Uk
Research shows interest only mortgage numbers in UK are falling
Concerns have been growing in the UK over the number of home owners with interest only mortgages who do not have enough finance to cover themselves when their loan comes to an end. But new research shows that over the past two years the total number of interest only loans outstanding has fallen by over a quarter with a 16% reduction in the number of loans over the past year alone. According to the Council of Mortgage Lenders the progress that has been made and the ongoing steps that are being taken by the industry to check that borrowers with interest only mortgages have plans for how they will repay their loans at maturity is encouraging. As at the end of 2014, CML members reported that there were around 1.9 million pure interest only mortgages outstanding, and around 460,000 part interest only mortgages. This was around 300,000 fewer pure interest only mortgages and 160,000 part interest only mortgages than a year earlier. The CML research suggests that a quarter of this reduction is down to natural attrition, which is loans maturing and repaying at the end of their term. Around a third can be attributed to full redemption of loans not set to mature until at least 2028, suggesting that many borrowers are taking action well before problems could arise. This also suggests that a significant group of borrowers are successfully remortgaging onto full repayment terms without falling foul of new affordability rules. Of those loans that have matured, few have failed to repay. In total, there are fewer than 16,000 loans outstanding which have matured but not yet repaid or restructured and previous experience shows that most such loans subsequently redeem within a relatively few months of maturity. However, the CML said there is no room for complacency and members are continuing to think about the options for customers who may not be able to repay their mortgages. This includes more partnering with third party advice providers, including equity release firms, and product innovations that may help some borrowers. The CML also pointed out that it remains a challenge to get borrowers to respond to lender contact designed to help them plan for their mortgage's repayment at maturity. Lenders contacted around 427,000 interest only customers between April and December 2014, about 17% of all interest only borrowers. During 2014, the focus of lender communications moved beyond those whose mortgages are due to mature by 2020, and included borrowers whose mortgages are not due to mature until after this. Response rates by borrowers varied. Around 27% of those contacted whose mortgages are due to mature between 2021 and 2028 responded but only a disappointing 2% of those whose mortgages are not due to mature until after 2028 did. However, where lenders did succeed in getting customers to respond, 86% of those who responded had a repayment strategy, and those who did not appeared responsive to making changes such as switching to repayment terms,… Continue reading
UK property sales exceed 100,000 for third month in a row
Residential property sales in the UK were at their highest in August for 18 months, according to the latest data published by HMRC. It means that more homes were sold in in August than in any month since February last year with the seasonally adjusted data showing 106,480 transaction during the month. It is the third month in a row that sales of more than 100,000 were recorded, however, sales are still well below the monthly sales of nearly 150,000 seen during the housing boom in 2006. The seasonally adjusted estimate of the number of residential property transactions increased by 3.1% between July 2015 and August 2015 and that is 5.7% higher compared with the same month last year. For August 2015 the number of non-adjusted residential transactions was 7.4% lower compared with July 2015. The number of non-adjusted residential transactions was 1.9% lower than in August 2014. Peter Rollings, chief executive officer of Marsh & Parsons, said that taking into account seasonal adjustment, property sales are going from strength to strength, and showing great improvement from this time last year. ‘With the spectre of higher interest rates being kept at bay, buyer demand is in full swing and summer sales have continued to blossom in August. After slightly fewer home sales than we would expect in a typical July, buyers last month were showing a new enthusiasm and readiness to enter the market,’ he pointed out. ‘The changes to stamp duty are still washing over London and cooling activity at the topmost tiers of the housing market. But overall demand for property in the capital hasn’t waned, as young professionals and first time buyers continue to seek out up and coming areas to put down roots,’ he explained. ‘The subsequent squeeze on available property for sale in the capital should keep pushing house price growth along well into the autumn,’ he added. Continue reading
Scottish rents fall nationally for first time since start of 2015
Residential rents in Scotland have fallen month on month for the first time since the start of the year with a 0.5% drop in August, according to the latest buy to let index. This means the average monthly rent in Scotland has dropped £3 from its summer peak of £549 in July to stand at £546 in August 2015, the data from Your Move, one of Scotland’s largest lettings agent networks, shows. Rent growth has also seen an about turn on an annual basis. After an acceleration of annual rent rises throughout the first half of 2015, Scottish rents are now just 1.7% higher than a year ago, marking a downturn since July, when the annual change stood at 2.8%. Brian Moran, lettings director at Your Move Scotland, explained that rents have retreated back from record levels, after an acceleration of rent rises in 2015. ‘This should provide a welcome let up for tenants, after only last month rents hit a new record level. This adjustment has also broken up the forward march of annual rent growth that’s been gathering speed recently,’ he said. ‘But peak lettings season is only around the corner, and this breather may not last for long. The vast discrepancy between demand and supply of available homes to let has not disappeared and this gap will only widen if landlords are scared out of the market by the government’s proposed regulatory changes and draconian rent controls,’ he added. A breakdown of the figures shows that rents are higher than a year ago across four of the five regions of Scotland. The Highlands and Islands continue to show the strongest annual rent rise, up from 5.4% in the year to July 2015 to 6% as of August. As a result, rents in this region have risen £32 over the past 12 months to a new record of £570 per month. Average monthly rents in the South have increased at the second fastest rate over the past year, jumping 4.5% since August 2014. Compared to a year ago, rents in Edinburgh and the Lothians and the East of Scotland have risen a milder 2.6% and 2.5% respectively. Meanwhile, Glasgow and Clyde was the only region to experience a year on year drop in rents in August. Average rents are now 3.6% lower than in August 2014, equivalent to £21 cheaper. On a monthly basis, there has been a more widespread slowdown. Average monthly rents have fallen in three out of the five regions of Scotland in August, up from only one region last month. The biggest monthly drop was in Glasgow and Clyde, where average rents have fallen 1.3% since July. The typical rent in Glasgow now stands at £554 per month, and has fallen considerably from its peak of £575. In the East of Scotland, the typical monthly rent is now… Continue reading
