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New mortgage deals create opportunity for next time movers in UK
Recent changes by lenders to raise the maximum age limits for mortgage applications are a sign of a changing culture in the UK. Changes in policies have been announced by leading lenders including the Halifax and Nationwide who have raised the age limit for mortgages to 80 and 85 respectively. Linden Homes is advising people to take this as an opportunity to step up the ladder. ‘These new mortgages offering people the chance to lend later in life are ideal for those people in their 40s and 50s who are considering a property move, but may’ve been restricted previously by the length of term they could borrow money for,’ said Tom Nicholson, the firm’s divisional managing director. ‘This is another move by the lenders to drive the market and reflects the changing habits of people renting for longer and moving up into larger homes, later in life. The new mortgage policies work the same as any other monthly mortgage repayment agreement. Providing those applying have an existing pension in place which will cover the cost of the monthly repayments, a mortgage agreement will be drawn up against the usual rigorous criteria for eligibility,’ he explained. According to Adam Champion, business development director at the New Homes Mortgage Helpline this new type of mortgage product is a sign of the times. ‘People need to see these new mortgage opportunities as a type of financial planning tool and they have their place in the market,’ he said. ‘First time buyers are getting older which over time pushes back the ages of those making the second, third or final move. These new mortgages available open up the market for those looking to make their next move as they approach retirement age for instance,’ he added. Champion stressed that these products are a positive advance for the housing market to help people make choices as they get older and shouldn’t be confused with old endowment style mortgages. ‘They work just the same as any other monthly repayment mortgage, with the debt being repaid over the term. These products give people the chance to make individual choices and find a financial product that works for them and their own situation. I am sure this will really create a great opportunity for those people looking to upgrade their property to consider the new options that now are available to them,’ he pointed out. Nicholson believes, however, that people looking to make the next house move may be missing out on securing their dream home to meet their family’s needs if they aren’t aware of what is on offer. ‘People in their 40s, 50s or 60s considering a house move will consult their bank to see how much they can borrow and may be told they aren’t in a position to get that larger home they want. What they may not have considered, is speaking with house builders offering new build homes, where potential can be… Continue reading
UK house prices crept up in May but annual growth slowed, says latest index
House prices in the UK edged up 0.2% in May but annual growth slowed to 4.7% to an average of £204,368, according to the latest index to be published. The annual pace of house price growth remains in the fairly narrow range between 3% and 5% that has been prevailing for much of the past 12 months, according to the date from the Nationwide, one of the leading home lenders in the UK. ‘In the near term, it’s going to be difficult to gauge the underlying strength of activity in the housing market due to the volatility generated by the stamp duty changes which took effect from 01 April,’ said Robert Gardner, Nationwide’s chief economist. ‘Indeed, the number of residential property transactions surged to an all-time high in March, some 11% higher than the pre-crisis peak as buyers of second homes sought to avoid the additional tax liabilities,’ he pointed out. ‘While cash purchases accounted for a significant proportion of the increase in activity it is not possible to determine whether or not these were purchased by landlords. Mortgage data suggests that, while buy to let purchases were a major driver of the increase, the purchase of second homes also accounted for a substantial proportion,’ he explained. The report also shows that the number of home mover mortgages, which is where second home purchases with a mortgage would show up, increased sharply in March. Gardner said that house purchase activity is likely to fall in the months ahead given the number of purchasers that brought forward transactions. ‘The recovery thereafter may also be fairly gradual, especially in the buy to let sector, where other policy changes, such as the reduction in tax relief for landlords from 2017, are likely to exert an ongoing drag,’ he added. But he also pointed out that healthy labour market conditions and low borrowing costs are expected to underpin a steady increase in housing market activity once stamp duty related volatility has passed, providing the economic recovery remains on track. ‘However, it is possible that the recent pattern of strong employment growth, rising real earnings, low borrowing costs and constrained supply will tilt the demand/supply balance in favour of sellers and exert upward pressure on price growth once again in the quarters ahead,’ he said. He added that according to the Royal Institution of Chartered Surveyors (RICS), the number of properties on estate agents’ books was already close to all-time lows on data extending back to the late 1970s. According to Matt Andrews, managing director of Bluestone Mortgages, consumer confidence is still rising, so with more people looking to secure lending it is important to see some innovation come into the sector to help more people get onto the housing ladder. ‘In order to help those who currently struggle to gain access to lending, such as people who have experienced a genuine blip on their credit scores, or who only have limited trading histories, we need to offer a more… Continue reading
Rental supply in the UK continues to fall, latest analysis report shows
The supply of residential rental properties in the UK has continued to fall but this comes at a time when rental costs are expected to rise. Overall the number of rental properties managed per lettings agents branch increased by 8% in April to the highest level this year but is down from April 2015, according to the data from the Association of Residential Lettings Agents (ARLA). The jump from March this year follows a rush from buy to let landlords pushing to complete sales ahead of the April stamp duty increase deadline, the ARLA report says. But supply still stands at 5% lower than in April last year and continues to fall year on year. In April 2015, the average number of properties managed per branch was 193, this year it stands at 183. Demand is also falling year on year: In April, the number of prospective tenants per branch was 34, down from 33 the previous month and down from 36 April of last year. Meanwhile, rent costs expected to rise following buy to let stamp duty rise. Some 66% of ARLA agents predicted that the stamp duty reforms will push rent costs up for tenants down the line. ARLA agents also reported an increase in the number of landlords selling their buy to let properties. An average of four, up from three in March, are pulling out of the market, showing an increase for the first time in a year. ‘It’s likely that this increase in supply is only temporary. At the end of April we saw a flurry of landlords seizing the last few moments before the stamp duty rise to complete sales, triggering an increase in the supply of empty rental homes to be filled this month,’ said David Cox, ARLA managing director. ‘However, we expect that fewer investors will be taking on buy to let properties over the next six months, following the price hikes, meaning that once these properties are filled we’ll see supply nose dive once again,’ he added. Continue reading
