Tag Archives: credit
Mortgage approvals increased in UK in May but still below six month average
The number of mortgages approved for buyers in the UK increased in May compared to the previous month but are still below the high level recorded in March due to stamp duty changes. The data from the Bank of England’s Money and Credit Report shows that there were 70,553 approvals for house purchases in March, 66,205 in April and 67,042 in May. This compares to an average of 70,598 over the previous six months. The data also shows that the number of approvals for remortgaging was 42,919, compared to the average of 41,019 over the previous six months. According to Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), stamp duty changes for buy to let properties and second homes meant there was an air of inevitability about the April dip in mortgage approvals, which has now been followed up by a modest recovery in the lead-up to the UK’s referendum on its European Union membership. ‘House purchase activity hasn’t quite returned to the heightened levels of early 2016, but the homebuyer market has visibly strengthened over the last 18 months. The data also shows record remortgage activity with almost 43,000 approvals in May, the highest of the post-Mortgage Market Review (MMR) era,’ he said. ‘A resurgence in remortgaging has been underway for the last six months, with more than 40,000 loans approved every month since December. It reflects growing opportunity for consumers to use the equity in their homes to switch to a new deal, and growing awareness of the savings on offer while rates are low and lender competition is high,’ he pointed out. Williams also explained that a year ago, the UK mortgage market was about to experience a post-election bounce and it seems unlikely that last week’s EU referendum result will produce a similar effect this time round. ‘However, despite inevitable uncertainty as some buyers and sellers wait to see how the dust settles, lenders will be maintaining business as usual. Mortgage rates continue to look attractive and the housing supply shortage means homes appearing on the market are still likely to be subject to considerable demand,’ he added. David Whittaker, managing director of Mortgages for Business, explained that investors’ desire to complete before the 01 April deadline meant that business was brought forward into February and March, which then resulted in dampened approval figures for April. ‘However, following this, it is now clear that the number of purchase approvals did increase between April and May, as property investors came to terms with the new normal this tax year,’ he said. ‘May feels like an age ago. Now, there is little doubt that the rest of the year will be dominated by the events of the last seven days. Following the Brexit vote, anecdotal evidence suggests that many are holding off on transactions until a more detailed picture of the economic and political fallout emerges. This could make for a quieter third quarter,’… Continue reading
New analysis suggests Brexit vote is affecting prime central London lettings market
The lettings market in prime central London has weakened rental as tenants capitalise on the current economic uncertainty including the upcoming referendum on the future of the UK in the European Union. The latest analysis report from specialist residential investor advisors London Central Portfolio (LCP) says that the rental market is reflecting a slowdown as a result of economic strains. It shows that whilst new lets have seen consistently positive rental upticks over the last five consecutive quarters, averaging a 5.5% increase overall, the market is beginning to subdue, according to the published statistics. Against a backdrop of falling stock markets, a collapse in oil prices and Brexit uncertainty, new lets have achieved just a 0.3% increase over the last quarter. This has been exacerbated by the predictably quieter Easter and May bank holiday period. The analysis, however, shows that re-lets are showing a significantly weaker picture, with a 1.2% fall in rents over the last quarter, following a fairly static picture over the course of the year. The report says that this is due to applicants being attracted to brand new properties, without any sign of previous use, coupled with a significant uptick in rental stock available. This has increased by 26.7% from 23,039 to 29,198 in the last three months, attributable to a reduction in transactions in the sales market which has led to more properties being available for rent. ‘The overall suppression in rents reflects a market dynamic which was conspicuous during the credit crunch, as tenants capitalise on economic uncertainty to leverage up their bargaining power. This has been compounded by companies cutting their relocation budgets in the face of global instability and, in some cases, delaying relocations in the run up the EU referendum,’ said Naomi Heaton, chief executive officer of London Central Portfolio. ‘In light of the current market conditions, landlords may need to be more flexible to accommodate the higher negotiating power of applicants and to prevent void periods which may erode any increase in rent ultimately achieved. For as long as this cycle lasts, landlords also may need to be more open to remedial and upgrade works between tenancies,’ she explained. ‘A slowdown in the re-let market has been compensated by continued positive renewal increases by tenants in situ. With Landlords often able to achieve contractual rental increases, above that which can be achieved in the open market, average rental growth of 3.3% in the last quarter has been seen in contrast to the softer market elsewhere,’ she added. The report also points out that despite the somewhat gloomy picture generally, corporate belt tightening means that small one and two bedroom properties are reinforcing their position as the hardest working sector of the market. Appetite for these mainstream rental properties remains strong, with void periods down to just 23 days on average. For these properties, the area around Marylebone, Fitzrovia… Continue reading
UK first time buyer market saw seasonal slowdown at end of 2015
First time buyer activity in the UK saw a seasonal slowdown at the end of 2015 despite price for this type of buyer falling, the latest property index shows. First time buyer numbers fell in December by 1,300 on a monthly basis, down 4.7%, as the traditional slowdown hit the UK property market but over the course of 2015, the longer term outlook remains healthy for first time buyers, with numbers up by 1.1% between December 2014 and December 2015. The data from the Your Move and Reed Rains first time buyer tracker report also shows that first time buyers find cheaper homes with smaller deposits and secure more affordable mortgages. Also, the average mortgage rate remains at a rock bottom level, with lenders buoyed by recent news that the Bank of England does not intend to raise interest rates for the foreseeable future. According to Adrian Gill, director of estate agents Your Move and Reeds Rains, first time buyers have been buoyed by a positive economic climate and a range of Government incentives such as the reduction of Stamp Duty on lower priced properties, designed to lessen at least the immediate costs of home ownership. ‘They increasingly came into their stride as 2015 has progressed. Some of the credit for this revival in activity should also go to first time buyers themselves. Over the course of the year they have toughened up their act and sought to get the best property they can at the best price and it’s a skill that will serve this group well as they head into 2016,’ said Gill. The cost of an average first time buyer home fell on a monthly basis in December from £153,275 to £152,470, a drop of 0.5%. However, over the course of the year, the average purchase price rose by 3.8%, representing an increase of £5,518 between December 2014 and December 2015. In addition, December saw a dip in the costs of getting on the property ladder. The average deposit put down by a first time buyer in December fell by 0.5% month on month to £25,292. This is indicative of a broader trend of deposit costs falling over the course of the year, with the average cost of a deposit dropping by £2,151 or 7.8% between December 2014 and December 2015. The decline in the burden of the average deposit on a first time buyer is reflected by the fact the proportion of an average first-time buyer’s income that is eaten up by the deposit fell from 64.6% in November to 64.3% in December. Between December 2014 and December 2015 the proportion fell by 6.8%. First time buyers in December also benefitted from a reduction in the regular burden placed on their finances by mortgage repayments. In November 19.3% of a first time buyer’s average income was consumed by monthly mortgage payments, by December this had fallen to 19%, the second lowest figure on record. Meanwhile, the average loan to… Continue reading
