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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
Irish property prices up over 16% year on year amid bubble concerns
Residential property prices in Ireland increased by 16.3% year on year in December 2014, up marginally on the 16.2% recorded in November, the latest index data shows. But it is a substantial increase on the 6.4% recorded in the 12 months to December 2013, according to the figures from the Central Statistics Office. So, at a national level the 0.4% rise in the month of December compares with an increase of 0.5% recorded in November and an increase of 0.3% recorded in December of last year. A breakdown of the data shows that in Dublin residential property prices rose by 0.2% in December and were 22.3% higher than a year ago. Also, Dublin house prices rose by 0.3% in the month and were 22.5% higher compared to a year earlier. Dublin apartment prices were 21% higher when compared with the same month of 2013. However, a CSA spokesman pointed out it should be noted that the sub-indices for apartments are based on low volumes of observed transactions and consequently suffer from greater volatility than other series. The price of residential properties in the rest of Ireland rose by 0.7% in December compared with a rise of 0.1% in December of last year and prices were 10.2% higher than in December 2013. House prices in Dublin are still 35.6% lower than at their highest level in early2007 while apartments in Dublin are 44.9% lower than they were in February 2007. Residential property prices in Dublin are 37.7% lower than at their highest level in February 2007 and the price of residential properties in the rest of Ireland is 41.4% lower than their highest level in September 2007. Overall, the national index is 37.6% lower than its highest level in 2007 but there are still concerns about the annual rate of price growth and Ireland’s Central Bank is poised to introduce new mortgage rules, mainly aimed at raising deposit levels to try to ward off a bubble. According to the Society of Chartered Surveyors Ireland (SCSI), the rebound will moderate substantially this year as tighter lending rules exert a downward pressure on prices. It’s annual review and outlook report for 2015, which is based on a nationwide survey of members, predicts that the pace of property price inflation would moderate to 5% to 10% this year. However, the SCSI believes that a threshold of 20% deposits for residential buyers seeking a mortgage is too restrictive and members favour a 10% to 15% level. The SCSI report also suggests that property values rose by 14% nationally in 2014 and by 19.5% in Dublin. It also shows that rents increased by an average of 11% nationally and are now just 5% to 10% off peak levels in some prime Dublin locations. The society report also shows a 33% increase in housing completions last year, but said that this figure is still less than half of what is required annually. ‘The lack of supply of family type homes in the… Continue reading
UK regional prime property markets outperform London
For the first time since the credit crunch, the UK’s prime regional property markets marginally outperformed London in 2014 with growth averaging 3.2%, according to the latest analysis. The new rates of stamp duty introduced by the Chancellor in his Autumn Statement in December 2014 brought mixed blessings for different parts of the market, the analysis report from real estate firm Savills shows. ‘For all buyers below £937,500, stamp duty rates have fallen and this is reflected in levels of annual price growth. Above this margin, the increased rates of stamp duty resulted in an adjustment in values at the top end of the market in the final quarter, most notably in the higher value extended commuter belt of London,’ said Lucian Cook, director residential research Savills. He also pointed out that given a strong performance earlier in the year, these commuter markets showed the highest level of annual growth. Prices rose by 4.6% in the London suburban markets such as Esher, Rickmansworth and Loughton and by 3.7% in the inner commuter zone in the likes of Sevenoaks, Guildford and Beaconsfield. While the markets within the commuter zone, up to an hour from London, are all now at or above their 2007 peak, the regions beyond these areas are some way below this level. Prices remain on average 10% below their 2007 peak across the remainder of the South of England and over 20% below across Scotland as an average. The markets of the Midlands and the North falls between the two with a decline of 14.8%. In the sub £1 million prime market that predominantly benefits from a cut in stamp duty, average prices rose by 4.6% in 2014, fuelled by particularly strong growth in the first six months of the year. ‘These lower value prime markets, particularly those well connected to London, are forecast to see the strongest growth over the next year and into the midterm,’ explained Cook. Higher value homes in the £2 million plus range recorded marginal 0.8% falls over 2014, but values fell by 3.1% in the last three months of the year. The report also says that the other overriding feature of the regional market remains the stronger performance of properties in urban locations. Annual growth in prime cities across the UK, such as Oxford, Cambridge, Bath, York, Chester and Edinburgh, averaged 5.8% price growth over 2014 compared to an average increase of 3.1% in their surrounding villages and 0.9% in rural locations. Meanwhile, prime London house prices rose by an average of 2.6% in 2014. However, 2014 was a year of two halves with prices rising by 4.9% in the first half and falling by a net figure of 2.2% in the second half. Savills said this was predominantly due to the stamp duty changes introduced in the Autumn Statement which particularly impacted the higher value markets. The strongest performers in 2014 were the markets up to £1 million and in the £1 million to £2 million… Continue reading
