Tag Archives: yahoo
Latest CML figures show lending to first time buyers still rising
Lending to UK first time buyers increased by 12% in October compared to the previous month and is now 14% up on the same month in 2013, according to the latest figures from the Council of Mortgage Lenders. By value, there was £4.4 billion advanced to first time buyers in October, 10% up on September and 22% higher than October last year, the CML data also shows. But first time buyer affordability changed fractionally, with first time buyers typically borrowing 3.39 times their gross income, compared to 3.4 in September. The typical loan size for first time buyers fell slightly month on month to £125,800 in October, down from £126,000 in September. First time buyers in October paid 19.5% of gross income towards covering capital and interest payments, little changed from 19.6% in September but still significantly less than the recent peak of 24.8% in December 2007. Lending to home movers also strengthened month on month. In October, the number of loans advanced to movers was 35,000, a 10% rise on the previous month and up 4% on October last year. By value, lending to movers totalled £6.5 billion, 8% up on September and up 10% on October last year. Remortgage lending activity saw a decline month on month in October, with the number of remortgage loans totalling 26,600. This was 6% down on September and 11% down on October last year. The value of these loans at £4.1 billion was down 7% on the previous month and down 5% on October last year. There were 19,600 buy to let loans in October, representing lending of £2.7 billion. This continued the growth seen last month with loan volumes and the value of these loans up 8% on September. Compared to October 2013, the number of loans increased 22% and the value of these loans went up 29%. ‘This has been a year of change for our industry, but the market has shown remarkable stability with house purchase and buy to let lending showing steady, consistent growth throughout 2014 compared to 2013,’ said Paul Smee, director general of the CML. ‘There have been fluctuations month to month but overall the market appears to be showing a positive direction of travel going into the New Year. Stamp duty reform was long overdue and it is welcome that the tax has been changed. It will now be interesting to see how the market reacts. The new structure should be less of a barrier to mobility for those looking to get on the housing ladder or movers looking to switch homes,’ he added. According to David Newnes, director of Your Move and Reeds Rains estate agents, while first time buyers have been forging ahead in the market this year, more recently lending to new buyers is starting to wane. ‘Mortgage market measures introduced in April have trimmed back lending since, coupled with the ongoing debate about when interest rates might rise and the LTI cap this has discouraged… Continue reading
UK housing minister announces £3.5 billion for new rental homes across the country
The UK’s housing minister has signed a new agreement to unlock £3.5 billion in funding to build new homes specifically for renting across the country. Brandon Lewis said that the deal with PRS Operations Limited, a subsidiary of Venn Partners LLP, is important to the government’s wider efforts to create a bigger, better private rented sector. The government’s private rented sector housing guarantee scheme enables landlords of new rented homes to use a government guarantee to secure long term financing. Lewis explained that this investment will increase the supply of purpose built, professionally managed private rental homes giving tenants more choice of better quality homes. Initially, up to £3.5 billion in government backed loans will be made available to landlords looking to invest at least £10 million for new homes available for private rent with the option to increase this to £6.5 billion in future. Venn Partners has created PRS Operations Ltd, a new organisation that will secure institutional investment in building homes specifically for private rent. This new organisation will work to arrange up to £3.5 billion of funding and then offer a series of smaller loans to eligible landlords looking to move into this expanding market. ‘House building is an important part of the government’s long term economic plan. The deal with Venn Partners to provide the guarantees scheme is part of a package of investment measures to help generate growth in the rented sector, while ensuring value for money for the tax payer,’ said Lewis. Other measures include a £3.5 billion affordable housing guarantees scheme, which has already helped provide over £1 billion in investment to provide over 9,000 new affordable homes, on some of the cheapest terms in the sector’s history The £1 billion Build to Rent Fund, which is on track to provide up to 10,000 newly built homes specifically for private rent across the country and the Private Rented Sector Taskforce, which has identified aspirations to invest over £10 billion of equity in the private rented sector. ‘We’ve pulled out all the stops to get the country building since 2010, including by creating a bigger better private rented sector. This is an exciting and important move that will help strengthen the private rented sector so that it meets the needs of tenants well into the future,’ Lewis explained. According to Danny Alexander, Chief Secretary to the Treasury, unlocking £3.5 billion of funding for the private rented sector will ensure that the government delivers the homes that people across the country need. ‘Housing starts are now at a six year high thanks to this government’s focus on building more homes. Investment in housing is essential for the future of an economy. That’s why for the first time in a generation, this government plans to directly commission homes, as well increasing investment in affordable housing to ensure the delivery of 275,000 affordable homes over the next five years. These guarantees will help to deliver more homes in communities across Britain,’ he added. Attracting significant institutional investment to the… Continue reading
Renting costs twice as much as owning a home in US cities
People renting a home in the United States can expect to pay twice as much of their incomes on their rent than an owner on mortgage payments, new research has found. It means that it is more affordable to buy a home now in most US metros than it was 15 years ago, even for those putting down less money on a home, according to a Zillow analysis of third quarter income and home value data. Renters, however, continue to pay an increasing share of their income to their landlords as rents soar and incomes remain flat. On average, US home buyers making the nation's median income and purchasing the typical home spend 15.3% of their income on their monthly house payment, down from the historical norm of 22.1% during the pre-bubble period from 1985 to 1999. On the other hand on average, US renters spent 29.9% of their monthly income on rent in the third quarter of 2014, up from 24.9% historically. Younger buyers, earning less money in many areas and making smaller down payments on a home, should expect to spend slightly more of their income on mortgage payments at around 17.4%. The Zillow report says that homes for younger buyers remain affordable thanks to continued low mortgage interest rates and their tendency to shop for less expensive properties. However, the report warns that continuously rising rents across the country could drive more people into the home buying market, but they also make it more difficult for first time buyers to save for a down payment. A breakdown of the figures shows that Washington DC renters can expect to spend 27.1% of their income on rent, up from 16.2% historically while in Miami, rent as a percentage of income has risen from 26.5% before the bubble to 44.5% currently. ‘Despite rising home values, homeownership remains very accessible for buyers that can scrape together a down payment, even if that down payment is relatively modest, find a home to buy and secure financing,’ said Zillow chief economist Stan Humphries. ‘But what keeps me up at night is the fact that it still remains so difficult for so many potential buyers to make those particular stars align, largely because renting is so unaffordable these days,’ he explained. ‘It's very difficult to come up with a down payment when so much of your monthly pay cheque, especially on an entry level salary, is going to your landlord instead of into your savings. Buying conditions are getting better every day, and in time the allure of fixed housing payments and building wealth through home equity will draw more buyers out of rentals and into home ownership,’ he added. The report also points out that home ownership rates in the US have steadily declined, even as the housing market has recovered, in part because millennials have delayed their entry into the housing market. But it is likely that by the end of 2015, millennials aged 23 to 34, will overtake Generation X as the biggest… Continue reading
