Uk
More UK home owners remortgaged in July due to falling rates
Home owners who remortgaged their properties in July lost no time in taking advantage of falling mortgage rates following the UK’s decision to exit the European Union (EU), a new report shows. Some 63% of remortgagers lowered their mortgage rates last month, up by 7% from May and 43% acted to reduce monthly payments as cheaper deals appeared on the market in the wake of the Brexit vote, according to data from LMS. With the exception of two-year variable products at 75% loan to value (LTV), Bank of England data shows average mortgage rates were lower across the board in July than was the case in May before the EU referendum took place with many falling to record lows. The rate cuts meant that more home owners who remortgaged to reduce their payments enjoyed substantial savings. Just 28% of those who took this course of action in May saved £200 or more each month from their new deal. In comparison, 35% who remortgaged to reduce their payments in July reported a monthly saving of £200 or more. The report says that the appetite for securing lower rates and reducing monthly payments in July came despite growing speculation of a base rate cut from the Bank of England, which ultimately occurred in August. For the first time since tracking began in December 2014, LMS data shows that there were higher expectations of rates falling than rising in July. Among the 13% of remortgagers who expected rates would change in July 59% expected rates would fall compared with just 18% who felt this way in May and 29% in June, when the EU vote took place. Despite widespread speculation over the economic impact of the UK’s vote to leave, the July data from LMS also shows little sign of a drop in consumer confidence in the remortgage market. The percentage of remortgagers increasing the size of their loan rose from 26% in May to 28% in July, while the percentage increasing their loan by more than £10,000 was unchanged from May at 19%. Similarly, the percentage remortgaging to pay for home improvements increased slightly from 19% in May to 21% in July, while there was a two percentage point increase in those remortgaging to pay off other debts from 7% to 9%, potentially in a bid to stabilise their finances in the face of an uncertain economic environment. ‘The aftermath of the vote to leave the European Union has seen many mortgage rates tumble to record lows, a fact that has not been lost by home owners as many seek to take advantage of low rates. July’s figures show many people were keen to press ahead with plans to remortgage, regardless of growing speculation that a base rate cut might be on the cards,’ said Andy Knee, chief executive of LMS. ‘The Bank of England’s reduction of the 0.5% base rate to 0.25%… Continue reading
Would be home owners in UK save for over four years for home deposit
Aspiring home owners in the UK believe they will need to save for more than four years in order to afford a deposit for their first home, new research has found. While most will safe for four years and four months some 27% believe that they will never be in a position to buy their own property, according to the report from insurance firm Aviva. Official figures show that the typical first time buyer home in Britain now costs £180,677. In order to save a 10% deposit, aspiring home owners starting from scratch would need to save £347 a month to build this deposit in four years and four months, assuming no interest growth. Despite property ownership becoming more difficult as UK house prices rise, under 45s believe home ownership will only become more important in the next 20 years, the report found. However, a clear distinction emerges between different age groups, with 73% of 16 to 24 year old and 60% of 25 to 34 year olds saying home ownership will grow in importance, compared to just 40% of over 55s. As younger age groups are the next generation of potential homeowners, it is clear that the desire to be a homeowner will continue to be very significant. Younger age groups are prepared to wait to get on the property ladder. Some 81% say that home ownership is perceived as a more important milestone in the UK than other parts of the world. On a personal level, 79% of people in the UK agree becoming a home owner is important to them or was, if they already are home owners. However, younger generations appear to accept that the path to home ownership might require some patience. Some 53% of over 55s say they want or wanted to become a homeowner as quickly as possible compared to 43% of 25 to 34 year olds, a key first time buyer age group. While 24% of over 55s say they don’t or didn’t mind waiting a while to become a home owner, this rises to 40% for 25 to 34 year olds. Despite the importance of getting on the property ladder, many people are failing to protect their possessions as 19% or 10 million UK adults do not have contents insurance if they own a home and 33% of those renting. The research also found that 40% of people don’t know the value of their contents insurance, leaving them at risk of being inadequately covered. In addition, 62% do not know how much their possessions and valuables are worth, potentially resulting in being under or over insured. ‘The UK’s households are changing, not just as the population grows, but as society evolves to include more family types. However, one thing remains constant and that is our desire to get on the property ladder. The next generation of home owners are certain this will… Continue reading
Cost of land to build prime homes in Asia still rising
Prices of residential sites in Asia increased by 1.9% in the first half of 2016, down from 2.8% in the preceding six months, put office land increased from 1.9% to 2.2%. Overall development land investment volumes in Asia matched the level registered in the corresponding period last year, according to the Prime Asia Development Land Index from international real estate firm Knight Frank. As compared to the preceding six months, however, they were 40.4% lower and the index report explains that land markets tend to be more active in the second half of the year, which accounts for 60% of the transactions historically. With state owned enterprises purchasing land aggressively, China, which accounts for more than 90% of the deals in Asia, saw a 6% year on year increase in volumes while in Thailand some major deals boosted volumes by 190.4%. However, cross border land investment volumes fell by 11.5% year on year. ‘Part of the reason is that while Chinese developers have previously snatched up land in Hong Kong and Singapore, they now appeared to have joined their local counterparts to become more cautious amid the ongoing correction in housing prices in these markets,’ the report explains. As a result, China bought 88.8% less land year on year in the rest of Asia. In China, among the cities tracked, Shanghai experienced the strongest growth in prime residential land prices. ‘While the government raised the down payment requirement on second and subsequent properties as well as tightened non-locals’ purchase eligibility, shadow banking and peer to peer financing helped home buyers circumvent these rules, although authorities are closing the loopholes,’ it adds. According to the National Bureau of Statistics, residential prices in Beijing, Guangzhou and Shanghai surged by 15.3%, 12.8% and 19.5% respectively in the first half of 2016 and the report says this emboldened developers to bid for land aggressively. In particular, Shanghai saw the average premium over reserve price in residential land auctions soar to 154% in the first six months of the year from 60% in the corresponding period last year. As a result of an overhang of unsold prime housing inventory in Mumbai and New Delhi that requires an estimated four and seven years to clear respectively, the Knight Frank indices registered a decline in prime residential land prices. It adds that strong office leasing demand boosted the prices of prime office development sites in Bengaluru, which grew the fastest in the region. Similarly, prices of commercial land in Mumbai and New Delhi outperformed those of residential sites. Tokyo registered the largest increase and the report says that the negative interest rate introduced by the Bank of Japan has brought mortgage rates down, supporting housing demand. Indeed, recent condominium launches with hefty price tags were met with much enthusiasm from home buyers, with one development in Minato ward even fetching a record high average price of US$33,800 per square meter. Sites for office development in Asia also… Continue reading
