TSI
Number of first time buyers in UK rises for third year
The number of first time buyers in the UK increased by more than a fifth in 2014, the third successive annual rise, new data shows. The 22% rise was similar to the 23% rise recorded in 2013, according to the annual Halifax First Time Buyer Review. There were an estimated 326,500 first time buyers in 2014, up from 268,500 in 2013, the highest annual total since 2007 and was 70% higher than in 2008. The data also shows that first time buyers increased their share of all house purchases made with a mortgage, accounting for 46%1 in 2014, up from 44% in 2013. Mortgage affordability has improved significantly in recent years. The proportion of disposable earnings devoted to mortgage payments by a first time buyer stood at 32% in the third quarter of 2014, a substantial improvement compared with the summer of 2007 when this figure reached a peak of 50%. Record low mortgage rates have been a major contributing behind this improvement, the Halifax says. There has been a fall in the size of the average deposit needed by first time buyers to £29,218, some 7% lower than in 2013 when it was £31,582. It says that this decline was primarily due to the greater availability of loans requiring a relatively small deposit during the past year. Nonetheless, the average deposit is still £11,718 or 67% higher than in 2007 when it was £17,499. ‘First time buyers are vital for a properly functioning housing market. Improving economic conditions and rising employment levels have boosted confidence among those thinking about getting on to the housing ladder for the first time, contributing to the significant increase in the number of first time buyers in the past two years,’ said Craig McKinlay, mortgages director at the Halifax. ‘Record low mortgage rates and Government schemes such as Help to Buy have improved affordability, enabling more first-time buyers to buy their own property,’ he added. The research also shows that nearly six in 10 first time buyer purchases are now above the £125,000 Stamp Duty threshold. The proportion exempt from paying stamp duty fell to 41% in 2014 from 45% in 2013. Almost half, 47%, of properties bought by first time buyers were priced between £125,000 and £250,000. Nationally, only 13% of first time purchases were above £250,000 in 2014. There were, however, considerable regional differences with more than half of first time buyers in Greater London, 56%, paying more than £250,000. The recent changes to the stamp duty system have saved the average first time buyer £781, reducing the tax bill for the average priced property of £171,870 from £1,718 to £937. Larne in Northern Ireland is named as the most affordable local authority district in the UK with an average property price of £80,793, some 2.8 times local average gross annual earnings. East Ayrshire and Inverclyde are the next most affordable also 2.8 and seven of the 10 most affordable authorities for first time buyers… Continue reading
Average city rents up almost 5% in the US in 2014
Americans paid out $20.6 billion more in rent in 2014 compared to 2013 as nationally average rents in cities increased during the year, new data shows. Cumulatively, they paid $441 billion in rent in 2014 compared to $420 billion last year, an increase of 4.9% as both the number of renting households and the average rent rose, according to an analysis from real estate firm Zillow. In California the Bay Area, consisting of the San Jose and San Francisco metros, saw the largest jump in cumulative rent paid in 2014, up 14.4% and 13.5% respectively. Rent per household in the San Jose metro rose by $197 per month, while rent in the San Francisco metro rose by $163 per month. Out of the top 50 largest US metro areas, the largest amount of cumulative rent was paid in the New York/Northern New Jersey and Los Angeles metros at $50 billion and $34 billion respectively. The smallest amount of cumulative rent was paid by renters in Birmingham, Alabama, at $1 billion, Louisville, Kentucky at $1.2 billion and Buffalo, New York at $1.2 billion. Nationally, the total number of renters is estimated to have grown 1.9% in 2014 and over the same time period, the median rent paid increased by 2.9%. ‘Over the past 14 years, rents have grown at twice the pace of income due to weak income growth, burgeoning rental demand, and insufficient growth in the supply of rental housing,’ said Zillow chief economist Stan Humphries. ‘This has created real opportunities for rental housing owners and investors, but has also been a bitter pill to swallow for tenants, particularly those on an entry-level salary and those would-be buyers struggling to save for a down payment on a home of their own,’ he explained. ‘Next year, we expect rents to rise even faster than home values, meaning that another increase in total rent paid similar to that seen this year isn't out of the question. In fact, it's probable,’ he added. Continue reading
CML voices concerns over European mortgage changes
The Council of Mortgage lenders has identified four main areas where a change of approach is needed to achieve minimum disruption to the UK mortgage market from European changes. In its response to the Financial Conduct Authority’s consultation on implementing the European Mortgage Credit Directive (MCD) in the UK, it says there are not sufficient measures to manage the transition to MCD rules. The submission says at present, there is no provision for ‘pipeline cases. Such a provision was crucial in the successful implementation of the Mortgage Market Review and the CML believes this approach should be replicated for the MCD. It also says that fundamental changes to the sales process that will confuse customers. The new requirement for a reflection period following a binding offer does not need to introduce a new step in the conveyancing process, as the current implementation proposal suggests. The CML says that the formal offer should be treated as the binding offer and this fully addresses the MCD requirements while minimising confusion. Another major issue is ensuring the MCD applies to new lending only. As currently drafted, the proposal is confusing and could be taken to apply to contract variations, which is not the intention. The FCA should make this explicit, says the CML report. The other concern is the disruptive definition of foreign currency loans. While the CML agrees with the objective of mitigating the risk of currency variation, the proposals apply too widely and the scope should be more narrowly defined. ‘The Directive provides little if any benefit to UK consumers or the operation of the market. We believe that both the government and the regulator share this view,’ said CML director general Paul Smee. ‘So, while we naturally recognise the need to comply, we believe that the UK should do so in a pragmatic way that disrupts the existing robust regulatory regime as little as possible,’ he added. Continue reading
