Uk
Lending to first time buyers with small deposits in UK falling
First time buyers in the UK are still finding themselves left out in the cold as lending to small deposit borrowers is falling as a proportion of all home lending, a new report shows. The Autumn Statement from the Chancellor of the Exchequer accompanied a house purchase jump in November with approvals up 1.3% to 70,511, according to the latest Mortgage Monitor from chartered surveyors e.surv. However, it explained that while the Autumn Statement focused on helping more people get on the housing ladder, first time buyers are yet to see the same benefits as other areas of the market. Despite the rise, lending to small deposit borrowers, that is buyers with a deposit worth 15% or less of their property’s total value, totalled just 11,493 in November, showing no improvement on 11,489 in October. Small deposit borrowers are falling as a proportion of overall house purchase lending, accounting for just 16.3% of approvals granted, down from 16.5% in October. The latest First Time Buyer Tracker report from Your Move and Reeds Rains reveals a similar picture. First time buyer sales dipped by 1.7% month on month from 28,600 in September 2015 to 28,100 in October 2015. ‘The Chancellor’s proposals coincided with a climb in November’s mortgage market. More prospective home buyers are find their applications successful as we near winter,’ said Richard Sexton, director of e.surv. ‘However, for first-time buyers it’s a different story. For those struggling to get their foot in the front door, promises of starter homes are of little consolation. Theoretically, first time buyers should be benefitting from measures such as the extended Help to Buy Scheme and the Help to Buy ISA which has finally come into force but home ownership still remains a distant dream to many,’ he explained. ‘Mortgages may be available, inflation low and wages rising but whether there are enough homes is another question. Supply must be addressed if aspirational home owners are to see a real difference and only time will tell if words can translate into real benefits for first time buyers,’ he added. November saw over 10,000 more mortgages approved to home buyers than a year ago, with 70,511 loans, jumping a fifth since 59,262 in November 2014. This was the highest year on year rise seen since March 2014, as the lending market went from strength to strength amid rising confidence. On an annual basis, this jump in overall home purchase lending has allowed an improvement in small-deposit lending. Home purchase lending to borrowers with smaller deposits grew 44% year on year from November 2014 to 8,000 approvals. However, the current total for small deposit loans, which stands at 11,493 this November, is crucially much smaller compared to the unsustainable pre-recession heights of November 2007, when 16,227 were granted. ‘When compared to last year, mortgage lending is in a much healthier place. Some 12 months ago, home buyers were still suffering from the impact of Mortgage Market Review changes,… Continue reading
Owning a home is still part of the American Dream, new research shows
The majority of young people renting their home still believe in the American Dream of owning their own home, according to new research from the National Association of Realtors (NAR). Although only half of surveyed households believe the economy is currently improving, nearly all young renters eventually want to buy a home and compared to earlier this year an increasing share believes their personal financial situation will improve in the months ahead. The survey data reveals that an overwhelming majority, some 94%, of current renters who are 34 years of age or younger want to own a home in the future. Overall, 83% of polled renters have a desire to own and 77% believe homeownership is part of their American Dream. Lawrence Yun, NAR chief economist, said that the survey's findings debunk the notion that young adults aren't interested in buying a home. ‘Despite entering the workforce during or immediately after the worst of the financial and housing crisis, the desire to become a homeowner appears to be a personal goal for a convincing majority of young renters,’ he pointed out. ‘Furthermore, there appears to be sizeable, pent-up demand for buying that currently remains untapped because of a variety of economic and personal reasons impacting many households,’ he added. The top two reasons given by renters for not currently owning was the inability to afford to buy and needing the flexibility of renting rather than owning at 53% and 19% respectively. When asked what would likely be the main reason for buying in the future, renters cited lifestyle considerations such as getting married, starting a family or retiring and an improvement in their financial situation at 33% and 26%. ‘A combination of factors such as rising rents and home prices, limited supply, repaying student debt, and getting married and having children later in life has more to do with the currently underperforming share of first time buyers than the idea that buying a home is not as desirable as it used to be,’ Yun explained. Despite uncertainty about the economy's current performance, at least 84% of all households within all surveyed age groups and education levels believe owning a home is a good financial decision. When asked if they believe this strongly or moderately some 76% who believe it's a good decision feel strongly about it. Additionally, at least 85% of surveyed households in each age category as well as across all education levels believe home ownership is part of their personal American Dream. The most appealing aspects of homeownership cited by those with this feeling include a place to raise a family, owning their own place and a nest egg for retirement at 36%, 26% and 14% respectively. NAR's survey found that more home owners than renters during the polling period believe that it's a good time to buy a home at 82% compared to 68%. Furthermore, of those who thought it was a good time to buy, 645 felt strongly about buying. Among… Continue reading
Prime property values in London could see 3% growth in 2016
Prime property values in London are set to see modest 3% growth throughout 2016 but the fringes of the capital are expected to see much faster price rises of 5% or higher, a new forecast suggests. The market below £1.5 million is predicted o be the main driver of price growth in the coming year, as Stamp Duty continues to take the shine off the wealthiest segment of the London property market, according to the report from agents Marsh & Parson. Tooting and Queen’s Park are named in the report as the locations to watch in the coming year and agents are expecting an influx of buyers in January as the new year markets gets up to speed quickly. As a result, the popularity of more affordable and emerging locations is boosting activity and prices in these areas above levels seen elsewhere across the capital, the report explains. It points out that with direct transport links into Bank on the Northern line, and a leafy common on the doorstep, buyer demand has quickly spread from Balham to neighbouring Tooting. And in the North West, Queen’s Park is providing a credible ‘next step’ for those priced out of North Kensington and Little Venice, and is well serviced by the underground and over ground rail connections directly into Euston. With a top rate of Stamp Duty of 12% now in place, the highest tiers of the London property market have been severely tempered in recent months as buyers struggle to absorb the additional transaction levy. The report also shows that total prime London property sales dropped between the second half of 2014 and the first six months of 2015 and it is sales above £937,000, the threshold at which the higher Stamp Duty charges apply, which have seen the sharpest fall of all. In 2015, some 59% of London property sales have been for homes below the £937,000 marker, while purchases above this price threshold account for 41%, as the top of the market slows. In 2016 sellers will have to adjust their price expectations to make their properties more competitive and attractive. But properties that are priced realistically will still sell well, and quickly. At the start of this year, London homes for sale were typically achieving 95% of their asking prices, but this has climbed throughout the year to stand at 97% as of November 2015. ‘The Chancellor’s Stamp Duty changes have certainly dulled the London housing market of late, and whilst 2016 will see a return to growth it will be rather lacklustre. There now exists a fundamental unevenness between sellers who want to sell their properties at the prices they were at six months ago and buyers, who are seeking recompense for the increased Stamp Duty levelled at them,’ said Peter Rollings, chief executive officer of Marsh & Parsons. ‘It’s already started but it’s going to take a while… Continue reading
