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People staying in their first home longer due to costs of moving up the housing ladder
Some 37% of first time buyers in the UK are staying in their first property for longer than planned despite improvements in wages in real terms, according to new research. The situation is most acute in London where 49% had not bought a second property within the timescales they had initially intended, the survey from Clydesdale and Yorkshire Banks shows. This is in contrast to the East of England where only 23% of first time home owners had stayed in their property longer than they had expected. The research also found that first time buyers plan to stay in their first home for an average of seven years and nine months although a quarter plan to stay for more than 10 years. Those in the North East plan to stay in their first property for the longest length of time at almost 11 years whilst first time buyers in London have hopes of moving up the property ladder after six years and three months. ‘The step between the first and second property remains a challenge for some and increasing moving costs are also adding to the difficulty of raising a sufficient deposit to afford a larger home,’ said Steve Fletcher, director of retail banking. Clydesdale and Yorkshire Banks have launched a new mortgage to help these kind of borrowers who are struggling to take the next step up the property ladder. The Home Mover Mortgage allows borrowing between 90% and 95% LTV. It comes with a three year fixed rate of 4.49% and is designed to support those who can afford larger mortgage payments but are struggling to save the required deposit. The Clydesdale and Yorkshire Banks Home Mover Mortgage comes with no arrangement fee and one free standard valuation. Continue reading
Mortgage lending in UK up 23% year on year, says latest CML data
Gross mortgage lending in the UK reached £19.9 billion in December, some 3% less than the previous month but up 23% year on year. The data from the Council of Mortgage Lenders (CML) brings the estimated total for the year to £220.3 billion, an 8% increase on 2014’s £203.3 billion and the highest annual gross lending figure since 2008. Gross mortgage lending for the fourth quarter of 2015 was therefore an estimated £62.3 billion. This is a 1% increase on the third quarter and a 23% increase on the fourth quarter of 2014. ‘Lending ended the year stronger than it started, with our estimate of nearly £20 billion lent in December. This brings total lending to just over £220 billion for 2015 as a whole, and slightly higher than we had anticipated,’ said CML economist Mohammad Jamei. ‘The low inflation environment, along with real wage growth, an improving labour market and competitive mortgage deals have all helped to underpin demand. Having said this, the upside potential looks limited over the near term, as the supply of existing and new properties on the market remains weak, and affordability pressures weigh on activity,’ he pointed out. ‘There is an added element of uncertainty as we wait to see the impact of tax changes on the buy to let sector,’ he added. John Eastgate, sales and marketing director of OneSavings Bank, believes that the stamp duty tax changes on second properties from April are expected to increase mortgage lending activity ahead of their rollout. ‘However we don’t see this as a long term trend. The end of the year is a difficult time to conclude a great deal. Regulatory changes are expected to cause a short term spike in demand from investors, which will be reflected in first quarter figures, while overall conditions are supportive of sustainable growth in gross mortgage lending,’ he said. ‘Investor demand may balance out after the April rush, but the Help to Buy ISA will help underpin long term first time buyer demand, and the diminishing prospect of an interest rate rise will help keep a lid on monthly mortgage payments. As UK employment hits a record high, all this bodes well for borrowers’ finances and the health of the market,’ he added. The indusry should not be concerned about that dip in December, acdoring to Rishi Passi, chief executive officer of Oblix Capital. 'In the longer term, low inflation and reasonable wage growth look set to improve affordability for first time buyers and those on the bottom rungs of the ladder,' he said. 'Help to Buy will also go some way to fill the void left by any buy to let landlords downsizing their portfolios, so developers with one eye on the future should be preparing future stock to meet this shifting demand,' he added. Continue reading
A third of people in UK renting a home have put buying plans on hold
One in three people in the UK renting have put their plans to buy a home on hold and remained in rented accommodation longer than planned, according to new research. It suggests that 1.66 million tenants in the private rented sector are actually frustrated first time buyers and the research from credit check firm Experian also gives an insight into why. Some 18% don’t believe they would be accepted for a mortgage so feel renting is their only option, while 10% have struggled to raise a deposit and consequently been forced to delay their plans to buy. A further 5% have had to prolong their time renting as they’ve been held up in securing a mortgage. Despite making regular payments for their housing, private renters don’t see this reflected on their credit report in the same way mortgage payers do, the firm explains. ‘Many would be first time buyers face the challenge of saving for a deposit on a home while paying rent each month,’ said Jonathan Westley of Experian. He pointed out that the research also shows that a significant amount of people are happy to rent in the long term, whether it’s because they enjoy a good relationship with their landlord or the flexibility of rented accommodation. Indeed, a third are content to rent and have no plans to buy a home of their own in the next five years. Some 25% of those surveyed intend to buy a place of their own sooner rather than later and the results show that 9% are currently saving for a deposit and believe they will be able to buy within the next 18 months, while 16% reckon they will need between two and five years to build up the required deposit. Would be first time buyers who have been frustrated in their attempts to get onto the housing ladder are more likely to be single parents or couples with children. These tenants either doubt they would get a mortgage or have had difficulty securing one, or have struggled to get a deposit together. The research also found that 74% would like to see rental payments contribute to their credit report. The greatest appetite for including rental payment data on credit reports is among people who are looking to buy in the next five years with 91% in this group recognising the importance of a good credit report and 83% would like to see rental payment data added to it. People who are happy to rent tend to live alone or only with other adults and are less likely to see rent as ‘dead money’ than private tenants as a whole and 26% of satisfied renters disagree when asked if renting is a waste of money compared to 16% of all private renters. Continue reading
