TSI
UK mortgage industry urged to do more for older buyers
The mortgage industry in the UK must better respond to the challenges of an ageing society and fit in with the increasing number of retirees taking out loans for homes, it is suggested. Speaking at a conference organised by the Council of Mortgage Lenders, David Sinclair, director of the International Longevity Centre-UK (ILC-UK), urged the industry to ensure they do not discriminate on basis of age alone. Sinclair also urged older people to think very carefully before looking to buy to let and an investment option to give them a return on their pension savings. He welcomed the work being done by the CML on this topic and urged the industry body to continue to work with providers to ensure they are better equipped to respond to the challenges of demographic change. Since 2010, both the number and percentage of mortgages extending into retirement has increased and ILC-UK research in 2014 revealed that the average housing wealth of retirees is £122,000 or £1.4 trillion in total. While lending criteria has been tightened across the board as a consequence of first the credit crunch and then the MMR, ILC-UK says that this may not fully explain the rising numbers of people who appear to be excluded from the mortgage market purely on the basis of age. Sinclair said that broader demographic trends, financial insecurity and public policy change is resulting in increasing numbers of people needing to take a mortgage into retirement but property investments can be risky and they do not guarantee returns. ‘The industry and the regulatory environment have been seemingly struggling to respond to ageing and demographic change. We are, however, very pleased to see that the industry have begun to respond to these challenges through the important work being led by the CML,’ Sinclair told the conference. ‘We are living longer, our family structures are changing, we are marrying later and we are working longer. At the same time, financial insecurity will result in more people needing to borrow more and later in life. We should be particularly worried about those retirees with interest only mortgages but no linked investment,’ he pointed out. He explained that whilst the introduction of pension freedoms could be a boon to the buy to let sector, older people should make sure they take advice before making the jump and with older people holding almost £1.4 trillion in wealth in their homes, equity release is going to be an attractive way of supplementing a pension for many. ‘The industry needs to ensure that the income poor asset rich pensioners are well served by this market. That said, the recent growth in the number of people aged 55 to 64 taking equity release is potentially very worrying,’ he added. Sinclair also called on the industry and government to work to address the fear of borrowing faced by many income poor, asset rich customers and to work together to ensure that individuals have access to advice. He added… Continue reading
Majority of UK home movers have benefited from Stamp Duty change
Home buyers spent an estimated £7.7 billion on Stamp Duty in England and Wales in the year to March 2015, new data shows, with the average home owner spending nearly £10,000. Home owners in London who bought for the first time in 1999 will now, on average, have spent over £38,000 in Stamp Duty over their lifetime and the typical Stamp Duty bill for a third stepper has fallen by £2,500 or 26% over the past year due to December’s reform of the tax. The research from Lloyds Bank shows that overall revenue raised increased by an estimated £1.5 billion, comfortably exceeding the £6.2 billion in the year to March 2008 at the peak of the last housing boom. In contrast, in the 12 months to March 1999, less than £1 billion was raised. A higher number of residential property transactions and increased prices are estimated to have led to a significant rise in Stamp Duty and the research also found that home owners stay in their homes for just under eight years on average, and take three steps up the ladder in their lifetime. The proportion of first time buyers paying Stamp Duty has more than doubled over the past 16 years from 32% in 1999 to 66% in 2015. In London and the South East over nine in 10 first time buyers now face paying Stamp Duty on their purchase. The proportion of home movers paying Stamp Duty has risen from 68% in 1999 to 85% in 2015. In the southern regions of England more than nine out of 10 home movers now pay Stamp Duty on their purchase. The highest overall Stamp Duty costs are faced by buyers in London and the South East. In London home buyers pay four times as much as the average for England and Wales at £38,600 while in the South East the lifetime cost is £22,800. The lowest lifetime Stamp Duty costs are in Wales which, at an average of £3,800, are less than 40% of the England and Wales average. Home owners in the North and East Midlands both at £4,000 and Yorkshire and the Humber at £4,500 face the next lowest Stamp Duty charges. Based on regional average house prices for typical first time buyer homes in 1999, Stamp Duty was only a factor for those first time in London and the South East. By the time these people were ready to move on to their next home (in 2007), the average Stamp Duty for their new property had risen to £2,283. In May 2015, those buyers moving on to their ‘final’ home faced an average Stamp Duty bill of £7,400, some £2,500 or 26% lower than in May 2014. The decline in Stamp Duty is due to the reforms that were implemented last December. Under the new progressive structure of Stamp Duty no tax is paid on any of the value of a property below the… Continue reading
Increase in lending for new homes across the board in Australia
There has been an increase in lending for new homes in Australia to both owner occupiers and investors, according to the latest housing figures from the Australian Bureau of Statistics. The data shows that there was a 4.3% increase in the number of owner occupier loans for construction, while the equivalent number of loans for the purchase of a new property rose by 1.6% in April. The figures include an increase in lending for investment in new residential dwellings which took the annual value to in excess of $9 billion for the first time ever. Harley Dale, chief economist of the Housing Industry Association, said the number of first home buyer loans for owner occupiers remains low, but is running at its highest annual level in a year, although that of course excludes those first time buyers entering the investment market. He also pointed out that the number of trade-up buyer loans reached its highest level since prior to the global financial crisis and described the data as a positive update for the new home building industry. A regional breakdown of the figures, however, shows wide disparities in new housing conditions. The total number of owner occupier loans for new housing increased in six out of eight states and territories. Over the three months to April this year the seasonally adjusted estimate of new loans increased by 4.9% in New South Wales, by 4.7% in Victoria, by 3.4% in Queensland, by 1.6% in South Australia and by 20.6% in the Northern Territory. The number of loans fell over the same period by 4.4% in Western Australia, by 10.3% in Tasmania and by 8.7% in the Australian Capital Territory. Continue reading
