Tag Archives: housing
Mortgage approvals in UK rise for first time in six months
Residential mortgage approvals in the UK rose in December for the first time since June, suggesting that a steady slowdown in the number of loans for home purchases could be bottoming out. Data from the Bank of England shows mortgage approvals for house purchases numbered 60,275 in the final month of 2014, up from 58,956 in November, but overall the number of approvals fell in most months of the year. Experts point to tighter rules on mortgage lending requiring banks and building societies to make more rigorous checks on whether borrowers can afford their loans as being behind the change. Before the 2008 financial crisis, monthly mortgage approvals in the UK ran at around 90,000 and the data also shows, and net mortgage lending, which lags approvals, rose by £1.612 billion, slowing from November and below expectations. ‘The introduction of more restrictive mortgage regulation in the autumn took the breath out of lending for a while,’ said Adrian Gill, director of Your Move and Reeds Rains estate agents, adding that lending is climbing again. ‘As the market adjusts to these new measures this stranglehold has been loosened. There was an encouraging December uptick in mortgage approvals, as borrowing is once more starting to build up speed,’ he explained. He pointed out that the government’s flagship Help to Buy is a vital foothold for first time buyers looking for a leg-up onto the housing ladder and is also crucially going some way to iron out significant regional discrepancies in the housing recovery. ‘The scheme is leaving the biggest imprint on places outside of London and the South East, where property prices are still lower and growth is yet to seriously hit the ground running,’ he added. ‘With the combined support of Help to Buy, higher LTV lending, low mortgage rates and reduced stamp duty costs, the path was clear for many smart first time buyers to make tracks and find fantastic deals on homes,’ he concluded. Meanwhile, new research suggests that some 5.2 million UK mortgage holders are ill prepared for unexpected illness in terms of making mortgage payments. According to the survey from mutual life insurance company Royal London some 52% of UK mortgage holders who earn an income don’t have a plan in place to cover repayments if they fall too ill to earn for three months or more. The research also found that although 34% of those without a plan in place to cover repayments have thought about it, some 18%, or 1.8 million people, admitted they have not given it any thought. Royal London also found evidence that many mortgage-holders who earn an income, haven’t considered how long they could cope financially if they became too ill to earn with 50% estimating it would be six months or less, and 26% not knowing how long they could cope. ‘Our research highlights how many UK mortgage holders are in a vulnerable position unsure how they’d cope financially and who they… Continue reading
UK buyers less concerned about interest rates, survey suggests
The drop in inflation in the UK to 0.5% in December 2014 has corresponded with a steep drop in the proportion of consumers viewing interest rates as one of the main barriers to buying a property, it is claimed. According to the latest Halifax Housing Market Confidence Tracker index over the last 12 months, the proportion of consumers citing concern about rises in interest rates as a barrier to buying property rise steadily from 14% in the fourth quarter of 2013 to 19% in the third quarter of 2014, the highest since the Tracker began at 22%. However, this fell back to 13% in the fourth quarter of 2014, the lowest level in over a year, at the same time as inflation began to fall sharply in the last few months of the year. ‘Speculation over a potential rate rise was high on the news agenda at certain times in 2014 and the Housing Market Confidence Tracker showed consumers becoming increasingly anxious about interest rate rises,’ said Martin Ellis, housing economist at the Halifax. ‘But with inflation falling sharply in the last few months it’s taken away some of risk of an imminent rise and worries have fallen accordingly. While a rate rise will happen eventually, lenders take this into account as part of our affordability checks in the mortgage application process. Going forward the key factor in how they adjust to any changes in rates will be the way in which borrowers manage their disposable income,’ he explained. It is not only interest rates that consumers perceive as being a barrier to buying a property. The largest single barrier is perceived to be the ability to raise a deposit, cited by 61% in the fourth quarter of 2014. However, in the last few years there have been a number of schemes launched specifically aimed at supporting borrowers with smaller deposits such as the Help to Buy scheme, which has loaned buyers deposits and guaranteed loans. ‘Mortgage affordability has improved significantly in recent years with record low mortgage rates a major contributor behind this improvement. Figures from the 2014 Halifax First Time Buyer annual review show that the number of first time buyers is at its highest level since 2007 and last year the number of first-time buyers increased by 22%. This was the third successive annual increase with a 50% rise in the past two years,’ Ellis pointed out. Continue reading
Gross mortgage lending in UK stalled in December, latest CML figures show
Gross mortgage lending in the UK reached £16.5 billion in December, unchanged month on month compared to November but down 1% compared to December 2013, the latest data shows. The figures from the Council of Mortgage Lenders also shows that the gross lending estimate for the fourth quarter of 2014 is £51.6 billion, down 8% on quarter three but up 1% on the fourth quarter of 2013. Overall, for 2014 the gross lending estimate is £205.6 billion, up 17% on 2013's £176 billion gross lending figure. ‘Housing market activity has been cooling and house price growth slowing in recent months, but 2014 was still the strongest year for mortgage lending since 2008,’ said CML chief economist Bob Pannell. ‘First time buyers were a key driver, helped by government initiatives such as Help to Buy. As a result, the number of first time buyers topped the 300,000 mark. While a far cry from the half million that we might regard as normal, this was the highest number of first time buyers since 2007,’ he pointed out. ‘Although lending remained muted in December, the previous monthly pace of decline in approvals appeared to moderate. So, alongside the big picture of a softer market, we are beginning to detect signs that underlying market conditions may be stabilising,’ he added. Adrian Gill, director of Your Move and Reeds Rains estate agents, said that while many places across the country have witnessed a recent lull in house price growth, the underlying sentiment in the market remains strong. ‘It will continue to carry the housing recovery further forwards, with unprecedented fundamentals for growth this year and 2014 will stand out as the best year for new buyers since the recession,’ he explained. ‘Towards the latter end of the year, demand was slightly spooked by the introduction of loan to income caps, but stamp duty reform provided some new comfort for prospective buyers. Along with the continued support of the Help to Buy scheme, aspiring home owners can more easily stomach the upfront costs of buying a home and save up for the necessary deposit,’ he added. Continue reading
