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UK lenders and brokers concerned about new European mortgage directive
Almost three quarters of mortgage brokers in the UK, some 74%, are worried about the impact of the incoming European Mortgage Credit Directive (MCD) on overall lending activity over the next year. A similar number of lenders, 71%, take the same view as MCD implementation approaches, with a six month window from 21st September to 21st March to adopt the new rules, according to new research from the Intermediary Mortgage Lenders Association (IMLA). Unlike last year’s Mortgage Market Review (MMR), many of the MCD changes are of a technical nature involving new approaches to disclosure and documentation rather than major changes to advice, affordability criteria or lending decisions for residential mortgage borrowers. Nevertheless, 40% of brokers believe a smooth implementation of the MCD will be more challenging for the industry as a whole than MMR, including 11% who believe it will be significantly more challenging. The majority of lenders, 71%, believe it will be at least as challenging for industry to implement MCD and this includes 21% who believe it is more of a challenge, although 28% feel it will be less challenging. The UK government has openly questioned the benefits of MCD to UK consumers beyond the high level of protection offered by the existing FCA regime, and its approach to the negotiation and implementation of the MCD has been to minimise the impact on the UK market as far as possible. And the IMLA research also shows industry remains sceptical about a number of incoming changes in the lead up to implementing the MCD. Just 5% of brokers felt the introduction of a second APR will benefit the UK mortgage market, while 70% disagreed, as did 86% of lenders. Similarly, just 9% of brokers feel that replacing the Key Facts Illustration document (KFI) with the European Standard Information Sheet (ESIS) is a beneficial move while 68% disagree. Lenders were again stronger in their opposition with 86% disagreeing that the switch from KFI to ESIS will benefit the market. The research also shows that broker sentiment about market conditions at the midway point of 2015 was broadly consistent with the start of the year, with 50% feeling conditions are improving, compared with 51% in January. This is slightly improved from July 2014 when 46% felt the same. The report notes that 67% of lenders feel conditions are currently improving, up from 53% at the turn of the year and just 44% last summer. IMLA’s research suggests ‘standard’ borrowers and first time buyers have both benefitted from improving access to mortgage finance as the market has adjusted to the MMR requirements. During the first half of 2014 some 34% of brokers had been unable to find a suitable product for at least one standard borrower, but just 25% have reported the same in the first half of 2015. Similarly, 28% had been unable to help at least one first time buyer enquiry in the first six months of last year, but just 20% had this… Continue reading
UK rental price growth slows but still over 10% higher than a year ago
Rent price rises slowed in every region of the UK over the three months to August 2015 compared to the previous three months, the latest lettings index shows. But they are still rising at double figures rates on an annual basis and are now 10.5% higher than a year ago, according to the finding from the HomeLet rental index. The data shows that across the country the average tenancy signed during the three month period was £992 per month but in Greater London it was £1,558 per month. The index report also points out that the trend is particularly marked in areas where rents have been rising exceptionally quickly this year, notably the South East of England and East Anglia. Nevertheless, on an annual basis, rent prices remain significantly higher than a year ago, with the average UK rent 10.5% higher than in the three months to August 2014. Overall, the average UK rent on new tenancies has increased 1.6% in the three months to August 2015, compared to an increase of 2.2% for the three months to July and June 2015. In the three months to August 2015, with the exception of Wales, where rents rose by 2.5%, no region saw rents increase by more than 2%. Three regions, the South East, North West and North East of England, saw rents fall during this period. The biggest fall was in the North East, where rents paid for new tenancies in the three months to August 2015 were, on average, 2.1% lower than in the three months to July. 'Rents continue to run slightly ahead of house prices, with the majority of the UK still experiencing rising rents, albeit at a much slower pace than we saw in the early part of 2015,' said Martin Totty, chief executive officer of the Barbon Insurance Group, HomeLet’s parent company. 'On an annualised basis, however, rents in most regions are still significantly higher than the same period a year ago, with only the North West reporting lower rents for new tenancies in the three months to August 2015 than for the same period last year,' he added. He explained that there is a robust rental market which is consistent right across the UK with only one or two exceptions, such as East Anglia, where prices rose sharply in 2014 and early 2015 but have now slowed notably, and the South West, which continues to see annual price rises in double figures. Continue reading
UK report reveals the economic benefits of new home building
House builders in the UK are providing more than just homes with a new report revealing the extent of the benefits. The report from the Home Builders Federation, says that for example, in the South East of England where there is a shortage of new homes, last year some 22,470 homes were started by private house builders, the public sector and housing associations in the sector. But this is just the tip of the iceberg. Based on the findings of the report, the economic footprint of this house building meant that 96,621 jobs were supported, 899 graduates and apprentices positions were created, and 966,210 new trees or shrubs were planted. It also shows that £36,109,290 was contributed towards education in the area, £28,896,420 in extra council tax revenue was generated plus £224,700,000 in other tax contributions, and some £21,031,920 went towards new open spaces, community spaces or sports facilities, or enhancing existing resources through Local Authorities. On top of this 5,168 new affordable homes were built and payments of £497,553,210 were made to local authorities for further provision of new affordable homes. While house building is increasingly being recognised as a key driver of economic growth, there are still not enough new homes being built in the region, the report points out. In the South East, this manifests itself as a shortfall of 12,011 homes every year. If the region was to meet this need, the knock-on economic benefits would be 51,648 jobs created, 480 graduates and apprentices positions created, 516,482 trees and shrubs planted, and £19,301,998 going towards education in the area. There would be £15,446,403 in extra council tax revenue, £120,112,000 in extra tax contributions, £11,242,483 contributed to open spaces, community, sport and leisure facilities, 2,763 affordable homes built and payments of £265,964,002 to local authorities for further provision of new affordable homes. 'House building makes a huge, but largely hidden, social and economic contribution to the South East. And whilst housing output in the region has increased, we are still not delivering anywhere near what is needed' said Stewart Baseley, executive chairman at HBF. 'As well as delivering desperately needed new homes, increasing housing supply would deliver significant additional benefits for everyone living in the region. As well as providing desperately needed new homes, increasing house building would deliver massive additional benefits to communities across the land,' he explained. 'People often don't realise that the new community centre or school or football pitch has been paid for as a direct results of new homes. Ultimately, providing new homes for people also means better facilities for the wider community. These are the very things that turn a collection of houses into communities; brand new places where people want to live,' he added. Neal Hudson, associate director at real estate firm Savills, pointed out that house prices in the South East have risen by 17.3% over the last two years. 'However, the performance of markets within a region can vary substantially. These variations are determined by the economic, demographic and affordability profile of demand… Continue reading
