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Extent of UK mortgage market change shown in annual stats
Home lending fell to £51.3 billion in the final three months of 2014, a drop of 8.1% compared with the previous quarter but was just 0.2% lower than the same quarter in 2013, new data shows. The figures from the Bank of England also shows that new commitments also decreased, from £53.6 billion in the third quarter of 2014 to £46.3 billion in the fourth quarter, a decrease of 8% compared with the final quarter of 2013. The proportion of gross advances at fixed rates decreased for the first time in nine quarters falling to 82.2% in the fourth quarter from 82.6% in the previous quarter. The quarter three out turn was highest since the figures began at the beginning of 2007. The value of residential loans advanced to first time buyers decreased over the quarter to £11.2 billion from £12.1 billion in the previous quarter and the third quarter out turn was the highest since the third quarter of 2007. Buy to let (BTL) lending increased from £6.6 billion in the fourth quarter of 2013 to £7.6 billion in the fourth quarter of 2014 and the proportion of gross advances at an LTV over 90% decreased by 0.5% over the quarter to 3.8% in the fourth quarter of 2014. The figures show overall that the lending landscape has been extensively reshaped over the past year, according to Adrian Gill, director of Your Move and Reeds Rains estate agents. ‘Fresh regulations and affordability checks have cultivated a much healthier mortgage market. Mortgage approvals may take longer to come to fruition, but buyers are benefiting from a more thorough and considered borrowing process,’ he explained. He believes that in the longer term, providing customers with the most suitable mortgage product for their needs is of paramount importance at a time when front-end demand is beginning to blossom in 2015, as consumer confidence grows. ‘Slashed stamp duty fees and more gradual house price growth are bringing homeownership closer within reach of aspiring buyers, while at the same time rock bottom inflation and competitive mortgage deals are giving borrowers a boost,’ he pointed out. ‘Buyers are finding brilliant deals on homes, and this front-end sales activity will soon trickle down to completions, feeding the property recovery,’ he added. Continue reading
Sales transactions down while lettings thrive in prime London property market
Sales in London’s prime property market have continued to fall for the second month in a row in 2015, with transactions down 22% year on year. According to real estate firm W.A. Ellis, a JLL company, this comes on top of a 34% year on year fall in sales recorded in January. A breakdown of the figures shows that the most dramatic reduction is sales of houses within Belgravia, Chelsea, Knightsbridge and Kensington which have dropped by 100% from 40 sales in 2014 to 19 in the same period this year. ‘Whilst at first glance, these figures may sound alarming, it is always the same in the run up to an election, particularly when property and potential taxation surrounding it, has been at the forefront of all parties’ manifestos,’ said Richard Barber, director at W.A.Ellis. ‘That said, if one uses the same parameters, namely houses sold in the preceding postcodes in previous election years, 2010 and 2005, 47 and 38 houses were sold respectively. He pointed out that an interesting trend that the firm has observed recently is the off market sales sector. ‘With sentiment amongst domestic buyers so cautious, it is not surprising that vendors wish to keep their houses away from the internet, where its exposure and time on the market can so easily be measured,’ he said. ‘There have certainly been several off market sales recently, but these will not contradict the general downward trend in transaction levels,’ he explained, adding that while the top of the prime central London market may be undergoing a weaker period in the face of the election, London’s suburbs are still experiencing strong growth, fuelled in part by buy to let investors benefitting from a reduction in lenders stress testing. He explained that loans of up to 75% (LTV) can now be acquired and the stress test for rental income has in some cases been reduced from 125% to 110%. ‘This is good news for investors, however one must remember that the government, as of 06 April, will be clawing back greater Capital Gains Tax revenues from both foreign owners and corporate structures on all capital gains made after this date,’ said Barber. ‘whilst the outlook for the market over the next 64 days remains tentative, we are still registering strong international interest at the very upper end of the market which is indicative of London’s perception as the number one safe haven and front runner for long term capital growth over the next 10 years,’ he added. In the lettings sector Lucy Morton, director and head of agency at W.A.Ellis, said that the firm is seeing both savvy investors and a cautious buyers entering the lettings dynamics. ‘The savvy investor is looking to buy to let to increase their portfolio prior to the election foreseeing that there could well be a boom in the sales market once the uncertainty is over and a government in place… Continue reading
New single house price index for whole of UK planned
Official house price statistics are due for a revamp in the UK where there are currently a number of different indices. This follows are consultation launched last year by the organisations responsible for publishing house price data in the UK; the Land Registry, Land and Property Services, Northern Ireland and the Office for National Statistics Registers of Scotland It looked at a proposed methodology for a single definitive House Price Index (HPI), and gathered views on whether it would meet requirements. It also asked interested parties how removing the indices currently published by Land Registry and the Office of National Statistics would them. The majority of respondents welcomed the proposal for a single official house price index and the clarity this would bring to the use of house price statistics. They also backed the continued publication of supplementary analysis and data alongside the House Price Index, for example, the Land Registry Price Paid Dataset, but also welcomed extra detail if available. Respondents also want a better explanation of the methods used to produce the House Price Index and consistent back data using any new methodology as far back as possible. While the majority thought the proposed methodology was sensible, there were areas that needed further analysis. They were happy with how long the proposed new index would take to publish, accepting the additional time required to process the new index and the greater accuracy and coverage it would provide. But they wanted further clarity on how the new index will be published due to concerns about the same data being published across a number of different websites. As a result a business case has been drawn up recommending the implementation of the proposed new single official house price index and there will be further work to ensure a full and consistent back series for the proposed new index that can be published back to 1969. Officials will also investigate using GOV.UK as the central publication point for the new monthly index publish a final version of the methodology by early summer 2015 if the new index is approved. Continue reading
