Tag Archives: finance
Research shows just 18% of UK mortgage holders overpay to reduce their loan
Mortgage holders in the UK could save over £1,800 in interest alone through regular overpayments, according to new research. Some 18% overpay on their mortgage every time a payment is due and 11% have even delayed buying a new car to make the extra payment, however 58% never overpay. Overall UK mortgage holders could save over £14 billion over the next two decades by regularly overpaying, the research from Comparethemarket shows. Overpaying each month by as little as £59, or around 10% of an average monthly payment, means mortgage holders could reduce their mortgage term by approximately one year and four months and possibly save £1,842 on interest alone. For first time buyers the potential savings are even greater. Mortgage holders between 25 and 34 years old could reduce their mortgage term by approximately two years and eight months and save roughly £6,553 on interest by overpaying by 10%. Many home owners are already aware of the benefits of overpayment. The survey found that 52% said that contributing more towards their mortgage each month would make them feel more financially secure, with 19% agreeing that it would make them feel much more secure. Those who do regularly contribute extra to their mortgage overpay by an average of 4.7%. Nearly a fifth said that they overpay every time a payment is due and 15% admitted to overpaying by more than 10% in the last 12 months. Many mortgage holders are willing to give up day to day luxuries in order to afford overpayments. To pay off more of their mortgage, over one in ten people delayed buying a new car, 18% had not taken a holiday abroad and over a fifth put off buying a luxury item such as expensive clothes or a new gadget such as an iPad. However the majority of people still hesitate to put more money towards their mortgage every month, with 58% admitting to never overpaying. Of those who don’t overpay, a fifth think they have too many other outgoings such as household bills, and one in 10 were not aware they could overpay on their mortgage or thought it seemed too complicated. Of those who do not overpay, 44% thought they couldn’t afford the extra payments, yet respondents also said they spent on average £167 each month on non-necessity items, with nearly one in 10 admitting to more than £300. The research also shows that 25 to 34 year olds admitted to spending closer to £210 on luxuries such as going out for dinner or attending the theatre. ‘As a nation we are getting more proactive in searching for the best deals, whether on energy providers or insurance. Whilst committing more of your pay cheque towards your mortgage can seem financially daunting, making small contributions each month, or even a one-off lump sum overpayment, could save mortgage holders thousands of pounds in the long term,’ said Jody Baker, head of money at the comparison website. ‘Sacrificing one meal… Continue reading
Homes to buy are more affordable in many US metros than renters think, research suggests
Home ownership in the United States has slowly fallen in recent years to currently its lowest level since 1965 but new research from the National Association of Realtors suggests that could be halted. The research shows that there are many affordable metro areas and a large segment of current people who rent their home earn enough income to qualify to buy a property. NAR reviewed employment growth, household income and qualifying income levels in nearly100 of the largest metropolitan statistical areas across the country to determine which areas with employment gains above the recent national average also have the largest share of renters who can currently afford to buy a home. Of the top 10 metro areas with the highest share of renters who earn enough to buy, nine were either in the South or Midwest, including three cities in Ohio. Lawrence Yun, NAR chief economist, pointed out that there has been a significant increase in renter households both among young adults and those who lost their home since the economic downturn, especially in metro areas that have seen robust job creation and a resulting influx of new residents. ‘Even in a time of expanding home sales, steady job growth and historically low mortgage rates, the homeownership rate recently tumbled to its lowest level in over five decades as many renters struggle to juggle escalating rents without commensurate income gains,’ he said. ‘However, this new study reveals that there are several affordable, middle tier markets with solid job gains and a large segment of renters who earn enough to buy,’ he added. The top 10 metro areas highlighted in NAR’s study were all outside of the West Coast and each had a share of renters who qualify to buy that was well above the national level of 28%. Top is Toledo in Ohio and Little Rock in Arkansas both with 46%, followed by Dayton in Ohio at 44%, Lakeland in Florida, St. Louis in Missouri and Columbia in South Carolina all at 41%, Atlanta at 40% and then Columbus in Ohio, Tampa in Florida and Ogden in Utah all at 38%. According to Yun, it's no surprise that many of the markets with the most renters qualified to buy are in the Midwest and South. The median existing home sales price in these two regions continue to be lower than the Northeast and West, and while many of these areas were slower to recover from the recession, improvements in their local labour markets in the past year have pushed their hiring levels to at or above the national average growth rate. ‘Overall housing affordability and local job market strength play a pivotal role in a renter's decision on whether to buy a home or sign another lease. The good news is that other recent NAR survey data shows that those residing in the two regions were the most likely to say that now is a good time… Continue reading
Architects set out what needs to be done to improve UK housing market
Housing policy alone is not enough to solve the UK’s housing crisis whose roots are as complex as they are varied, according to architects. The Royal Institute of British Architects (RIBS) says that as demand for new homes continues to outstrip supply successive governments have failed to keep up and it believes that the only solution lies in bringing together the public and private sector to promote, enable and finance new homes, and improve the quality of homes. In a new report it points out that high quality design needs to be at the heart of the solution. ‘Without it, we’ll be solving one problem by storing up further challenges for the future,’ it says in a anew analysis report and calls for housing policy to be added to the remit of the National Infrastructure Commission and for future infrastructure schemes to include details of their impact on housing supply. It also calls for the establishment of a Chief Built Environment Adviser and better use of public resources. ‘With interest rates at historic lows, more can be done to use the balance sheets of public and private sector bodies to boost housing supply,’ the report suggests, adding that the cap on Housing Revenue Account receipts should be lifted to allow councils to borrow to build social housing. Other possibilities include central and local governments setting up public sector investment vehicles and a national housing investment bank to issue bonds and ISAs, recycle right to buy receipts and attract long term institutional investment. RIBA believes that local authorities should set up Local Housing Development Funds, with initial capital for investment provided by local authority pension funds. Once such schemes are up and running, they would be able attract secondary institutional investment and the Government should transfer responsibility and resources for housing and planning to local and regional authorities. ‘This transfer needs to be accompanied by greater autonomy over policy setting. The regeneration of housing estates should be based on an approach which makes the most of the strengths of existing communities and addresses the challenges exacerbated by the urban environment such as anti-social behaviour or high rates of obesity,’ the report says. ‘Local leaders should be empowered to shape their local housing market by taking control over requirements for affordable housing, including the tenure composition for new developments such as social rent, affordable rent, living rent, shared ownership, and Starter Homes, based on local housing need, rather than fixed national targets,’ it adds. It also points out that self build and custom build add value to a locality, can be an affordable routes to home ownership, and are valuable as delivery mechanisms for new, high quality homes. It acknowledges that the Self-Build and Custom Housebuilding Act and the Housing and Planning Act aim to identify land and provide planning policies to support custom build but says that unless local authorities have sufficient resources they will struggle to implement their duties… Continue reading
