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UK home owners increasingly looking to remortgage to a better fixed deal
Up to one in six UK home owners are considering remortgaging over the next six months as the ongoing mortgage price wars cut rates, new research has found. They are targeting average savings of £99 a month, equivalent to £1,188 a year, according to the study by The Nottingham Building Society Nottingham. This comes as Council of Mortgage Lenders figures show that lending for remortgaging increased 15% month on month in recent data and industry experts are forecasting a surge in remortgaging in response to recent rate cuts which have seen five year fixed rates drop below 2%. The Nottingham's research shows five year fixes are the most popular choice for customers considering remortgaging and 27% of potential remortgaging customers would choose a five year fix and 21% a two year fix. The research shows strong demand for fixed rate deals as around three quarters of those considering remortgaging would choose a fixed rate deal. The study found 12% would ideally fix for longer than five years. Just 7% of those surveyed would choose tracker rates while 4% would consider discount deals and 7% say they would choose a standard variable rate. ‘The mortgage price war is interesting to existing home owners who are keen to take advantage of the record low rates. With interest rates expected to rise in the coming years then now could well be the right time for many to consider whether there are savings to be had,’ said Ian Gibbons, senior mortgage broking manager for Nottingham Mortgage Services. ‘Potentially savings are higher than the average £99 a month people are looking for. Someone with a £150,000 mortgage who moved from a deal at 4% to one at 2% could be around £3,000 a year better off,’ he explained. ‘However, to secure the best remortgage deal it is important to look at more than the base rate. You need to search the whole market and to be aware of the product fees that may be charged. A great rate won't save you much if you have to pay a high fee,’ he added. Continue reading
Court ruling means UK new home targets are more difficult, it is claimed
A land broker has warned that a recent High Court ruling lessens the likelihood of the UK ever hitting its house building targets. Following a legal challenge by Reading Borough Council and West Berkshire District Council, the ruling by Justice David Holgate forced ministers to scrap guidance which excluded developments of 10 homes or fewer from the requirement to provide or contribute to affordable housing provision. The Department for Communities and Local Government (DCLG) has said it will appeal the High Court’s ruling. However, according to Home Counties land broker Aston Mead it will lead to fewer homes being built as a result. ‘It has already stopped a stack of proposals in their tracks and a lot of sites in our pipeline are now being renegotiated,’ said Aston Mead director Adam Hesse. ‘Sites that may well have been suitable for 10 units will now be reduced to whatever the new threshold is, so full use won’t be made of the brownfield land available. Consequently it will mean less income for districts and boroughs, the very same organisations fighting for a change to the guidance in the first place. It’s utter madness,’ he added. He also pointed out that the contribution that small developers make to the house building programme should not be underestimated. ‘Small sites are the engine rooms of UK development. They are invariably built by small firms who have proportionately higher costs. The economic viability of their schemes is often on a knife-edge, with little ability to challenge local authority demands for affordable housing,’ said Mead. ‘This latest ruling now means that they will simply give up trying to build on certain sites, leading to fewer homes of all types. What’s more, small and little used commercial sites which could be more productively turned over to residential housing won’t even be attempted,’ he explained. ‘The country desperately needs more homes. It is already falling far short of current house building targets. A ruling like this is a significant blow for smaller residential developers and will only serve to ensure that those targets are even harder to meet,’ he concluded. Continue reading
UK sees strong month on month price growth, latest index shows
Residential property prices in the UK increased by 2.7% between July and August and are up 9% compared with a year ago, according to the latest index figures from the Halifax. The data from the lender also shows that on a quarterly basis, from June to August, prices were 3% higher than in the previous three month period. It is the biggest monthly price rise since May 2014 when it was 3.8% but the index report points out that monthly movements can be volatile and the quarter on quarter change is a more reliable indicator of the underlying trend. The index report also shows that buying still cheaper than renting. The average monthly costs associated with buying a three bedroom house in the UK for a first time buyer was £666 in June 2015, some 8% or £56 lower than the typical monthly rent paid on the same property type at £722 a month. With the price of a typical first time buyer home rising by 8% over the past year, the difference between the cost of owning and the cost of renting has narrowed from £85 to £56 over the past year. 'The underlying pace of house price growth is strong. The shortage of second hand properties for sale on the market is resulting in upward pressure on house prices,' said Martin Ellis, Halifax housing economist. 'At the same time, economic recovery, real earnings growth and very low mortgage rates are supporting housing demand. Strengthening demand and highly constrained supply are likely to mean that house price growth continues to be robust in the short term,' he added. However, according to Rob Weaver, director of property at residential investment platform Property Partner, for many people, weak supply and the resultant price growth have become an almost insurmountable barrier to getting on the property ladder. 'With supply so low, consumer confidence healthy and mortgage rates still at record lows, strong price growth is a trend that can only continue in the months ahead. If prices carrying on rising at this rate, even many haves will become property have nots,' he said. 'House price growth in August hit its highest level in 16 months, as the number of homes being marketed fell to record low levels. Sellers are just not coming to the market and no-one really has an answer to how to tempt them back,' he explained. 'We are in danger of seeing the days of free wheeling price growth, and we know where that ended up. There needs to be a focus on creating more supply, because without properties coming to the market, prices will continue to grow and the market will continue to become more and more volatile,' he added. Jonathan Hopper, managing director of the buying agents Garrington Property Finders, believes that price growth is being driven by a curious mixture of strength and starvation. 'Britain's economic strengths of wage growth, low inflation and bullish sentiment, are… Continue reading
