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Easy mortgage access for home buyers in the US tightens
Access to mortgage credit in the United States tightened in the first quarter of 2015, marking a pause in easy accessibility for buyers. It had been getting progressively easier to obtain a mortgage since 2012, but the first several months of this year marked a change, according to according to the latest Zillow Mortgage Access Index (ZMAI). Mortgage credit availability is almost unchanged from a year ago, meaning despite fluctuations from quarter to quarter, there has been little progress toward making mortgages easier to obtain over the last year. In the long term, experts expect mortgage access to continue improving. In a survey earlier this summer of more than 100 economists and housing experts, more than 60% said they expect mortgage regulations to loosen further, with many expressing concern the market will become too lax over the next year. A high number in the Zillow Mortgage Access Index means credit is easier to obtain, while a lower number means credit is tighter. Mortgage credit was easiest to obtain in July 2004, when the ZMAI reached 136.4. But availability tightened over the next few years. In May 2007, both the housing and mortgage availability began a multi year plunge, leaving home values down more than 22% and credit the tightest in recent history. Mortgages were the toughest to obtain in September 2010, when the ZMAI was at 11.8. Today, access to mortgage credit has improved significantly, and is at 65, more than two thirds of the way back to 2002 pre-crisis levels. 'Recent market volatility is causing some lenders to be more cautious in their underwriting. Tighter mortgage access will make it harder for people with low credit scores to get a home loan, and even people who can get approved for a mortgage will have fewer options in terms of available mortgage products,' said Zillow chief economist Svenja Gudell. Continue reading
Latest Help to Buy figures reveals success of flagship UK govt scheme
The UK government's flagship Help to Buy scheme has helped nearly 120,000 people achieve their aspiration of buying a new home since it was created, the latest figures reveal. Since the launch of the Help to Buy equity loan and mortgage guarantee schemes some 80% of scheme completions have been made by first time buyers, with more expected when the government’s Help to Buy ISA launches in December. The data also shows that the average house price under the scheme was £186,000, significantly below the national average and over 110,000 people have bought a home through the scheme with 95% sales outside of London and half for new build homes. This counters fears that the scheme might be loaded against first time buyers and especially those seeking to buy homes outside of the capital city. Over 90,000 have been first time buyers. Together with the government’s Help to Buy: NewBuy scheme, which offers 95% mortgages for those buying new build properties, the number of new home owners has reached over 118,000. Help to Buy is also ensuring the long-term health of the housing market by increasing housing supply, stimulating home building. Half of the homes bought through Help to Buy are new-build properties, helping to contribute to the 36% rise in private house building since the launch of Help to Buy. First time buyers will have a further boost from the Help to Buy ISA, which banks and building societies across the UK will offer from 01 December. Under this scheme, first time buyers can save up to £200 a month towards their first home and the government will boost their savings by 25%, or £50 for every £200, up to a £3,000 bonus. Six major lenders have already signed up to offer Help to Buy: ISAs. These lenders are Barclays, Lloyds Bank, Nationwide, Natwest, Santander and Virgin Money. 'This government is committed to helping people achieve the aspiration of buying their own home, and our Help to Buy schemes have now helped nearly 120,000 working people across the UK do just that,' said Chancellor of the Exchequer George Osborne. 'The stronger economy and financial system means we expect banks to start to exit our Help to Buy Mortgage scheme, and it was introduced in times of financial distress and will come to an end next year in any case,' he pointed out. 'The Help to Buy shared equity scheme goes from strength to strength and our new Help to Buy ISA we’re launching in December will provide generous support to those saving for their first home by providing a government boost on their deposit,' he added. Communities Secretary Greg Clark said it has also helped the construction sector with private house building up by more than a third since the launch of the scheme. Indeed, Home Builders Federation executive chairman Stewart Baseley, said Help to Buy continues to drive demand for new build homes. 'Its success is allowing builders to increase the number of homes… Continue reading
Research suggests potential buyers are not savvy about UK mortgage rules
Two thirds of potential house buyers in the UK do not understand the new mortgage rules which were introduced last year, new research has found. Some 31% of people who plan to buy a property within the next two years are unaware that mortgage rules were overhauled more than a year ago and a further 35% did know that the regulations had changed, the study by lender and broker Ocean Finance shows. In April 2014, the biggest piece of mortgage regulation in a decade came into force. The changes, brought in by the Financial Conduct Authority, mean lenders must take additional steps to ensure borrowers only get a mortgage they can afford. In practice, the new mortgage rules mean that borrowers face increased scrutiny from lenders about their incomes and their expenditure including spending on things such as childcare, holidays and entertainment. Yet 70% of those questioned were unaware that lenders are required to look closely at their spending. Consequently, a quarter said they haven’t changed their spending habits to help them qualify for a mortgage. Of those who do know that lenders are now required to examine spending, more than a fifth have reduced their spending on treats and have stopped contributing to life assurance and pensions to keep a greater proportion of their income in their bank accounts. The research also found that just 24% of aspiring home buyers questioned were aware that the new rules also test their ability to afford a mortgage if interest rates rise. And even fewer, 16%, knew that the rules would also test their ability to withstand changes to their personal circumstances. To help demystify the new rules and ensure they are prepared to apply for a mortgage, almost a fifth of potential buyers have sought advice from an independent mortgage broker and 30% have looked online for information about the rules. But 14% have relied on their friends or family for advice and a third have not sought any advice on applying for a mortgage. The research shows that a third of potential home buyers are so concerned about the tougher mortgage rules that they expect to have to delay buying a house so they can save for a bigger deposit and get into a stronger position to obtain a mortgage. 'More than a year after the new mortgage rules were introduced, potential buyers are still in a state of confusion about what they mean in reality. Even more worrying is that a large chunk of people who are gearing up to apply for a home loan are not even aware that the mortgage rules have changed,' said Gareth Shilton, Ocean’s spokesperson. 'As an industry, we need to do more to educate buyers and to guide them through a process which many people are finding understandably daunting. For anyone who plans to apply for a mortgage in the next year, it's key that their finances are in order, including checking their credit file… Continue reading
