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Mortgage rate savings have been significant in UK over last two years
Fixed rate mortgages in the UK fell to their lowest levels in 2015, whilst the standard variable rate remained static, meaning the potential savings for borrowers have increased. Indeed potential savings have improved significantly by 50% over the course of the past two years, according to the latest research from Halifax. The average interest rate on a new fixed rate mortgage fell a further 0.59over the past 12 months, whilst there was no change in the standard variable rate over the same period. This means that the average fixed rate now stands at 2.66% compared with the average standard variable rate of 4.49%, with the gap between the two widening by 1.81 percentage points since August 2012. As a result the amount homeowners could be saving by switching to a fixed rate deal has increased by 50% in the past two years. In November 2013, the average monthly payment of a home owner who took out a two year fixed rate on a £100,000 mortgage would have been £485. At the same time, the payment on a standard variable rate mortgage would have been £551, a monthly saving of £66. According to the research a borrower taking out a fixed rate in November 2015 would be paying £457 a month on a £100,000 loan compared with £555 on the average standard variable rate, saving of £99 a month and 50% higher than two years’ earlier. ‘With the base rate remaining at record low levels for another year, fixed rate mortgages fell further in 2015. Over the past three years average rates have fallen sharply, significantly widening the gap between them and standard variable rates. As a result, borrowers have been able to make considerable savings,’ said Craig McKinlay, mortgages director at the Halifax. ‘Whilst remortgaging activity has picked up in the last year, this is only in line with new loans. As a result, remortgage activity’s share of all lending has remained relatively subdued, especially when compared to its strength in 2008,’ he explained. ‘Without the concern of a base rate rise in the immediate future it seems borrowers’ appetite to remortgage has been dulled, meaning that some could be missing out on significant savings,’ he added. The research also shows that remortgage activity remains well below the 2008 peak. The widening gap between fixed rates and standard variable rates appears to have helped improve remortgaging’s share of all new mortgage lending from 29% in August 2012 to 32% in November 2015. However, this growth is far slower than that seen in the gap between fixed and variable rates, and demonstrates that remortgaging remains considerably below the peaks of 50% that it reached in 2008. Continue reading
Research shows hundreds of thousands of UK landlords are not protecting tenant deposits
Some 284,000 residential landlords in the UK have failed to protect renters’ deposits despite the fact that it is a legal requirement to do so, new research has found. A report from the Centre for Economics and Business Research (Cebr) for financial comparison website money.co.uk says that these landlords are sitting on £514 million of deposits that should be protected by an official third party service. With 4.6 million households privately rented and the average protected deposit at £1,040, the total value of deposits paid by tenants and placed in protection schemes by landlords has now reached £3.2 billion, the report claims. Despite the risk of fines for landlords who fail to protect their tenants’ deposits, 15% are still failing to do so running the risk of a £2,400 penalty and the report adds that landlords that flout the rules could together be earning up to £8.5 million a year in interest on unprotected money, while leaving themselves and their tenants with no third party protection when their agreement comes to an end. The government imposed deposit protection schemes to stop landlords unfairly taking money out of deposits for things such as wear and tear or pre-existing damage when tenants move on. With this protection in place, an alternative dispute resolution scheme will step in and assess the case and make sure any money held back by the landlord is a fair deal for both the tenant and the landlord. However, compliance with these rules are not being monitored effectively and the onus to report and take action against the landlord lies with the tenant, the report also explains. ‘While many landlords are doing the right thing and protecting deposits in one of the official government backed schemes, a worrying amount of money is falling through the cracks and far too many tenants are being left vulnerable,’ said Hannah Maundrell, editor in chief of money.co.uk. ‘It’s not right that tenants are left responsible for taking their landlord to court if their deposit hasn’t been protected. The government needs to step in and take decisive action. Introducing a compulsory register listing every landlord that rents out property in England and Wales would be a start. This works for Scotland and Northern Ireland and it seems crazy this hasn’t been brought in across the UK,’ she explained. ‘Add in tenants’ ratings and reviews to this too and you have both the beginnings of a solution that helps renters make an informed choice about who they’re handing over buckets of cash to; and the foundation for policing landlords that are currently going unchecked,’ she added. Maundrell also pointed out that it is not just renters that stand to benefit from deposits being protected. ‘Landlords need a safeguard against renters that misbehave too. I can’t understand why any landlord wouldn’t do this. It doesn’t have to cost anything to place money with a tenancy deposit scheme and could save so much hassle later on,’ she added. Continue reading
Rental prices up year on year in 11 out of 12 UK regions, latest index shows
Residential rents prices have increased in 11 out of 12 regions in the UK with the South East of England and the East Midlands showing the highest annual rent increases. Overall the average rent in the UK, excluding Greater London, is now £740 per month while in the capital city it is £1,510 per month, according to the latest rental index from HomeLet. Only the North West of England has seen rental prices drop with a fall of 3.4% from £646 per month to £624 per month. However, rent prices for new tenancies in Greater London are rising at the slowest rate for almost two years. The January index data shows Greater London rent prices are 6.2% higher for the three months to January 2016 compared to the same period in 2015, the slowest rate of growth seen in Greater London, the slowest since March 2014. By comparison, rent prices in other regions continue to rise steadily with the South East of England and the East Midlands seeing the highest rent price rises in the three months to January 2016, at 7.2% and 6.8% respectively. Monthly data gives a different picture. Rent prices in the UK, excluding Greater London, were 0.2% higher in the three months to January 2016 than in the three months to December 2015. In Greater London, rent prices have fallen by 0.9% in the three months to January 2016, compared to the previous month. Overall, six out of 12 UK regions have seen rent prices rise in the three months to January 2016 compared to last month, while six have seen prices fall. ‘It’s notable that there has been a further fall in the rate at which average rents in the Greater London area are rising. In recent years, the capital has seen much faster rates of increase than the rest of the country, but it may be that an affordability ceiling has now been reached in London and that rents will now track other parts of the UK more closely,’ said Martin Totty, chief executive officer of the firm’s parent company Barbon Insurance Group. ‘The fact that UK wide average rents in the private rented sector continue to show sustained upwards growth reflects there is still strong demand for rental properties, driven mainly by the impact of the long term structural imbalance in supply and demand of property,’ he pointed out. ‘Landlords achieving higher average rents over time also suggests that tenants starting a new tenancy are proving they can afford higher average rents. With demand outstripping supply, some would-be tenants may be able to outbid rivals for properties, which could drive higher rents,’ he added. Continue reading
