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UK home lending approvals up almost 10%
House lending approvals in the UK have seen the fastest month on month increase in over five and a half years, up 9.1%. There were 65,778 house purchase approvals in January but on an annual basis they fell 12.9%, according to the latest Mortgage Monitor from e.surv, one the UK’s largest chartered surveyors. This makes January 2015 the fifth consecutive month in which the number of loans has fallen on an annual basis. ‘Lenders have a desire to return to growth and the January lending uptick is testament to this, as borrowers key in to mortgages while interest rates remain at historic lows. However, undoubtedly, some potential borrowers remain thoughtful about the approaching election and are playing a waiting game,’ said Richard Sexton, director of e.surv chartered surveyors. ‘Whilst the Mortgage Market Review and LTI caps are preventing what has previously been perceived as higher risk lending, equally we have Help to Buy supporting and encouraging first time buyers. With the announcement that the Bank’s Monetary Policy Committee is going to be given new abilities to place caps on LTV ratios, it looks like the purchase mortgage market could be closely managed and scrutinised in the run-up to the General Election,’ he added. The data also shows that loans to higher LTV borrowers grew 20.1% between December and January. The first month of 2015 saw 10,064 loans to borrowers with deposits worth 15% or less of their property’s total value, compared to 8,378 in December. While this month on month growth is partly due to the increase in the total number of approvals, higher LTV borrowers also occupied a larger proportion of borrowers in January. Some 15.3% of borrowers were higher LTV, compared to 13.9% December. On an annual basis, the proportion of higher LTV borrowers is 1.7% higher than January 2013, when they made up 13.6% of all house purchase loans. The latest First Time Buyer Opinion Barometer from Your Move and Reeds Rains found that the number of first-time buyer property completions fell to 24,800 in December from 25,900 in November, a 4.2% drop. January’s month on month increase in mortgage approvals could, however, boost numbers of first time buyers further. ‘Help to Buy is doing its work, plugging the savings gap left by low interest rates, enabling first-time buyers to get on the property ladder despite only being able to save small deposits. Lenders are locked in a price war, offering ever lower repayment rates to try and bring in borrowers,’ explained Sexton. But first time buyers can be challenged by the introduction of new regulation. No matter how you slice and dice it, caps add another layer of complexity for people fresh to the house-purchase market. With the Bank of England’s new powers to reign in LTVs, first time buyers are a group that could be more affected than others,’ he pointed out. ‘While regulatory supervision… Continue reading
Prime central London rental market set for a boost in 2015
Rental prices in the prime central London property market are set to grow 2.5% this year with the overall sector remaining robust despite uncertainty in the sales market, it is claimed. The latest data from Strutt & Parker and its retained economic advisors Volterra, show that there were 2,093 lets agreed in the sector in the final quarter of 2014, which although 18% below the five year quarterly average, is far above the level of lets seen in the 2007 peak. ‘In 2015, we hope to see a boost of activity levels and slow but steady growth in prime London lettings. The rental market is calling out for an injection of fresh stock which has started to come to the market, in particular refurbished lateral apartments,’ said Zoë Rose, head of London lettings at Strutt & Parker. ‘As investors continue to convert their assets into properties, we anticipate supply easing, with more properties coming to the rental market and the early signs are that this is already happening. We believe that this trend will continue all year as prime property owners place greater focus towards the rental option,’ she explained. She pointed that rentals were often seen as the last choice, simply a back-up option, which is why there was such a shortage of prime rental stock that came to the market last year. The next few months will determine whether this change is set to continue, with the bonus of giving the niche tenant greater choice in this elite rental sector of the market. She added that there were 12,000 rental transactions in prime central London in 2014, up from just over 10,000 five years ago. ‘So the market is in good shape when you look at historic figures. The number of people out there that enjoy the flexibility of renting at the high end definitely seems to be growing,’ she said. In the sales market, headwinds look set to continue into the first half of 2015, according to the firm. Whilst UK assets remain an attractive position at present, and this looks set to continue as the UK economy continues to grow, uncertainty over taxation change due to the looming election are placing considerable uncertainty on this market. ‘The prime central London sales market is feeling the full impact of buyer caution ahead of the Election, with the strongest activity at the very top end of the market above £5 million and at the other end below £2 million, where the financial impact of a potential mansion tax is less relevant, or indeed irrelevant,’ said Andrew Scott, head of London residential at Strutt & Parker. Continue reading
Average rental deposits up in the UK but surprising fall in London
London was among the many areas of England and Wales to see quarterly drops in the average deposit amounts needed by tenants at the end of 2014. The average deposit amount protected by mydeposits saw a 1.4% rise between the third and fourth quarter of 2014 but London saw a 2.6% drop equalling to a fall of £49 to a total of £1,811. It means that the average tenancy deposit protected by mydeposits now stands at £1,226, up £52 over the last year. The figures also show a difference of £1,244 between the average cost of deposits in the most expensive and cheapest regions in England and Wales. London stays at the top of the most expensive average deposit paid by tenants around the U.K with £1,811 on average being spent in the capital, which year on year is an increase of £79 or 4.6%. The quarterly contrasts between the north and west in the Midlands and up in the North makes for interesting reading. The East Midlands saw an 11% increase while the West Midlands saw a 5.3% fall. Meanwhile, in the North West there was a 3.9%) increase to £650 compared to the largest monetary drop in value in the North East who saw a fall of 31.6% to £567, the lowest overall across England and Wales. Wales also saw a big drop of 23% in deposit values taking their average total to £657. Deposits in the East of England dropped at the same pace as London at 2.6% for the quarter but saw the biggest increase across the UK throughout the year with a 6.2% rise to £1,021, the third highest behind the South East at £1,203 and London. ‘This the first cycle in which we’ve seen a steady quarter on quarter reduction to average deposit values in many parts of England and Wales. While it’s difficult to pinpoint an exact reason for this, it is most likely to be attributable to rental demand tailing off throughout December,’ said Eddie Hooker, chief executive officer of mydeposits. ‘This is because deposits are commonly set at between four to six week’s rents and landlords and agents are more likely to accept lower than advertised rents in December in order to avoid having vacant properties over the Christmas and New Year period and experiencing a void,’ he explained. ‘Whilst this is good news, 2015 is going to be a big year for housing with the General Election some five months away. We’ve already seen government wide support for the new deposits loan scheme that is set to benefit thousands of tenants and go a long way to creating a better private rented sector for all,’ he added. Continue reading
