Taylor Scott International
High street lending in UK down 11% compared to a year ago
Gross mortgage borrowing in the UK in January was £9.8 billion, some 11% lower than in the same month last year, according to the latest data from the British Banking Association. Despite slower demand in the second half of 2014, the overall mortgage stock is 1.4% higher than a year ago and approvals overall in January were slightly below December and 21% lower than a year ago. The data also shows that although turning up slightly in January, house purchase approvals were 20% lower than last January and remortgaging and other approvals continued to trend downwards and were 21% and 25% lower than a year ago respectively. According to David Whittaker, managing director of Mortgages for Business, while the mortgage market may have slowed since the peaks seen in the first half of 2014, the present lull is no cause for serious concern. ‘The spate of lending regulations introduced throughout last year inevitably put breaks on the mortgage market, arguably that was precisely the objective, and as a result activity clearly tapered off towards the end of last year. Borrowers and lenders alike have been factoring in and adjusting to the new regulatory landscape and rightfully exercising caution to ensure healthy balance sheets,’ he said. ‘However, that brake has coincided with a downhill ride for long term borrowing costs, after an almost entirely unexpected shift in global capital markets. This has ushered in even lower new mortgage rates than previous record lows,’ he explained. ‘Essentially, we’ve moved on a long way since the fourth quarter of 2014 and in recent weeks we’ve been seeing landlords take advantage of some incredible deals, especially at the most competitive 75% LTV range. In particular, prudent borrowers are aiming to lock in such low rates now that a five year fix is just as cheap as many variable rate deals. Activity may be below levels seen last year but this is not a reliable indicator of the year ahead,’ he added. Patrick Bamford, director of Mortgage Insurance Europe for Genworth, believes that mortgage lending on the high street falling by almost a third since January 2014 is a damp start to the year. ‘Aspirational first time buyers and home movers face multiple challenges: high house prices relative to wages, strict mortgage lending criteria and a lack of house building,’ he said. ‘Despite a wave of new high loan to value (LTV) products appearing on the market, first time buyers still face financial pressures from every direction. Unless they have a large deposit, they are left paying a far greater premium for 95% LTV mortgages than before the recession,’ he pointed out. He also pointed out that while Help to Buy has certainly invigorated the product range for first time buyers and provided a much needed boost to high LTV activity, greater lender appetite and competition needs to be encouraged to give buyers better rates. ‘There… Continue reading
UK annual house price growth slows for six month in a row
Annual house price growth in the UK slowed to 5.7% in February from 6.8% in January, the sixth month in a row that it has slowed, the latest index figures show. UK house prices fell by 0.1% in February, taking the average price to £187,964, according to the data from the Nationwide Building Society. According to Robert Gardner, Nationwide's chief economist, the broader economic backdrop has remained supportive of housing market activity. ‘Mortgage rates remain close to all-time lows and consumer confidence remains buoyant thanks to a further steady improvement in labour market conditions,’ he said. ‘Indeed, the unemployment rate has continued to decline and earnings growth has picked up, particularly in inflation adjusted terms, thanks in part to the sharp decline in energy prices,’ he added. But he pointed out that the pace of housing market activity remains fairly subdued. ‘There was a small increase in the number of mortgages approved for house purchase in December, up 2% from 59,000 in November to 60,300 in December, though it remains too early to determine whether this marks a turning point in activity,’ he concluded. The UK property market is undergoing a sustained reality check, according to Alex Gosling, chief executive officer of online estate agents House Simple. But he believes it is far too premature to suggest that the property market is running out of steam. ‘The strong jobs market, rising real wages and cheap credit are fuelling consumer confidence, and for many renters the home owning dream remains as attractive as ever. But the fillip provided by the Stamp Duty reforms announced late last year appears to be waning, and mortgage activity is fairly subdued,’ he explained. ‘Tightened lending criteria are forcing first time buyers to save much more and much longer before they can get a mortgage. The most recent English Housing Survey found that just 36% of 25 to 34 year olds own their home, compared to 59% a decade before,’ he pointed out. ‘Steady, not stellar, growth is likely to be the pattern for house prices in 2015. The double digit rises of 2014 are history,’ he added. Continue reading
Rate of home ownership in England at lowest level for 30 years
After rising almost continuously over the course of the twentieth century, the rate of home ownership in England has been declining steadily since 2003, the annual housing survey shows. The report published by the Department of Communities and Local Government shows that in 2013/2014 home ownership fell from 65.2% to 63.3% and is now at its lowest rate for almost 30 years. Indeed it is some 8% below the all-time high of 70.9% in 2003 and among owner occupiers, the proportion of people owning their home outright overtook the proportion owning with a mortgage in 2013/2014. The data reveals a sharp decline in the proportion of younger people owing their own home, particular those aged 25 to 34 who are traditionally first time buyers who are vital to the housing ladder. But the number of this group owning their own home fell from 59% in 2004 to just 36% in 2014. Over the same period, the proportion renting, either privately or through a local authority or housing association, increased from 41% to 64%. For 16 to 24 year olds, the proportion renting increased from 76% to 91%. The increase has occurred in the private rental sector, which currently houses 19% of total households in England, the highest share since the 1960s. Indeed, over the last decade the number of privately rented households has nearly doubled to 4.4 million, while the percentage of households in social rental properties has declined from 18% to 17%. The survey suggests that 25% of people in social housing and 61% of those in the private rental sector expect to be able to buy their own home in future. However, this remains a longer term aspiration, with around half of renters expecting it to take five years or more to take their first steps into the housing market. The survey lays bare the generational divide in housing with older households continuing to benefit from the growth in home ownership and accumulation of equity in the second half of the 20th century, with younger households suffering from a lack of access to home ownership in the 21st, according to Lucian Cook, head of residential research at Savills. ‘We urgently need a co-ordinated, long term response to the housing crisis rather than short term populist policies that only address a few of the symptoms. A new government will need to front up to the need to provide a bigger, better private rented sector and find ways to encourage the recycling of existing housing wealth so younger households can get on and trade up the housing ladder,’ he said. Savills forecasts that number of private rented households will continue to rise, while levels of owner occupation will continue to slide as higher interest rates, greater mortgage regulation and an acute housing shortage further reduce access to mortgaged home ownership. The firm estimates that by the end of 2019 there will be more… Continue reading
