Tag Archives: credit
Switzerland has seen sustained prices growth but it now slowing due to cooling measures
Switzerland has seen sustained levels of residential property market growth between 2008 and 2013 with house prices up 28%, the opposite of what has happened in many other European markets. Economic expansion, low interest rates, growth in real wages and immigration of wealthy individuals have all supported housing demand. The strengthening Swiss franc also raised their price in comparison to other currencies, according to a new analysis from international real estate firm Savills. However, price growth is now slowing, amid government efforts to cool the market by introducing stricter lending requirements. ‘The decoupling of the Swiss franc with the euro has seen its value appreciate and make Swiss exports more expensive, slowing the economy in general. Foreign buyers with Swiss franc denominated mortgages have been especially hit,’ said Yolande Barnes, director of world research at Savills. The report points out that Switzerland has one of the world’s strictest citizenship systems. Qualification requires 12 years of permanent, legal and notated residency, fluency in one of the official languages and integration into Swiss culture and community. On top of this Switzerland introduced new quotas for European Union citizens in 2013. Foreign buyers are also heavily restricted on residential property purchase with just 1,500 permits released a year, although the rules vary significantly by Canton. In Geneva the emphasis is on the rental market with some 80% of the population of the city doing so and the rental market is strongly pro-tenant, the report explains. ‘Geneva is an expensive city in which to live and there is especially strong demand for city centre apartments which are in short supply,’ said Barnes. Demand is fuelled in part by employees of the finance and business services sector on generous relocation packages, the report shows. Property prices in Geneva have grown 55% since 2006, compared to 27% across Switzerland. ‘These rates of growth are echoed in the rental market. High prices have put property purchase and even rent out of reach of many locals in Geneva, which counts itself alongside Zurich and Zug as one of the most expensive locations in the country. Each day 90,000 workers commute from neighbouring France to the city, a number that has doubled over the last decade,’ Barnes explained. ‘For those who can afford it and, non-nationals who can obtain a permit to purchase, Geneva offers attractive property in a safe, secure environment. The most desirable property enjoys lake or mountain views,’ she added. The report also looks at what is happening to property prices in the Swiss Alps which attract second home buyers from across the globe. The Swiss Alpine resorts of Gstaad, St Moritz, Zermatt and Verbier are among the world’s most exclusive, and expensive, with ultra-prime prices ranging from €20,000 to €30,000 per square meter. The report explains how these resorts have diversified beyond skiing to cater to many of the other demands of the super-rich. Designer shopping, Michelin starred restaurants and polo are all part of the offer. These… Continue reading
Over a year on from new UK mortgage rules, many are still unaware of the change
Two thirds of potential house buyers in the UK been left in the dark about the new mortgage rules which were introduced last year, new research has found. The survey by mortgage lender and broker Ocean Finance shows that some 31% of people who plan to buy a property within the next two years are unaware that mortgage rules were overhauled more than a year ago. A further 35% of potential buyers did know that mortgage regulations had changed, but said they felt confused by the new rules. In April 2014, the biggest piece of mortgage regulation in a decade came into force. The changes, brought in by the Financial Conduct Authority, mean lenders must take additional steps to ensure borrowers only get a mortgage they can afford. In practice, the new mortgage rules mean that borrowers will face increased scrutiny from lenders about their incomes and their expenditure including spending on things such as childcare, holidays and entertainment. Yet 70% of those questioned were unaware that lenders are required to look closely at their spending. Consequently, a quarter said they haven’t changed their spending habits to help them qualify for a mortgage. Of those who do know that lenders are required to examine spending, more than a fifth have reduced their spending on treats and have stopped contributing to life assurance and pensions to keep a greater proportion of their income in their bank accounts. Just 24% of aspiring home buyers questioned were aware that the new rules also test their ability to afford a mortgage if interest rates rise. And even fewer people, 16%, knew that the rules would also test their ability to withstand changes to their personal circumstances. To help demystify the new rules and ensure they are prepared to apply for a mortgage, almost a fifth of potential buyers have sought advice from an independent mortgage broker. Almost 30% have looked online for information about the rules and 14% have relied on their friends or family for advice. Worryingly, a third have not sought any advice on applying for a mortgage. The research shows that a third of potential home buyers are so concerned about the tougher mortgage rules that they expect to have to delay buying a house so they can save for a bigger deposit and get into a stronger position to obtain a mortgage. ‘More than a year after the new mortgage rules were introduced, potential buyers are still in a state of confusion about what they mean in reality. Even more worrying is that a large chunk of people who are gearing up to apply for a home loan are not even aware that the mortgage rules have changed,’ said Gareth Shilton, Ocean’s spokesperson. ‘As an industry, we need to do more to educate buyers and to guide them through a process which many people are finding understandably daunting. For anyone who plans to apply for a mortgage in the next year,… Continue reading
UK mortgage approvals highest since beginning of 2014
Approvals for mortgages in the UK increased in July to their highest level since February 2014, according to the latest figures published by the Bank of England. The data shows that there were 68,764 mortgages approved in July, up 16.4% from last November’s 17 month low of 59,100. Experts said that it shows that the housing market is heating up again and point out that mortgage approvals have risen in five of the past seven months at a time when house prices are also rising. Net mortgage lending, which lags approvals, also increased, up by £2.709 billion in July, the biggest increase since July 2008. Charles Haresnape, chairman of the Intermediary Mortgage Lenders Association (IMLA), pointed out that it is also the highest number of approvals since the introduction of the Mortgage Market Review (MMR) last year which cooled the market. ‘With 7% more approvals compared with the six month average, it is a clear indication that health is returning to a market that has been under significantly pressure to perform while adjusting to new working practices,’ he explained. However, he also pointed out that the European Mortgage Credit Directive (MCD) rules begin to come into effect this month and there is likely to be an extra element of uncertainty and instability ahead for the market. ‘With more regulation on the way and a potential rise in the cost of borrowing on the cards, the six month window to implement the MCD rules will be a challenge for all concerned,’ he warned. ‘On the positive side, rising approvals suggest consumer appetite is strong and lenders will also be striving to meet their end of year targets, which should support some competitive deals. We must hope that the impacts of change do not weigh down too heavily on what otherwise looks like a strengthening market recovery,’ he added. Howard Archer, chief economist at IHS Global Insight, said it was possible July’s performance was lifted by some house buyers looking to lock in a low mortgage interest rate before they start rising. ‘While we currently expect the Bank of England to first hike interest rates in February 2016, there is now a very real prospect that they could act before the end of 2015. However, the Bank of England is stressing that interest rates will only rise gradually and to a limited extent,’ he explained. Continue reading
