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Over half a million UK home owners plan to pay off mortgage with pensions pot
Just over half a million people, some 631,000, in the UK intend to use all or part of their pension to help repay their mortgage balance, new research has found. While the majority of 40 to 70 year olds with mortgages, 71%, intend to continue to meet their obligations via monthly repayments and 25% through additional lump sum contributions, up to 9% or 631,000 intend to use their retirement savings to repay their mortgage. The research from financial firm Paternership, shows that this is lower than the figure recorded last year when it was 14% and said that more people are looking to more traditional methods to repay the outstanding balance on their mortgages. It also shows that 8%, or 561,000 people, say that they intend to rely on an inheritance to repay the outstanding balance on their property and 7% or 491,000 confess they don’t know how they will meet their obligations. ‘While it is still shocking that over half a million people in the UK intend to use all or part of their retirement savings to repay their mortgage, it has fallen from over a million in 2014,’ said Andrew Megson, managing director of retirement at the firm. ‘This is fascinating as it suggests that the Pension Freedoms which allow people to access their entire pension in cash have encouraged people to take a more holistic view of how they use their pension rather than focusing on one off expenditure. This in turn appears to have focused peoples’ minds on paying off their home loan before they retire,’ he explained. ‘The work that the lenders have done in communicating with interest only mortgage customers about their options and obligations is also likely to have had a positive impact as it will have encouraged more people to move to capital repayment. That said, while a debt free retirement is the ideal, some people may find they reach traditional retirement age with an outstanding balance,’ he pointed out. ‘Using their pension may well seem like an option but it is not the only option as working longer, downsizing or considering a lifetime mortgage may be more appropriate. Ideally, pension savings should be used to provide an income in retirement, and with the state pension only providing a very basic safety net, making this choice could lead to hardship in later life,’ he added. Continue reading
Strong mortgage activity boost for Scotland, latest CML data shows
Mortgage activity in Scotland saw a rise of 39% in the second quarter of 2015 and is also up 3.1% year on year, according to the latest data from the Council of Mortgage Lenders. It is outperforming other areas of the UK which have seen only a small quarterly rise and indeed the Scottish market saw the highest number of loans to those purchasing a home since the second quarter of 2008. A breakdown of the data shows that the value of first time buyer loans increased by 52% in comparison to the first quarter of 2015 and 11% year on year. The number of first time buyer loans is up 51% on the first quarter of 2015 and 5% on the second quarter of 2014. The data also shows that first time buyers account for 48% and home movers 52% of all house purchase lending activity and typically borrowed 3.02 times their gross household income, up from 2.84 the previous quarter but less than the UK average of 3.38. The typical loan size for first time buyers was £101,515 in the second quarter, up from £94,795 in the first quarter while the typical gross income of a first time buyer household was £34,000 also up compared to £33,677 in the first quarter. First time buyers' payment burden in the second quarter was 17.2% of gross income to cover capital and interest payments, up on the first quarter's 17% but lower than the 18.4% UK average. Home owner house purchase activity came out of the traditional seasonal dip in the first quarter to see large growth in numbers both quarter on quarter and, to a lesser extent, year on year. Remortgage lending rebounded out of a stagnant period to total the highest volumes since the last quarter of 2013. ‘After three quarters of consecutive decline, it is welcome to see house purchase levels in Scotland bounce back finally. This quarter saw the highest number of loans to those purchasing a home since the second quarter of 2008,’ said Kennedy Foster, CML policy consultant for Scotland. ‘With competitive mortgage deals, better affordability than the UK overall and the replacement of stamp duty with a new taxation system that benefits the majority of borrowers, it appears conditions are relatively favourable at the moment in Scotland for those looking to buy a home,’ he added. According to Christine Campbell, managing director of Your Move Scotland, activity may have been boosted by the revised stamp duty system in Scotland by providing a helping hand. ‘Since its introduction house purchase loans have soared to a seven year high, after a staggering 39% quarterly leap. Scottish buyers are eagerly making the most of the new tax savings available, and we’ve seen property sales rise 25% month on month in June,’ she explained. She believes that any rise in interest rates will be put back even further by the current turmoil in the finance markets due to the slowing Chinese economy and the current… Continue reading
UK regional office market sees demand increase
Occupier demand in the UK regional office market increased 51% in the first quarter of 2015 compared with the previous quarter, with total investment at its highest level since 2007. This growth totalled a combined take up of 2.08million square feet and 49% above the five year quarterly average, according to the latest data from real estate firm Knight Frank. Birmingham saw the top performance in the second quarter with take up of 521,136 square feet which was boosted by a number of large transactions, the most significant being the 212,000 square feet pre-let to HSBC at Arena Central. Pre-letting activity also increased in the second quarter of the year, impacting on new and grade A availability which is down by 17% year on year collectively to 2.2 million square feet. In the investment market some £2.09 billion of regional office assets changed hands in the first half of 2015, the sector’s strongest first half year since the second half of 2007. Bristol, Manchester and Birmingham were the main focus of investment activity, accounting for over half of total investment turnover. Bristol in particular saw some sizeable transactions, including the off market purchase of Templeback by Orchard Street Investment Management in June 2015 for £58.5 million, reflecting a net initial yield of 5.34% and Aviva Investors’ acquisition of 66 Queen Square for £32.7 million, at a net initial yield of 4.94%. ‘Improved occupier confidence has led to a surge in pre-letting activity and high levels of take-up across the main regional office markets in the second quarter,’ said Stephen Hodgson, head of regional offices at Knight Frank. The firm anticipates that this will be reflected in rental growth and further starts on new development schemes over the next 18 months. ‘On the investment front, despite the fact that yields are approaching historic lows we also feel that there is scope for further yield compression,’ added Hodgson. Continue reading
