Tag Archives: real estate
Peer to peer lending set to change the UK mortgage industry, it is claimed
Peer to peer finance is set to revolutionise the UK mortgage industry, starting with secured lending to landlords, according to a new independent review of the buy to let mortgage industry. Population growth combined with a weak home building response mean the phenomenon of buy to let would survive a new recession similar to, or even worse than, that experienced in 2008, according to the research conducted by The Wriglesworth Consultancy and commissioned by peer to peer lender Landbay. However despite this, the research also reveals the higher price of buy to let finance, with average new mortgage rates one third more expensive for landlords than for owner occupiers. This leaves a gap for P2P mortgage lenders to disrupt the industry. In the first ever published stress tests for a peer to peer lender, the report also reveals that secured peer to peer lending against buy to let properties has a natural stability against economic shocks. This contrasts with severe uncertainty over other types of riskier peer to peer finance, such as unsecured personal loans to consumers, business credit, or other forms of direct peer to peer property ownership and development finance. Stress tests of Landbay’s loan book also indicate the importance of quality manual underwriting when lending to landlords. More attention to landlords’ personal finances makes loan books less prone to losses than historic examples of mass buy to let lending using automated underwriting systems to approve loans. ‘The mortgage world has changed. Now everyone has access to the sorts of markets that were once the preserve of large financial institutions,’ said John Goodall, chief executive officer of Landbay. ‘A new energy for more inclusive finance, combined with new technology, is revolutionising the world of saving and borrowing. This has only just begun, and over the long term the impact of these fundamental changes will be far greater than was at first envisioned,’ he explained. ‘All peer to peer finance is relatively new, but it would be an enormous mistake to assume that means this broad swathe of lending is in any way uniform. Combining P2P lending with the backstop of income producing property as security can create an entirely different class of investment while shaking up competition in the world of mortgage lending,’ he added. Continue reading
UK mortgage lending falls back to similar level a year ago, latest data shows
Gross mortgage lending in the UK reached £16.9 billion in November, some 9% lower than October when it was £18.6 billion, according to the latest figures from the Council of Mortgage Lenders. It matches the £16.9 billion seen in November last year but shows that the last 12 months has been one of ups and downs for the UK mortgage market. ‘Current activity in the housing market has eased with transactions back down to levels seen almost a year ago,’ said CML economist Mohammad Jamei. ‘The reform in stamp duty is likely to provide a modest short term boost in activity over the next few months, but its impact will fade away in the medium term,’ he added. Reacting to the figures, Peter Rollings, chief executive officer of Marsh & Parsons, said that the contours of the UK housing market have shifted from the start of 2014, with property price rises softening into a more organic upward curve. ‘New configurations of affordability checks and pre-emptive measures in the mortgage market temporarily diverted the route of lending, but overall progress is healthy,’ he explained. He pointed out that mortgage products have never been more attractive. ‘With a plentiful choice of properties and now smaller up-front stamp duty costs, buyers are faced with a very favourable set of conditions,’ said Rollings. ‘This has a knock-on effect for sellers, as durable demand enables them to trade up, and this fluidity of movement at every level of the market will ensure buoyant activity and optimism spills over into the start of next year,’ he added. Continue reading
UK surveyors report a resurgence in remortgage activity
November saw a resurgence in remortgaging activity even as the rest of UK housing market cooled, according to the latest research from Connells Survey and Valuation. Remortgaging was the most robust sector of the housing market and performed well both on a monthly and annual basis. The total number of remortgaging valuations conducted in November increased by 10% compared to October, and by 3% compared to November last year. ‘Remortgaging is defying the rest of the market. With the base rate set to remain low well into 2015, it is clear that this is driving demand,’ said John Bagshaw, corporate services director of Connells Survey & Valuation. ‘Lenders continue to offer even more competitive mortgage rates, while many households are using this opportunity to remortgage and reduce their monthly payments,’ he added. By contrast, the total number of valuations for all purposes fell 5% on an annual basis. This is a considerable improvement from a steeper drop of 10% over the 12 months to October 2014. On a monthly basis property valuations remained static since October. According to the firm November saw a marked shift in sentiment with more lenders and borrowers opting for a tone of caution. ‘Regulatory changes continue to impact other sectors of the market, especially first time buyers with restrictions on lending. On the other hand, the low base rate has powered demand for remortgaging, and to a lesser extent, buy to let,’ explained Bagshaw. ‘While this year the total number of valuations fell by 5% compared to last year, this annual figure compares favourably with historic data and exceeds the number of valuations recorded in November 2012, 2011 and 2010. With so many variables in play it remains to be seen whether this points to a cooling market in 2015 or if this is part of the usual festive seasonal trend,’ he pointed out. Buy to let also performed well compared with the rest of the market. On a monthly basis, the number of buy to let valuations dipped 5% since October and by 1% compared to the previous November. The sector is supported by an array of low LTV products and lenders have become more focused on low risk borrowers, such as landlords who typically have lower LTVs and multiple streams of income, according to the firm. As a proportion, first time buyer valuations now make up under a third of total activity at 28%. In terms of numbers this area of the market was down the most on an annual basis with a fall of 11% and also dipped 7% compared to the previous month. The number of valuations for owner occupiers moving home saw the second fastest annual fall, down 9% compared to November last year. However, on a month on month basis this sector of the market saw no change. ‘Recent policy changes such as loan… Continue reading
