Tag Archives: financial
Lenders in UK praised for work on responsible lending requirements
Lenders in the UK positively applied the responsible lending requirements which came into force as part of the Mortgage Market Review (MMR) introduced in April 2014, a new report concludes. But there is scope for improving consumers’ ability to make better choices about mortgage deals according to the Responsible Lending Review published by the UK’s financial watchdog, the Financial Conduct Authority (FCA). It also says that some firms need to make process improvements to help them consistently assess and record their lending decisions and some could be more proactive and consistent in making use of flexibilities and exceptions to the responsible lending requirements for existing customers. The research found no evidence that the rules have prevented firms lending responsibly to consumer groups such as older borrowers and the self-employed. However it points out that with older consumers representing an increasing proportion of the UK population it is important that the mortgage market continues to develop a range of products that can meet their needs. Potential issues relating to lending to older borrowers will be included in wider work on the ageing population being undertaken by the FCA. The review looked at the challenges that consumers face in making effective choices, particularly when it comes to assessing and acting on information about mortgage products, with intermediaries being key to the process. It also examined if there are opportunities to make more effective use of technology in the provision of information and advice and commercial relationships between different players in the sector’s supply chain, in particular the use of panels, that might give rise to competition concerns. The FCA will carry out further work where there is greatest scope for competition to improve consumer outcomes. In particular, it will launch a targeted market study in the fourth quarter of 2016 focused on consumers’ ability to make effective choices, with a view to improving how competition works in consumers’ best interests. This study will try to determine if the available tools for helping consumers make choices, such as price comparison websites, best-buy tables, and advice, effectively meet their needs. ‘For millions of consumers a mortgage is one of the biggest financial transactions they will enter into in their lifetime so it’s encouraging to see firms embrace the spirit and the letter of our rules,’ said Christopher Woolard, director of strategy and competition at the FCA. ‘At the same time, there appears to be more to be done to improve competition in the mortgage sector. Competition can play a key role in ensuring that the sector works well, delivering lower prices, better products and choice, and more innovation,’ he explained. ‘Based on the evidence we’ve collected so far, we intend to launch a forward looking market study later on this year, with particular focus on the roles played by intermediaries and panels,’ he added. The Council of Mortgage Lenders welcomed the review and pointed out that members are already working on certain areas such as improving consumers' ability… Continue reading
March saw unprecedented lending levels in UK due to buy to let rush
Home owner house purchase lending was up by 60% year on year in the UK in March but the overall lending figures were affected by a rush from buy to let buyers seeking to beat a new stamp duty surcharge. Overall on an unadjusted basis, home owners borrowed £13.8 billion and first time buyers borrowed £4.5 billion, up 32% on February and 29% on March last year, according to the latest figures from the Council of Mortgage Lenders. Home movers borrowed £9.3 billion, up 75% on February and 82% compared to a year ago while remortgage activity totalled £4.7 billion, down 2% on February but up 7% compared to a year ago. Landlords borrowed £7.1 billion, up 87% month on month and 163% year on year but CML director general Paul Smee pointed out that activity was distorted in March due to a rush to beat the introduction of changes to stamp duty on second properties in April, alongside the seasonal uptick in activity before Easter. ‘While the increases are substantial, these supercharged levels of activity are likely to be temporary and will fall back over the summer months,’ he added. Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), suggested that while activity has picked up among home movers, the leap in landlord lending makes it clear that price inflation has been fuelled by the Government’s stamp duty changes for buy to let properties and second homes, incentivising many buyers to bring their purchases forward where possible. ‘A policy move that aims to manage long term demand has therefore created short term tremors in the market and made it hard to predict how things will look when the dust settles. The Government’s hope is that first time buyers will find their prospects improved and lenders are certainly doing their bit with first time buyer lending up 29% year on year,’ he explained. ‘Continuing access to high loan to value (LTV) mortgages is an important part of this equation, and should not be frowned upon given the rigorous affordability checks in place,’ he pointed out. ‘Nevertheless, the UK needs a balanced housing market to prosper and playing politics across tenures cannot compensate for the underlying short supply of property. Added uncertainty from the upcoming EU referendum vote means the market is in urgent need of time and space to draw breath. Now is not the time to consider further tinkering under the bonnet after a rollercoaster start to the year,’ he added. According to David Whittaker, managing director of Mortgages for Business, it wasn’t just March which was exceptional. ‘The first quarter as a whole was strong as landlords reacted to tax changes. The dust will begin to settle in this part of the mortgage market through the second quarter of the year,’ he said. ‘Landlords have a new status quo and it’s not just the additional stamp duty that needs to be factored into… Continue reading
UK housing market grew at an accelerated rate, latest housing market bulletin shows
Average house prices are continuing to grow in the UK and at an accelerating rate with the South East, the East of England and London seeing the strongest growth, according to the latest Housing Market Bulletin. The report, published by the Homes and Communities Agency using data from house prices indices, lenders and construction companies, shows that residential sales surged forward strongly in March. It also shows that gross mortgage lending continues to see robust growth with levels over one third higher than a year ago and private sector house building investment continues to increase, but public sector investment has stalled. The value of Greenfield residential development land is slipping, but urban land is increasing. A breakdown of the figures shows that there were 141,310 residential property transactions in England in March 2016, which is 80.6% higher than one year earlier. It says that this sharp uptick could have been the result of by buy to let buyers having brought forward purchases in order to avoid increased Stamp Duty tax liabilities from April. There were a total of 1,135,830 transactions in England in the year to the end of March 2016. This is 9.9% higher than in the previous 12 months. Aside from this the spike in the data in March, the seasonally adjusted monthly total has been moving strongly upwards for the past year. The total stock of property for sale remains historically low. In England and Wales overall, the number of properties entering the market was down 6% in March compared to a year before and the supply shortage is most keenly felt in the West Midlands and the South West regions where, respectively, 12% and 11% less stock was registered for sale with estate agents compared to March 2015. Greater London was the only English region with increased numbers of homes coming to the market, up 6% on the same month in 2015. Gross mortgage lending reached an estimated £25.7 billion in March. This is 59% higher than March 2015 and gross mortgage lending for the first quarter of this year was an estimated £62.1bn, which is 39% higher than the first three months of 2015. There were a total of over 23.5 million dwellings in England in 2015, which is 704,000 or 3.1% more than in 2010. The number of private sector homes had increased by 649,000 or 3.5%, and there were over 209,000 or 9.3% more private registered provider homes. But the number of Local Authority owned homes fell by nearly 143,000 or 8% over the same period. The Output in the Construction Industry indices show the total value of new housing development in Great Britain is unchanged in the fourth quarter of 2015 compared to the same quarter in 2014. The trend in the private sector has been of sustained steady increase over at least three years. The public new housing sector enjoyed expansion during 2013 and most of 2014 but then had four quarters of shrinking… Continue reading
