Tag Archives: real estate
UK mortgage arrears at lowest rate for more than a decade in 2015
Mortgage arrears in the UK are at their lowest for more than a decade with fewer than one in 1,000 ended in repossession in 2015, according to the latest data from the Council of Mortgage Lenders. Beneath the headline figures, the CML quarterly data shows home owner mortgage arrears running at 1.03% of all loans at the end of 2015, with buy to let at a lower rate of 0.31%, continuing the recent trend of a lower prevalence of arrears in the buy to let market. However, the picture is reversed on repossessions, with around one repossession per 2,500 mortgages in the buy to let market in the fourth quarter of the year, compared with one in 5,000 in the homeowner market. Across the whole market, most had relatively modest levels of arrears at under 5% of the mortgage balance. The number of loans with arrears in the most severe band, representing 10% or more of the mortgage balance, was 23,700, down from 24,200 at the end of 2014. The CML report says that the modest decline in the most serious arrears band may partly reflect distortions in the timing of possessions, but the overall arrears trend is clearly down. At 10,200, the total number of repossessions in 2015 was less than half the number in 2014, down from 20,900 but the report says that caution is needed on the year on year comparison, because the timing of some possessions may have been affected by the aftermath of a court case which has been causing lenders to review their processes. However, it is likely that the underlying trend is still emphatically down. ‘It is good news that the levels of mortgage arrears and repossessions remain low and falling. But, at the risk of sounding as if we are crying wolf, we would continue to urge all borrowers to plan ahead for a time when the interest rate environment may be less benevolent. Lenders do not wish to see borrowers who are coping currently falling into difficulty if and when rates do eventually rise,’ said CML director general Paul Smee. The figures are a sign of a period of relative stability for both owner occupiers and landlords when it comes to managing borrowing, according to Kevin Purvey, chairman of the Intermediary Mortgage Lenders Association (IMLA). ‘Lending volumes forecast to rise, the rigours of lenders’ affordability checks will help borrowers avoid a future scenario where they become overstretched. However, continuing delays to the Bank of England’s first rate rise should not breed complacency,’ he explained. ‘With mortgage rates at record lows, there is still plenty of reason for households to think ahead, weigh up their monthly balance sheet and consider remortgaging to help prepare for the inevitable rise. Changes to tax allowances will give landlords added incentive to look at their remortgage options in 2016,’ he pointed out. ‘Lender competition remains high, which means intermediaries will be at the heart of the continuing… Continue reading
Amendments to tenancies bill in Scotland could hit provision of rural homes
New amendments to the Private Housing (Tenancies) Bill in Scotland have the potential to create significant problems for the provision of rural homes, it is claimed. The Bill has reached its stage two process within the Scottish Parliament with the Infrastructure and Capital Investment Committee meeting to discuss amendments that have been lodged. In total, 198 amendments had been submitted to the original draft Bill, demonstrating the depth of feeling regarding the future of the private rented sector and perhaps indicating there has been a lack of thorough consideration due to rushed timescales. However, Scottish Land and Estates said that it was particularly concerned that an amendment by Alex Johnstone MSP to allow a landlord to ask a tenant to leave in order to accommodate a new or retiring employee had been rejected. ‘The Scottish Government has stated repeatedly that the aim is for a simpler tenancy which strikes a fair balance by offering tenants more security and giving landlords robust and comprehensive grounds so they have the confidence to let without fear of not being able to recover possession under reasonable circumstances,’ said Katy Dickson, policy officer for business and property at Scottish Land and Estates. ‘The drafted legislation went some way towards this balance point but disappointingly a number of amendments which were approved will leave landlords dismayed that the new tenancy will bring the uncertainty and imbalance that they feared at the outset of the Bill,’ she explained. One of the main concerns for rural landlords is the rejection of Alex Johnstone’s amendment to allow a landlord to repossess a property in order to house a new employee or retired employee. ‘This ground would come with a full notice period and prior notification at the outset of the lease so that security was not lessened on all let property. Without this ground the ability for rural businesses to grow is restricted and landlords may well choose to move property out of the long term letting market into a holiday home or decide to leave it empty,’ Dickson explained. She said that frustration is growing at the Scottish Government’s continued lack of appreciation of the importance of this ground. ‘The Housing Minister repeatedly stated that a family should not be moved out to allow an employee to move in but has failed to recognise that an employee often comes with a family. The fact that there is similar uncontested ground for religious workers adds further confusion as why can tenants’ security be lessened for religious workers but not farm workers?’ added Dickson. She accused the Scottish Government of making a surprising U-turn by proposing an amendment to remove the initial period when they had previously stated that this provided landlords and tenants with security. ‘This was a disproportionate reaction to some campaign groups raising fears that it may be problematic for a limited number of people… Continue reading
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
