TSI
Survey reveals lack of knowledge in UK about home insurance
Some 1.6 million UK home owners have bought home insurance from their lender and many mistakenly believe they cannot switch for a better deal, according to a new survey. Some 30% or 466,200 households believe their home has to be insured with their mortgage lender as a condition of the loan and 6% were told by their lender that it was a mandatory purchase. On top of this 24% think switching away from their lender’s insurance will invalidate their mortgage, according to the survey from Gocompare Home Insurance. Overall it found that 14% of home owners arranged their home insurance through their mortgage lender and 30%, almost half a million home owners, believed that they had to arrange their home insurance through their mortgage lender as a condition of their mortgage deal. And 24% of borrowers who arranged their insurance with their lender think that switching their insurance to another provider will invalidate their mortgage while 12% say they felt under pressure to buy their lender’s home insurance and 6% said they were told by their mortgage provider that they had to. Protecting a property with adequate buildings insurance, typically against fire, flooding, subsidence and storm damage, is as a requirement made by all mortgage lenders. Buildings insurance provides financial protection for the borrower, and ultimately the lender, from damage to the main structure of the home. While most lenders offer home insurance, borrowers are not obliged to buy it for them. However, the practice of compulsory home insurance tied-in mortgage deals was never formally outlawed despite promises to do so in the late 1990s. When questioned why they had opted to buy their lender’s home insurance, the survey revealed a mixture of misunderstanding, misplaced trust in their mortgage lender and consumer apathy. For example, 14% thought buying their lender’s home insurance might help with their mortgage application, 9% said they didn’t realise they could buy cover elsewhere, 22% said that their lender gave reassurances that the product was good value, 50% think that their mortgage lender provides the best value cover for their home insurance and 49% had opted to do so out of convenience. The survey also found that 72% hadn’t compared products and prices offered by other providers and 34% of home owners who arranged cover through their lender didn’t check cover levels and excesses to make sure they were buying the right policy. According to statistics published earlier this year by the Association of British Insurers, the main reasons for household insurance claims being rejected included the claim value being below the policy excess and the incident not being adequately covered by the policy. ‘We were shocked to find that so many people still think that their mortgage offer is conditional on buying their lender’s home insurance, and that a significant minority are essentially in a mortgage linked insurance trap, believing that switching away from their lender’s insurance will invalidate their mortgage,’ said Ben Wilson from Gocompare Home Insurance. ‘We… Continue reading
Sellers reduce asking prices in Spain as the market become more realistic
Sellers in Spain are becoming more realistic about prices and have reduced asking values which is seen by experts as a good move in terms of keep in the real estate recovery going. Asking prices fell by 0.2% to €1,624 per meter in April, according to data from property portal Fotocasa, compared to a year ago. Meanwhile the latest house price index from the Government shows that prices were up 2.4% in the first quarter of 2016 year on year and up 0.2% quarter on quarter. The Fotocasa asking price index has been fairly stable for the last year, with prices never varying more than 1% either up or down. ‘House prices will continue to go in different directions during 2016,’ said Beatriz Toribio, head of research at Fotocasa. ‘Whilst in some areas of the country prices are stabilising or even rising, in others they continue to fall hard. This is a consequence of the crisis the sector has lived through, which has left a market of two or more speeds that is ever more obvious,’ Toribio added. Since the peak of the market in 2007 average house prices have fallen by 45% but there is some regional variation. Peak to present prices are down by 50.5% in Murcia, 47.5% in the Valencian Region, 47% in Catalonia, 43.9% in Madrid, and 42.6% in Andalusia. The Government figures, however, show that house prices are down 29% since the peak which it outs at the first quarter of 2008 and it adds that price bottomed out in the third quarter of 2014. Prices have increased the most in the Balearics with growth of 9.6%, followed by Catalonia up 4.9%, Madrid up 4.2%, Extremadura up 3.7%, Galicia up 2.6%, the Valencian region up 2.4% and the Canaries also up by 2.4%. The latest mortgage figures show that lending volumes are also up which means more people can buy a home. The data from the National Statistics Institute on Friday reveals that the number of new mortgages listed in the property registers in Spain stood at 22,983 in March, up 4.5% over the same month in 2015. In more good news for the Spanish property market the latest report from the General Council of Notaries show that foreign demand rose by 12.9% in 2015. More than half, 52%, were people buying a holiday home while 48% were foreigners living in Spain. The British were the biggest group of foreign buyers with 21% of the market, followed by the French at 9%, Germans at 7.5%, Belgians at 6% and Italians at 5.5%, the data also shows. The Balearics is the most popular part of Spain with overseas buyers with foreign purchases amounting to 44% of the market, with the Canaries at 39%, Valencia at 37% and Murcia and Andalusia both at 25%. Foreign demand growth was strongest in regions with small markets, where even a modest increase in foreign demand translates into a big increase in percentage terms. Growth was biggest… Continue reading
Confidence among UK private sector landlords remains subdued
Confidence remains low among UK landlords as a result of recent government interventions in the buy to let market but buyers are slowly returning to the market, says a new survey. Overall, landlords report improved buying intentions, growth in tenant demand and yields and confidence is stable but remains at subdued levels, according to the research by BDRC Continental on behalf of Paragon Mortgages. Following an increase in the rate of stamp duty payable on buy to let purchases, and with a staged reduction in income tax relief available on rental income due start next year, landlord confidence remained low in the first quarter of 2016. Asked about expected business in the next three months, just 41% of landlords rated their prospects as being either ‘good’ or ‘very good’. This is down from 65% during the same period last year, prior to the government’s clampdown on buy to let. Indicating that falling levels of confidence may have stabilised however, the figure is just 2% down on the fourth quarter of 2015. Reflecting this, the survey also saw landlords’ property purchase intentions edge above selling intentions, reversing the situation seen in the final quarter of 2015 when more landlords were looking to sell property than were looking to buy. Some 19% of landlords indicated that they intend to purchase a property in the coming year, up from 17% in the fourth quarter of 2015 while 16% of landlords indicated that they intend to sell a property, down from 19% in the previous quarter. Driving this trend was an increase in tenant demand, with 39% of landlords reporting demand as increasing either slightly or significantly, up from 34% in the fourth quarter of 2015. Reflecting this increase, landlords reporting tenant demand as being stable declined from 40% to 36%. The research also shows that yields in the first quarter of2016 also grew slightly on the previous quarter, averaging 5.7%. Despite negativity persisting around business expectations over the short term, rental property as an asset class is still viewed favourably by landlords. Some 38% of landlords polled believe investing in the PRS to be ‘much better’ than other investment options such as stocks and shares. A further 33% believe investing in the PRS to be a ‘little better’ than other investments and just 10% believe an investment in the PRS is worse than other investments. ‘Increased stamp duty, as well as reduced levels of income tax relief for landlords due to come into force next April, have undoubtedly impacted landlord sentiment. Confidence by some measures is down by around a third when compared to the same period last year. That said, this data does suggest that confidence is stabilising,’ said John Heron, director of mortgages at Paragon. ‘In the previous quarter we saw more landlords respond very negatively to the announcements on stamp duty and tax on rental income with more intending to sell rather than buy property, this trend is now reversed and purchase… Continue reading
