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Home lending in the UK rebounds in February, latest data suggests
Home lending rebounded in February for borrowers in the UK requiring smaller deposits and total home purchase approvals increased for the third month in a row, according to the latest figures. Higher LTV lending represents 16.9% of February house purchase approvals, the largest proportion since September 2014 and there were 10,300 higher LTV loans, a 10.7% month on month increase compared to January. The mortgage monitor report from e.surv chartered surveyors suggests that the lending market is regaining its momentum. A breakdown of the figures shows that higher LTV house purchase approvals, that is loans to borrowers with a deposit of up to 15% of the total value of their property, made up 16.9% of house purchase approvals in February, a significant proportional increase from 15.3% in January and just 13.9% in December. Higher LTV approvals formed the largest proportion of total house purchase lending since September 2014 and as a result, the absolute number of higher LTV approvals has bounced back. There were 10,298 higher LTV loans in February, 10.7% more than 9,300 in January. February also marks the third consecutive month of growth in higher LTV approvals. The report says that the rise was partly driven by rising property prices. The average purchase price for first time buyer homes climbed to a new record of £160,304 in January, 12% higher than January 2014, according to the latest First Time Buyer Tracker from Your Move and Reeds Rains. ‘Lending to lower deposit borrowers is back on track, which is encouraging as the mortgage market moves into spring. Higher LTV borrowers took a nosedive in October as a proportion of the market after the introduction of loan to income caps became a challenge for first time buyers,’ said Richard Sexton, director of e.surv chartered surveyors. ‘But these buyers are evidently returning to the market to take advantage of low mortgage rates and cheaper stamp duty charges. And after the tricky bedding in phase that accompanied new mortgage legislation, first time buyers are now once again accessing a market restructured for long term viability,’ he added. He pointed out that the Mortgage Market Review has ensured that all future borrowers are subject to comprehensive affordability checks and given plenty of advice, and so the danger of them defaulting has been reduced. ‘Many prospective borrowers are unable to save up a massive sum for a deposit but they often still have strong monthly incomes and make attractive customers for lenders. Low deposits do not necessarily need to mean high risk,’ he said. House purchase approvals grew 0.2% month on month in February, with 60,935 approvals, compared to 60,786 in January and 60,349 in December. This improvement comes after a series of drops stretching from July to November 2014, suggesting the market is settling back into sustainable growth. ‘The mortgage market is beginning to warm up, with three months of improvements under… Continue reading
New single house price index for whole of UK planned
Official house price statistics are due for a revamp in the UK where there are currently a number of different indices. This follows are consultation launched last year by the organisations responsible for publishing house price data in the UK; the Land Registry, Land and Property Services, Northern Ireland and the Office for National Statistics Registers of Scotland It looked at a proposed methodology for a single definitive House Price Index (HPI), and gathered views on whether it would meet requirements. It also asked interested parties how removing the indices currently published by Land Registry and the Office of National Statistics would them. The majority of respondents welcomed the proposal for a single official house price index and the clarity this would bring to the use of house price statistics. They also backed the continued publication of supplementary analysis and data alongside the House Price Index, for example, the Land Registry Price Paid Dataset, but also welcomed extra detail if available. Respondents also want a better explanation of the methods used to produce the House Price Index and consistent back data using any new methodology as far back as possible. While the majority thought the proposed methodology was sensible, there were areas that needed further analysis. They were happy with how long the proposed new index would take to publish, accepting the additional time required to process the new index and the greater accuracy and coverage it would provide. But they wanted further clarity on how the new index will be published due to concerns about the same data being published across a number of different websites. As a result a business case has been drawn up recommending the implementation of the proposed new single official house price index and there will be further work to ensure a full and consistent back series for the proposed new index that can be published back to 1969. Officials will also investigate using GOV.UK as the central publication point for the new monthly index publish a final version of the methodology by early summer 2015 if the new index is approved. Continue reading
Edinburgh prime housing market heads sales growth in Scotland
Estate agents in Scotland had expected to see a house price boom following the No vote in the independence referendum last September but this has not happened, it is claimed. However, there are some areas that are doing well, according to the annual Scottish Property Briefing report from Strutt & Parker. It says that the luxury new build market has definitely taken off in central Edinburgh and the firm forecasts continuing growth in this area. It also predicts a 4% to 5% growth in the £400,000 to £1 million mature markets, although selling properties over this price will continue to be challenging and there is likely to be 0% growth in this area. Last year there were 66 house sales of over £1 million in Edinburgh, which represented almost half of all Scottish properties in this range, of which Strutt & Parker sold almost 20% including one house at almost £4 million which is one of the Scottish capital's most expensive sales in recent years. According to Blair Stewart, who heads up the firm’s Edinburgh residential department, despite the new Land and Buildings Transaction Tax and continuing political uncertainty there are still many people willing to invest and live in the city. In the Country House market over the last year there has been a 27% increase in prime market transactions of £400,000 and over. Areas that have performed well have been those within commuting distance to Edinburgh, with a 50% increase in transaction numbers in Fife, a 69% increase in the Borders and an 85% increase in Midlothian. ‘The legacy of the Referendum continues to affect the prime country house market with continued uncertainty. Land and Buildings Transaction Tax will cause the top and middle of the prime market to readjust and capital values are expected to reduce by 2% to 4%,’ said Malcolm Leslie. ‘It is also expected that some would be buyers will make the most of their existing home by extending or renovating rather than moving home and incurring the increased tax. The quality of life that a Scottish country house can offer, together with the increasing value gap between southern England and rural Scotland, will encourage inward investment,’ he explained. ‘Finally I predicted that with the stability in the macro economic situation, the long term prospects for growth in the prime country house market look good,’ he added. There are two major factors affecting property prices in the UK, according to Stephanie McMahon, head of Strutt & Parker's research team. ‘Emerging countries with weak institutions has led to a flight of money from these markets to places such as the UK that has, for example, very strong property rights,’ she said. ‘Secondly, the population growth and rise in single person households leads to demand outstripping supply. However, the country as a whole is affected differently. Prices in London have risen by 35% since 2007, yet in Scotland it has fallen by 7%,’ she added. She pointed out that… Continue reading
