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Home buyers set to see sustained period of low borrowing in UK
Home buyers in the UK, including buy to let investors can look forward to a sustained period of low borrowing rates, according to housing market lenders, due to the lowest ever bank base rate. The decision by the Bank of England to reduce the interest rate to 0.25% and the possibility of it going even lower, brings to an end the longest period of no change in rates since the War/post-War years of 1937 to 1951. Bank rate was cut from 1% to 0.5% in March 2009, and remained there till it was cut again last week. The Council of Mortgage Lenders (CML) points out that mortgage rates have fallen significantly over that period. The average mortgage rate over that period has fallen from 3.8% to 2.9%. It also points out that the bank rate is not the only influence. Funding costs, levels of competition, targeted levels of profitability, and an assessment of current and future market conditions to price appropriately for risk are also relevant factors. So it also follows that a rate cut does not automatically feed through on a like for like basis to mortgage rates. Future pricing will depend on all the factors above and is a matter for individual lenders. Around 50% of borrowers are currently on fixed rates and will therefore see no immediate impact on their payments in any case. Of the remaining 4.9 million home owners with a variable rate mortgage, over 1.5 million have a tracker rate mortgage and these borrowers may automatically see a rate reduction depending on their mortgage contract but some will have a lower level below which rates cannot fall. For new borrowers, mortgage pricing is extremely competitive and set to remain so. However, it is worth noting that the Bank has also been urging borrowers to plan ahead for the prospect of higher rates in the future and the CML said consumers should not assume that just because rates are low now, they will necessarily stay that way for a prolonged period. Recently, fixed rates have been accounting for about 90% of new lending, and while this is partly because they have been priced attractively, it's also likely to reflect a consumer appetite for certainty about outgoings. CML director general Paul Smee believes that some hesitation on the part of consumers thinking about buying property is understandable against the backdrop of recent political uncertainty. However, mortgage lenders are well capitalised and resilient and open for business to lend, in line with consumer demand as and when confidence levels bounce back. ‘Since the last change in official rate in March 2009, the average mortgage rate has already fallen from 3.8% to 2.9%. This confirms that bank rate is not the only influence on mortgage pricing; we feel that the mortgage market is at present well capitalised, resilient and open for business. Housing market fundamentals are sound,’ he explained. ‘So, we see the cut as a wider reaction to the economic effects of… Continue reading
Research shows Olympic legacy has boosted house prices in east London
As the Rio 2016 Olympic Games get underway new research shows how house prices closest to the 2012 Olympic Park have increased three times faster than the national market. Homes closest to Olympic Park have seen more than 50% added to their value with prices up by £3,522 per month since the London Games ended in 2012. The research from Lloyds bank also shows that the majority of areas close to the main site have recorded price growth in excess of £100,000 since September 2012. Average property prices in the 14 postal districts in East London closest to the Queen Elizabeth Olympic Park have risen from £286,638 in September 2012 at the close of the Paralympic Games to £438,065 in March 2016, an increase of 53% or £151,427, equivalent to a monthly rise of £3,522. This is more than three times the rate of increase seen in England and Wales and nationally property values grew on average by 17% over the same period from £234,947 to £275,872. Price performance in the 14 East London areas has also outpaced London as a whole. Since September 2012 the average price in the capital has grown by 32% to an average price of £557,359. In the four years since the last Olympic Games, the average price in all but one of the 14 areas has risen by over £100,000. In cash terms the largest rise was seen in Shoreditch, where the average property price has grown by £245,330, followed by Dalston at £203,113, Homerton at £197,737 and Bethnal Green at £178,893. East Ham recorded the lowest rise in prices, a relatively modest increase of £83,566 in four years. ‘The last Olympics Games, held in London, was a great event which captured the world’s attention for a few weeks in 2012, but the longer term benefits of the Games are still being felt today, particularly for home owners in the areas close to the Olympic Park who have seen property prices outperform both the national and London markets,’ said Nitesh Patel, Lloyds Bank housing economist. ‘Since the Games closed in September 2012, regeneration in this part of the capital has seen significantly improved transport connections and facilities, which have helped attract businesses and households to the area and in turn boosted local property values,’ Patel added. In the 11 years since the Games were awarded to London in July 2015, the average property price in the 14 postal districts in East London closest to the Olympic Park has grown from £206,398 to £438,065 in March 2016 an increase of 112% or £231,667, which is equivalent to a monthly increase of £1,796. They have also outperformed the increase in England and Wales in this timescale as nationally property values grew on average by 48% over the same period from £185,783 in July 2005 to £275,872 in March 2016. In the past year, house prices in the 14 areas closest to the Olympic Park rose by 15%, from £379,663 in March… Continue reading
Call for administration of UK leasehold property sales to be streamlined
The Conveyancing Association (CA), the leading trade body for the conveyancing industry in the UK, has outlined a number of recommendations to end what it believes to be significant delays and overcharging taking place within the leasehold sector. A growing number of leasehold sales are taking place each year across all UK regions, up from 220,000 in 2011 to 260,000 in 2015, with 57% in Greater London and 40% in the North West. As a result the CA wants to see a streamlined process taking out the unnecessary delays and a cut to what it describes as ‘unwarranted’ fees charged by many lease administrators who administer the terms of the lease to the leaseholder. In a recent survey of conveyancers some 56% of CA member firms said they believe that in 30% of transactions lease administrators charge unreasonable fees, and a further 32% said in 16% to 30% of sales they charge unreasonable fees. On top of this, 62% of estate agents, the traditional buffer between the consumer and the process, say that the provision of leasehold sale information causes real issues in the house moving process, with 34% branding it ‘an absolute nightmare’. Common problems within the process include identifying the lease administrator as there is no registration or regulation required and significant delays can be incurred attempting to find the right person or company. There is also a recognised imbalance of bargaining power between the lease administrator and the leaseholder as there is currently no requirement for the publication of costs or any control over their extent in relation to receipt of service of notice, deed of covenant, share transfer or certificate of compliance. When it comes to overcharging on the part of the lease administrators the CA has seen cases where costs levied are up to nine times more than what the conveyancing industry might expect them to charge for carrying out such work. On average Lease Administrators are charging between £250 per hour and £360 per hour for administrative work, far in excess of what conveyancers and customers might expect those charges to be. The CA also points out that there is also often a duplication of costs with leaseholders required to pay multiple parties to complete their LPE1 (Leasehold Property Enquiry) form and no redress system is currently available to existing or incoming leaseholders with no effective consumer rights and no recourse to the Ombudsman given its lack of jurisdiction over costs unless the complaint is in respect of a breach of agreement for those costs. It points out that there can be significant delays in the provision of the LPE1 information and dealing with other requirements post-sale necessary for the registration and protection of the leaseholder’s title. This causes significant distress to a chain of house movers and can cause sales to fall through. To reduce the impact of these issues the CA suggests that delays in the… Continue reading
