges on buy to let mortgages was to raise the overall cost for comparison by just 0.54% per annum in the third quarter of the year. This is significantly lower than the average of 0.67% extra in fees and charges seen at the start of 2013, and down from 0.58% in the second quarter of 2014. However, beneath this overall trend there is also a growing divide between fees for buy to let borrowers at different loan to value ratios. For example, charges for low LTV up to 65% of property value and medium LTV from 65% to 75% buy to let mortgages have fallen dramatically. By contrast, charges for high LTV at 80% and above loans have increased. In the first quarter of 2013 the effect of these, at 0.71%, was broadly in line with that for medium LTV loans. Yet since then charges have mounted, to add an additional 0.84% to the average cost of buy to let borrowing at higher LTVs in the third quarter of 2014. ‘Healthy competition is good news for landlords, who can now choose from a pool of in excess of 700 different buy to let mortgages,’ said David Whittaker, managing director of Mortgages for Business. ‘Meanwhile, the wider benefits of more buy to let funding are being felt by everyone in the private rented sector, including tenants who have seen a growing supply of homes to let this year. This is a vote of confidence in landlords, at a time when lenders remain under serious pressure to maintain the safest possible loan books,’ he explained. ‘Yet the details are even more encouraging. Prioritising middle and lower LTVs is prudent but the most encouraging signs are lenders offering landlords what they need. Longer term fixed rates are the best option for landlords looking to protect their future income and minimise any risk associated with interest rate rises, and there are now many more of these options available,’ he added. The index report also shows that five year deals now make up almost one in five fixed rate mortgages on the market, at 19%, up rapidly from 15% in the second quarter of this year. By contrast three year fixed rate deals have dropped from 19% to 17% of all products in the third quarter while two… Continue reading
Worrying number of home owners plan to use pension to pay off mortgage
More than half a million 40 to 70 year olds in England intend to use part or all of their pension to repay their mortgage, according to new research. While 58% take a more traditional approach to managing their mortgage by making monthly repayments until it is paid off and 22% making lump sum payments in addition to monthly contributions some have other ideas. One in 10 intend to use their tax free pension lump sum to repay the outstanding balance on their mortgage and 5% plan to use their pension to repay the outstanding balance on their mortgage. In addition, 7% claim to have savings or investments set aside to meet this cost which suggests that they may hold one of the estimated 2.2 million interest only mortgages outstanding on lenders books. The firm says that it is worrying that 6% plan to use an inheritance to repay their mortgage and 3% to take in a lodger to help them meet this cost, neither of which are guaranteed sources of finance. ‘It is worrying to see that over half a million people in England plan to use all or part of their pension to repay their mortgage. This suggests that the number of people who actually need to do this is likely to be far higher as unexpected events such as redundancy, illness or family financial emergencies cause issues,’ said Mark Stopard, head of product development at Partnership. ‘While it is natural for people to want to retire debt-free, the purpose of these savings is ideally to provide an income for their retirement which can last up to 30 years or more. Although the state pension will provide a very basic safety net, it is unlikely to be sufficient for people to have as comfortable a retirement as they might wish,’ he explained. ‘This research clearly highlights that people need to focus on repaying their mortgage as early as possible and avoid traps such as remortgaging for the full period each time they take out a new deal,’ he pointed out. ‘Even those who are currently retiring have options such as working longer, downsizing or taking out an equity release plan, all options that will help to keep their pension funds intact,’ he added. Continue reading
