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Signs of mortgage market in UK recovering, says CML
Home lending appears to be on the brink of recovery after a dip due to new mortgage rules, the latest gross lending data from the Council of Mortgage Lenders suggests. The CML April estimate for total gross lending is £16 billion, 1% down on the previous month and 4% lower than the £16.7 billion of lending last April. But according to Mohammad Jamei, CML economist, lending appears to be in the throes of an incipient recovery even although lending in April was fractionally down on the previous month and year as this comes after a stronger March. ‘Overall, we now seem to be on the cusp of a modest lending recovery. Household finances are generally improving as earnings growth continues to outstrip inflation, and mortgages are being offered at extremely competitive rates. As a result, we expect to see stronger lending in future months,’ he said. Paul Smith, chief executive officer of haart estate agent, believes that the mortgage market is in rude health and despite the doom and gloom in the election run-up, consumers have been undeterred by the prevailing uncertainty. ‘Mortgage lending is still down on April 2014 but 2014 was an exceptional year where property prices and demand were speeding along beyond all expectation and an application of the brakes is no bad thing,’ he said. ‘Lower, but still strong, house price growth and levels of demand that aren’t dominating the headlines, is actually good for overall sentiment and both buyer and seller confidence. With the new majority government bedding in and the continued advantageous economic climate and government support for consumers, we expect mortgage lending to be on an upward trajectory for the rest of this year,’ he added. John Eastgate, sales and marketing director of OneSavings Bank, said that there is no doubt that pre-election jitters took their toll on borrower demand in April ‘But the mortgage market hardly ground to a halt. Mortgage rates remain near historic lows, and this continues to drive underlying activity,’ he pointed out. ‘On top of this, we have seen deflation take hold, pushing back the prospect of a hike in interest rates. Combined with improving earnings, this will boost the borrowers' budgets. With the new government now in situ, any lingering uncertainty has been put to bed, and sentiment has undergone a palpable bounce,’ he explained. ‘There are already signs that mortgage activity is on the increase, with big ticket purchases returning, and the market expects positive momentum to build as the year progresses. Yes, affordable mortgages for those with the smallest deposits remain thin on the ground, holding back first time buyer levels, but an increasingly buoyant buy to let market will support total lending in 2015,’ he added. Continue reading
UK property market sees lowest annual price growth since 2013
Annual UK property price growth was 3.7% in April, taking the average price of a home to £208,717, the lowest level of annual growth since July 2013, the latest index shows. Month on month prices were up 0.5%, according to the latest monitor report from haart estate agents. In London prices were up 1.9% month on month and 6.8% year on year to an average of £513,154. The data also shows that in April new buyer registrations fell by 1.6% compared with March, the first monthly fall this year, as buyers adopted a pre-election ‘wait and see’ attitude. Seller activity also slowed in April with new property instructions up just 1.5% month on month. The report also shows that house sales were up 3.3% in April compared to March but down 17.1% from April 2014. But there has been a post-election pick up in seller activity with the weekend after polling day seeing a 34% surge in new property instructions compared with the previous weekend. The average price of a first time buyer home increased 3.5% annually and 0.8% on the month. The report says that the new Help to Buy ISA, when the product is designed and implemented, will provide further assistance to first time buyers seeking to buy a home. First time buyers now make up 42.9% of all mortgages written, which is up slightly on March but still falls below 46.1% in April 2014. The average mortgage granted to first-time buyers is up 1.2% on the month in April and 2.5% annually. ‘The pre-election property market held its breath in April but the election uncertainty did not have an overall stifling effect on the market average property price growth for the UK slowed but did not come off the boil,’ said Paul Smith, chief executive officer haart, which has a network of over 200 branches across the country. ‘However, there was a drop in activity from sellers and prospective buyers in the run up as a wait and see attitude took hold of the market. We are already seeing the reversal of this with a flurry of activity from prospective sellers in the weekend immediately following the election,’ he explained. ‘Continuity of government, no mansion tax and supportive policies like the Help to Buy ISA should keep the property market on its upward trajectory for the rest of 2015,’ he added. Continue reading
Home owners in Scotland’s Shetland Isles see top value growth since 2009
Home owners in the Shetland Isles in the far north of Scotland have seen the value of their property increase by £39,311 or 31% since the trough of the last housing market cycle in 2009, new research shows. The situation has been helped by the islands having the highest employment rate in Scotland, according to the research by the Bank of Scotland. Aberdeen City has the second highest house price increase in Scotland since 2009, with property prices going up 21% or £38,275, followed by Aberdeenshire with a 16% increase of £33,022. The report notes that both are amongst the five areas in Scotland with the highest levels of employment over recent years and says that there is a clear link between levels of employment and house price performance in recent years. Those areas with the highest average levels of employment since 2009 have, on average, recorded bigger house price gains. For example, the five local authority districts (LADs) with the highest employment have experienced average house price rises of 14% or £23,462, since 2009, compared with an increase of 2% for Scotland as a whole. The average house price in the 10 LADs that recorded the highest employment rate between 2009 and 2015 rose by £9,554 or 6%. However, looking further afield to the top 20 LADs, they have seen an average increase of only 2% or £2,617, which is in line with the average for Scotland. In stark contrast, those areas with the highest levels of unemployment, as measured by the claimant count, have typically underperformed the Scottish average. The 20 areas with the highest levels of unemployment have recorded an average house price fall of 8% or £11,252. The five areas with the highest unemployment rate have seen a 7% drop in the value of their homes. ‘There has been a very clear relationship between conditions in the Scottish jobs market and house price performance during the period since the housing market downturn between 2007 and 2009. Those areas with high levels of employment have tended to record above average house price growth. Areas with high unemployment levels have, on the other hand, typically underperformed,’ said Nitesh Patel, economist at the Bank of Scotland. ‘The past few years have underlined the importance of local economic health in determining house price behaviour. Other factors, however, are also key drivers of house price trends including the strength, or otherwise, of housing supply,’ added Patel. Continue reading
