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Over a year on from new UK mortgage rules, many are still unaware of the change
Two thirds of potential house buyers in the UK been left in the dark about the new mortgage rules which were introduced last year, new research has found. The survey by mortgage lender and broker Ocean Finance shows that some 31% of people who plan to buy a property within the next two years are unaware that mortgage rules were overhauled more than a year ago. A further 35% of potential buyers did know that mortgage regulations had changed, but said they felt confused by the new rules. In April 2014, the biggest piece of mortgage regulation in a decade came into force. The changes, brought in by the Financial Conduct Authority, mean lenders must take additional steps to ensure borrowers only get a mortgage they can afford. In practice, the new mortgage rules mean that borrowers will face increased scrutiny from lenders about their incomes and their expenditure including spending on things such as childcare, holidays and entertainment. Yet 70% of those questioned were unaware that lenders are required to look closely at their spending. Consequently, a quarter said they haven’t changed their spending habits to help them qualify for a mortgage. Of those who do know that lenders are required to examine spending, more than a fifth have reduced their spending on treats and have stopped contributing to life assurance and pensions to keep a greater proportion of their income in their bank accounts. Just 24% of aspiring home buyers questioned were aware that the new rules also test their ability to afford a mortgage if interest rates rise. And even fewer people, 16%, knew that the rules would also test their ability to withstand changes to their personal circumstances. To help demystify the new rules and ensure they are prepared to apply for a mortgage, almost a fifth of potential buyers have sought advice from an independent mortgage broker. Almost 30% have looked online for information about the rules and 14% have relied on their friends or family for advice. Worryingly, a third have not sought any advice on applying for a mortgage. The research shows that a third of potential home buyers are so concerned about the tougher mortgage rules that they expect to have to delay buying a house so they can save for a bigger deposit and get into a stronger position to obtain a mortgage. ‘More than a year after the new mortgage rules were introduced, potential buyers are still in a state of confusion about what they mean in reality. Even more worrying is that a large chunk of people who are gearing up to apply for a home loan are not even aware that the mortgage rules have changed,’ said Gareth Shilton, Ocean’s spokesperson. ‘As an industry, we need to do more to educate buyers and to guide them through a process which many people are finding understandably daunting. For anyone who plans to apply for a mortgage in the next year,… Continue reading
Better planning and more land needed to meet UK housing targets
House builders across the UK say policy makers should boost resources for local authority planning departments, increase skills and training for the construction sector and step up the delivery of public sector land to help increase the supply of new homes. The House Builder survey from international real estate firm Knight Frank, which contains the views of builders and developers across the country, also suggests that two thirds believe that the maximum number of new homes that can be delivered per year is 180,000 or less with only 9% thinking the government’s target of 200,000 is possible. The report points out that while activity in the house building sector has continued to pick up over the last year, the supply of new homes is still falling well short of demand. Boosting supply, where new housing is most keenly needed, is a key priority if the UK housing market is to avoid long term distortion. However, while nearly 60% of respondents expect housing completions to rise over the next year, with 18% saying the rise could be between 10% and 25%, around half expect no change in the delivery of affordable homes over the next 12 months. Just 9% of respondents said that under current market conditions it would be possible to deliver more than 200,000 homes a year, every year. More than 90% of respondents are expecting construction costs to rise again over the next 12 months and two thirds expect that development land prices will rise again this year. Indeed, the report found that rising labour and build costs are expected to pose the greatest risk to the sector in the coming year and some 56% of respondents said that the Community Infrastructure Levy (CIL) was weighing on development volumes The biggest policy change that would help boost development volumes would be recruiting more people to Local Authority planning departments, according to respondents. ‘The imbalance between the demand for new homes and the number of units being built is well-recognised, by the industry and political parties alike. In the 12 months to April 2014, some 141,000 homes were built in the UK, up by 4% on the previous year,’ said Grainne Gilmore, head of UK residential research at Knight Frank. ‘However, official household growth projections suggest an additional 230,000 potential households a year in the UK. Below these headline figures, there is a recognition that the right type of homes must be built in areas where there is the most housing need, typically adjacent to existing urban areas,’ she explained. ‘This has led to tensions about the greenbelt, with a lack of consensus on how to expand accommodation in some of the UK’s most thriving towns and cities. Nearly one half of the respondents to the housebuilder survey said that rules around developing on greenbelt land should be loosened,’ she added. The report points out that policy makers from all political parties are keen to encourage development on brownfield land and the… Continue reading
Average property prices in Canada set to rise by 2% in 2015, says latest forecast
The national average property price in Canada is forecast to increase by 2% to $442,400 in 2016, according to the latest forecast from the Canadian Real Estate Association. But there is likely to be regional variation. For example, increases are forecast to be slightly larger but less than 3% in British Columbia, Saskatchewan, Manitoba, Ontario, New Brunswick, and Prince Edward Island, with gains in some provinces reflecting an expected rebound from levels in 2015. Price growth in 2016 is forecast to be strongest in Ontario with growth of 2.8% due to an ongoing supply shortage of listings for low rise homes in and around the Greater Toronto Area, the CREA forecast report says. ‘Alberta and Quebec are forecast to see average home price growth of about 1.7% and 0.8% respectively in 2016, while Nova Scotia and Newfoundland and Labrador are forecast to edge slightly lower. The report explains that the national average price has run higher than expected since CREA’s last forecast, in part reflecting a jump in the proportion of higher priced home sales this spring and early summer in B.C.’s Lower Mainland, in and around the Greater Toronto Area (GTA) and Calgary. This trend now appears to be receding, causing the national average price to follow suit. However, recent trends in the Home Price Index, which is not affected by changes in the mix of sales activity the way that average price is, suggest that prices are still accelerating across much of B.C., in and around the GTA and Montreal. B.C. continues to see some of the strongest economic growth in the country, coupled with strong demographics. Home sales there have been drawing down inventories and boosting prices across the province. In Alberta, home sales have gone from setting records in 2014 to running at or below their 10 year average, as uncertainty surrounding the outlook for oil prices and employment continues to side line potential home buyers. In Ontario, the ongoing shortage of single family homes for sale in and around the GTA continues to drive very strong price gains. Record levels of activity in the province would likely be higher were it not for a shortage of low rise homes coming onto the market. In Saskatchewan, Manitoba, Quebec, and most of Eastern Canada, supply remains elevated. Home prices outside of B.C. and Ontario are forecast to keep pace with or lag inflation, as elevated supplies are drawn down by sales and return to better balance. The forecast for national sales in 2015 has been revised slightly higher, reflecting stronger than anticipated activity in B.C. and Ontario. National sales are now projected to rise by 3.3% to 495,800 units in 2015, marking the second strongest year on record for home sales in Canada. Across the country, British Columbia is projected to post the largest annual increase in activity in 2015 with growth of 18.1. Alberta, Saskatchewan, and Nova Scotia are expected to post the largest annual sales declines 21.6%, 12% and 12.1%… Continue reading
