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Over half a million have taken up UK flagship home buying savings product
Over 500,000 people have opened Help to Buy ISAs, which offer government bonuses of up to £3000, as they save towards buying a home, the latest data shows. Figures also show that since the launch of the Help to Buy equity loan, mortgage guarantee and ISA schemes over 160,000 completions under the schemes have taken place, with 80% having been made by first time buyers. The average house price being purchased with support from the Help to Buy schemes is £189,795, significantly below the national average and 94% of Help to Buy completions have taken place outside London. The figures also show that over half of Help to Buy completions have been for new build homes. The Help to Buy schemes continue to benefit first time buyers overwhelmingly, with 129,000 households buying their first home thanks to the scheme. This is 80% of overall Help to Buy buyers, demonstrating that the scheme is successfully helping people get on the housing ladder. The highest number of homes completed through both the Help to Buy: ISA and mortgage guarantee schemes has been in the North West region. The equity loan, a scheme for new build properties, is particularly popular in the South East region. First time buyers and second steppers have been supported further by the London Help to Buy scheme launched in February 2016. The scheme supports purchases of new build homes in the capital by offering a 5% deposit backed by an equity loan of up to 40% from the government. There were 256 completions in London between 01 February 2016 and 31 March 2016 using the equity loan. Help to Buy was designed to support responsible lending and the figures show that the average house price for the three schemes combined is £189,795, significantly below the national average house price of £292,000. The average house price-to-income multiple under the mortgage guarantee scheme is capped at a four and half times ratio to ensure responsible lending. More than 1,000 households a month on average have purchased their own home through Right to Buy since the scheme was reinvigorated in 2012, over 52,500 households in total. The latest quarterly figures show more than 3,250 people bought under the Right to Buy scheme between January and March 2016. In total, more than 309,000 households have now been helped to purchase a home through government backed schemes since 2010, that’s 141 new home owners a day and around 4,350 a month. ‘It’s hugely encouraging that over 500,000 people have already opened Help to Buy ISAs. The Government’s Help to Buy schemes offer responsible lending, and the vast majority of those who are benefiting are first time buyers,’ said Chancellor of the Exchequer George Osborne. Anyone who aspires to own their own home should have the opportunity to do so, wherever they are in the country, according to Communities Secretary Greg Clark. ‘Today's figures clearly show how we’re helping people realise home ownership dream, with… Continue reading
First time buyers paid more for a home in England and Wales in May
First time buyers in England and Wales paid an average of £173,282 to get on the housing ladder in May, a record high that fuelled by intense competition for properties. This was despite some uncertainty creeping into the housing market ahead of the referendum on the future of the UK in the European Union, according to the latest first time buyer tracker index from real estate agents Your Move and Reeds Rains. But transactions in the first time buyer sector were down by 0.8% compared to the previous month at 24,900 completed sales in May compared to 25,100 in April. However, the report points out that without a pre-referendum supply shortfall first time buyer numbers would have been even higher. The amount paid by first time buyers was up 2.7% from £168,656 in April and 15.8% more than the average of £149,645 seen in May 2015. First time buyer house prices have now increased by more than £23,000 in the last 12 months and current average prices paid are the highest on record. Across the market as a whole, house prices dipped in May in anticipation of the EU referendum on 23 June, with the latest Your Move House Price Index showing house prices in England and Wales fell 0.4% month on month in May. But the bottom of the market has defied this trend fuelled by unwavering first time buyer demand. The overarching trend remains strong, with first time buyer numbers some 13.2% higher than the 22,000 seen in February and 5.1% higher than a year ago. The tracker report also shows that the average mortgage rate for first time buyers slipped further in May to 3.08%, a new record low, following a fall of 0.37 percentage points over the past year. And while there is a climbing cost of purchasing a home, these cheaper rates mean mortgage repayments have not increased significantly as a proportion of first time buyer’s income. As of May, mortgage repayments accounted for 21.1% of income, just 1.7% more than a year ago. Meanwhile, the average first time buyer deposit currently sits at £27,669, up 12.8% or £3,146 from £24,523 a year ago. When compared to the average first time buyer income of £39,651, this represents an extra 29 days’ worth of salary. As a proportion of income, the average deposit has climbed 6.1% compared to May 2015. Continue reading
UK remortgage figures up in May, but uncertainty could now creep in
Last month was the best May for remortgaging since 2008 but uncertainty and volatility are now expected following the decision by the UK to leave the European Union. Remortgaging reached £5 billion in May and the number of loans reached 32,334, higher than every May since 2008, when 77,100 loans were approved while the average amount of equity withdrawn reached £33,600, the highest amount this year and 43% up from the previous month. However, despite record low interest rates, borrowers felt the pinch due to falling incomes, according to the research from LMS. Remortgage lending was up by 26% compared to May of last year but was down by 16% from April, which was an exceptional month for remortgaging. The number of remortgage loans also decreased month on month by 7% from 34,800 in April to 32,334 in May but this is 31% more than May 2015 when 24,700 borrowers remortgaged. The average amount of equity withdrawn per customer from remortgaging activity has risen by 43% month on month, from £23,479 in April to £33,691 in May. The average amount of equity withdrawn is also up by a quarter in comparison to May last year when equity withdrawn stood at £26,863. The total amount of equity withdrawn rose by 33% over April from £817 million to £1089 million in May, some 64% more year on year from the £664 million recorded in May 2015. This is also the highest amount of total equity withdrawn since May 2008, back when remortgagors withdrew almost £1.21 billion. Despite being the lowest interest rate on record, however, average household income fell from £50,000 in March to £44,898 in April. A drop of 10%. The household income recorded in April 2016 is also 1% lower than in April 2015, when income was recorded at £45,365. ‘Remortgaging witnessed its best month of May since 2008, although the numbers are slightly down following a rush to remortgage in April. The favourable mortgage market, with eagerly competitive lenders, record low rates and rising house prices provided the ideal background remortgaging to continue its year on year surge,’ said Andy Knee, chief executive of LMS. ‘We will have to wait and see what the impact of June’s Brexit decision on the housing and mortgage markets will be in the short and medium term. There will be some uncertainty and volatility to cope with as everyone absorbs the news and this is likely to put a dampener on the housing market at least until the autumn,’ he pointed out. ‘However, interest rates remain at historically low levels and for those with a mortgage now is a great time to take out a fixed rate and stabilise their financial outgoings. Lenders may well come under pressure and their appetites for new business may shrink in the short term. If they do, the range of excellent rates available today might not be around… Continue reading
