Tag Archives: debt
UK sees sharp expected drop in home lending in April
Lending for home purchases fell by 40% in April compared with the previous month but experts point out this was a blip due to an unusually high level of borrowing in March ahead of stamp duty change. Home owners borrowed £8.1 billion, down 4% compared to a year ago and took out 47,300 loans, down 31% on March and 5% on April 2015, according to the latest figures from the Council of Mortgage Lenders. First time buyers borrowed £3.9 billion, down 11% on March but up 15% on April last year. This equated to 25,100 loans, down 9% month on month but up 7% year on year. Home movers borrowed £4.3 billion, down 53% on March and 14% compared to a year ago. This represented 22,200 loans, down 46% month on month and 15% on April 2015. Remortgage activity totalled £6 billion, up 25% on March and 40% compared to a year ago. This came to 34,800 loans, up 23% month on month and 30% compared to a year ago. Landlords borrowed £2.5 billion, down 65% month on month and 7% year on year. This came to 16,100 loans in total, down 64% compared to March and down 10% compared to April 2015. Paul Smee, director general of the CML, pointed out that it was not a surprise that lending eased back following the significant rises in activity in March as borrowers looked to beat the second home property stamp duty deadline. ‘We expect the market to take several months to return to its previous levels after the lending surge,’ he added. According to Andy Knee, chief executive of LMS, remortgaging is driving growth in the home loan market. He pointed out that not only were the number of remortgage loans up by almost a third from the year before but it was the greatest number of people remortgaging since July 2009. ‘It’s great to see home owners taking advantage of the favourable environment for remortgaging. Record low interest rates have improved affordability and home owners are sitting on huge amounts of housing equity that they may have been wary of capitalising on previously. The Government is also consulting on seven day switching for faster transactions, the ease of which could drive the incentive for borrowers to revisit their mortgage faster,’ he pointed out. He also pointed out that with prices continuing to rise first time buyers still remain disadvantaged. ‘There are signs of encouragement in the first time buyer market, such as a greater range of high loan-to-value products, but we’ll have to wait patiently for the year to unfold to be able to gauge the impact of this on the market,’ he added. However, Patrick Bamford, business development director for AmTrust Mortgage Insurance, believes that continued low interest rates and a plethora of products mean mortgages are getting cheaper for first time buyers who are spending less of their income servicing their debt. He explained that there was… Continue reading
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
US home sales on track to reach highest pace since 2006 despite market challenges
Relentless supply constraints and home price growth outpacing wages are testing the patience of home buyers in the United State this year, but existing home sales are still on track to come in at their highest pace since 2006. Monthly existing home sales were uneven in the first quarter but still came in at a seasonally adjusted annual rate slightly higher at 5.29 million than last year’s overall annual pace of 5.26 million, National Association of Realtors chief economist told the 2016 Legislative Meetings and Trade Expo. He pointed out that demand has mostly remained strong, especially in the top job producing metro areas and is being upheld by mortgage rates near three year lows and the 14 million jobs gained since 2010. ‘The housing market continues to expand at a moderate pace in spite of the fact that home prices are rising too fast in some areas because of insufficient supply fuelled by the grossly inadequate number of new single family homes being constructed. Pending sales in recent months have remained stable and should support a modest gain in home sales heading into the summer,’ he explained. Yun forecasts existing sales to finish 2016 at a pace of around 5.40 million which would be the best year since 2006 when it was 6.48 million. After rising to 6.8% in 2015, the national median existing home price is forecast slightly moderate to between 4% and 5% this year. Senator Elizabeth Warren told the meeting that college debt is hampering young people from getting on the housing ladder. She explained that seven out of 10 college graduates that need to borrow thousands of dollars to attend college and then spend countless years afterwards repaying the debt at high interest rates. ‘Student debt is crushing young people, it’s hurting the nation's economy and delaying the opportunity for many to buy their first home. Every monthly payment going to reducing their student debt could instead be money going towards saving for a down payment on a house,’ she added. Yun remarked that the ongoing absence of first time buyers is the missing link to a full housing recovery despite it being a time when conditions are ripe for a larger share of them buying homes. ‘Job growth has been strong for multiple years, rents have soared in many areas and mortgage rates are historically low. Unfortunately, a multitude of factors such as increasing home prices amidst flat wage growth, the lack of available starter homes and repaying student loan debt is thwarting many young would be buyers,’ he told the meeting. ‘Spectacularly low mortgage rates mean today’s prospective home buyers are the luckiest in a generation but the unluckiest in actually becoming home owners because of the roadblocks hampering their ability to buy,’ added Yun. Warren urged Congress to pass the Bank on Students Emergency Loan Refinancing Act, which would give a much needed break to student debt… Continue reading
