Investment
New mortgage market tracker report reveals how many applications are successful
Almost half, 47%, of enquiries to intermediaries about getting a mortgage in the UK resulted in a completion during the third quarter of 2015, according to a new Mortgage Market Tracker report. The quarterly tracker from the Intermediary Mortgage Lenders Association (IMLA) shows how many enquiries result in applications, offers and completions, as well as dropout rates, those attributed to lender declines, and the wider issues of intermediaries’ confidence in the business outlook for the mortgage industry, the intermediary sector and their own firm. The data from this first report also shows that 67% of initial borrower enquiries led to an application, 83% of which then received a lender offer. A similar percentage of offers, 84%, then reached completion. The largest percentage of dropouts occurred during the initial stage, with 33% of borrower enquiries not leading to an application. Intermediaries attributed 27% of all dropouts, equivalent to 14 in every 100 enquiries, to lender declines, with the remaining 73% of dropouts coming from client or broker withdrawals. The largest firms, those with more than 11 employees, and sole traders both outperformed the industry average of 67% converting enquiries into applications, with 70% of consumers progressing through this stage. Once a borrower submitted an application, sole traders achieved the highest rate of offers at 87% compared to an average of 81% and subsequently completions at 88% compared to an average of 84%. However, the smallest firms also reported the highest rate of dropouts due to lender declines at 35%, compared with an industry average of 27% and significantly higher than the decline rates reported by the larger firms. ‘The intermediary channel has never been more important to the UK mortgage market, with consumers and lenders both increasingly relying on brokers to match individual needs to suitable products,’ said Peter Williams, IMLA executive director. ‘Regulatory changes have brought new assessments and criteria to contend with, but this data suggests the majority of applications are getting the green light. It also shows that brokers are playing an invaluable role in the earlier stages by assessing borrowers’ circumstances and providing realistic advice and recommendations,’ he explained. ‘The advantage of a competitive marketplace with a range of mainstream and specialist players is that a decline from one lender does not necessarily mean the end of the road. Rather brokers will work to secure alternative mortgaging opportunities. As this suggests, positive customer outcomes rely on lenders and brokers working together effectively,’ he pointed out. ‘After a period of fundamental change, it is encouraging that intermediaries are upbeat about the business outlook, which bodes well for consumer access to mortgage finance. By tracking the mortgage pipeline, we hope to provide useful data for both lenders and intermediaries to help fine-tune the process and ensure a positive experience for consumers,’ he added. According to Brian Murphy, head of lending at the Mortgage Advice Bureau, brokers… Continue reading
Investment in European commercial property up 18% year on year in Q3
The level of investment into European commercial real estate continues to grow with €62 billion invested in the third quarter of 2015, up 18% on the same period in 2014. France experienced the most noteworthy increase with investment activity of over €7 billion, almost double that of the same quarter in 2014, according to figures from CBRE. French investment activity was dominated by domestic investors who accounted for more than 70% of CRE investment in the third quarter, and who typically favoured large offices located in the Paris CBD. Whilst France benefitted from the biggest change in investor sentiment, it was Germany which saw the greatest increase in absolute terms, with quarter three investment of €14 billion, up €5.6 billion on the same quarter last year. The report points out that the €36 billion already invested in German commercial real estate in the first three quarters of this year is 40% higher than the equivalent period in 2014. Alongside France and Germany, several other countries experienced a strong third quarter. Norway and Sweden saw investment volumes grow by 139% and 68% respectively on the third quarter of 2014. Southern Europe also performed well, with Portugal and Italy benefitting from a slight shift in investor focus away from the Spanish market. Belgium attracted near record levels of investment in the third quarter, boosted by several large retail transactions. In Central and Eastern Europe, Poland, the Czech Republic and Hungary saw the most investment activity. At a city level, the most notable aspect was the move of the Nordics up the table of Europe’s largest CRE investment markets with Oslo, Copenhagen and Stockholm making the top 10. Typically these Nordic capitals have very high levels of domestic investment, around 70%, with cross-border European investment accounting for around 25% and just 5% of capital coming from outside of Europe. However in the third quarter foreign investment accounted for more than half the total in both Oslo and Copenhagen. London and Paris continue to fill the top two spots in the league table, but interestingly all five of the main German markets make it into the quarter’s top ten for the first time since the first quarter of 2013. ‘We have seen good growth across the European commercial real estate investment market in the last quarter. With high levels of transactions expected in the fourth quarter, this current trend is set to continue and we believe we will see a strong year end in terms of investment volumes,’ said Jonathan Hull, managing director, EMEA Capital Markets at CBRE. ‘Retail recorded the strongest levels of investment growth this quarter up 45% on the third quarter of 2014, the second highest level we have seen in 10 years of data. The office sector also performed well across the region, underscored by some significant transactions in France, the UK, Norway… Continue reading
UK lettings agents report fewer rent rises in October
Fewer tenants are experiencing rent increases in the UK with the number of letting agents reporting rent rises falling to a quarter, according to the Association of Residential Letting Agents (ARLA) latest report. This is down from 32% in September meaning that the number of rent hikes in October is the lowest reported this year, the data from the ARLA private rental sector report shows. The data also shows that demand for rental properties dropped in October, alongside supply of available housing, a trend typical of the time of year. ARLA agents registered 33 new tenants on average per branch this month, the lowest amount this year. However, the London rental market bucked this trend. The report found that demand for rental housing in London continued to increase in October with an average of 42 prospective tenants registered per branch, up from 39 in September, an 8% increase. Supply of rental accommodation decreased in line with demand, dropping from 182 properties on average per branch in September, to just 173 in October. However, prospective renters in the East of England and the South West will have better luck finding a property; agents in those regions managed more properties in October than September, with 199 and 184 properties managed respectively. ‘Fewer agents reporting rent increases should bring some relief to tenants before Christmas. It’s definitely a step in the right direction, however a quarter of tenants are unfortunately still seeing hikes,’ said David Cox, ARLA managing director. ‘Although it’s typical that demand dropped at this time of year, as there’s a seasonal lull in the run up to Christmas, we except to pick up again in January,’ he added. Looking ahead to next year, ARLA hopes to see the number of tenants experiencing rent hikes remain low with supply and demand levelling out. ‘However, a lot is resting on the economic and political agenda. We’re still waiting for new houses, promised by the Prime Minister to be built,’ said Cox. ‘Whilst this will take pressure off the rental prices as supply rises, the changes to landlord tax proposed under the Finance Bill is likely to discourage new landlords from entering the market,’ he pointed out. ‘Further, it’s been a waiting game all year to see if Bank of England governor Mark Carney will raise interest rates in the New Year and this will play a big part in determining whether renters looking to buy a home will be able to afford to,’ he explained. ‘And when interest rates do rise, the goal of home ownership will be pushed further out of reach for many and of course put further pressure on the private rental sector,’ he added. Continue reading
