Tag Archives: lending
Many first time buyers in UK expect to be paying for mortgage into retirement
A third of young people in the UK expect to still be paying a mortgage beyond age 60 with over half worried that they would not be able to afford the payments when retired, new research shows. Rising house prices are an increasing concern to people trying to get on the housing ladder but many are still determined to own their home, according to the latest annual Generation Rent Report from lender the Halifax. Overall some 34% expect to work beyond retirement age to pay off their mortgage, 44% are worried that they won’t be able to afford their mortgage payments in retirement and 51% are worried that paying their mortgage will hamper their ability to save for retirement. Despite this, the report reveals that home ownership aspirations remain as strong as ever and that those late to the ladder are taking a range of measures to ease the financial burden. Indeed, the numbers of first-time buyers have recovered strongly in recent years, with 300,000 taking the first steps onto the property ladder in 2015. The average age of a first time buyer is now 30.4 years, nine months older than in 2010. Some 49% of aspiring first time buyers believe that buying with a partner is the most likely measure to consider to make owning a home more affordable while 34% say it is extending a mortgage beyond 25 years. In 2007 the proportion of first time buyers taking up a 35 year mortgage stood at 16%. By 2015 this figure had grown to 26% and over the same period, the share of mortgages with a 20 to 25 year term dropped from 48% to 30%. As well as 34% expecting to still be paying a mortgage aged 60, some 6% still expect to be paying their mortgage over the age of 70, while 8% expect to be paying their mortgage throughout their life. Only 46% believe they will be mortgage free before they retire, falling to 30% of non-home owners. The research also shows that 34% expect to work beyond retirement age to clear their mortgage and while for current owners this is 28%, for those not yet on the housing ladder 39% believe they will be working later in life. Some 44% are worried that they won’t be able to afford their mortgage payments in retirement and 45% are worried that the cost of their mortgage will mean they have to work longer while 51% are worried that paying their mortgage will hamper their ability to save for retirement. ‘Despite the barriers and the understandable concerns, it’s very positive to see that younger generations are still striving to get onto the housing ladder, with more than 300,000 taking that first step in 2015,’ said Craig McKinlay, mortgages director at the Halifax. ‘This recovery has been fuelled by a number of factors, including an abundance of successful Government initiatives and the affordability of monthly mortgage repayments due to the continuing low interest rate environment… Continue reading
House prices in key cities growing faster than UK as a whole
House prices growth in key cities in the UK was 4.2% higher in the first quarter of this year, the highest for 12 years, the latest index shows. The normal seasonal upturn in demand was boosted by investors rushing to beat the stamp duty deadline in April which saw a 3% rate on buy to let properties and second homes, according to the cities house price index from Hometrack. It suggests that tougher lending criteria and tax changes are likely to push investors into higher yielding, lower priced markets, and city level house price growth is expected to moderate in the second quarter of the year. Overall the annual growth for the 20 city house price index is running at 10.8%, ahead of 8.7% across the UK as a whole, the data also shows. Liverpool recorded the fastest increase in the first quarter of the year but the index report explains that this was due to priced rising off a low base. But it does mean that Liverpool is closing the gap to other major cities such as Manchester and Leeds where house price growth is running at over 7% per annum, the highest year on year growth since 2007. ‘The acceleration in growth in the last quarter has, in part, been down to stronger demand from investors, especially those searching for higher yielding property. Tougher lending criteria for buy to let investors and changes to tax relief on mortgage interest payments are likely to push investors to search for higher yielding property which means more focus of investor demand in lower value cities, with lower buying costs, and further support for house price growth,’ the report says. ‘With the rush to beat the stamp duty deadline now over, the question is how weaker investor demand will impact house price inflation in the second quarter of 2016. This at a time when home buyers start to consider the implications of the European Union referendum for the economy and mortgage rates,’ it points out. ‘We believe house prices will continue to rise but a moderation in investor demand and greater caution in the run up to the EU vote will limit further acceleration in house prices. We expect the rate of house price growth to slow more rapidly in high value, low yielding cities such as London where house prices will be more responsive to weaker investor demand,’ it adds. Continue reading
UK equity release market sees record start to the year
The equity release market in the UK has seen a record start to 2016 with lending reaching £393.9 million, the highest for a first quarter on record. This kind of lending is now up 21% compared with last year and new equity release plans have reached over 5,000 for the first time since 2009, the data from the Equity Release Council also shows. This year is the 25th anniversary of the first industry standards being developed for equity release and now drawdown popularity is continuing to increase its market share. With new loans rising, they have now reached the highest amount ever recorded as home owners make use of their housing wealth to supplement their monthly income, make home improvements, support younger family members with buying a property or pay for the trip of a lifetime. The data also shows that the market share of drawdown lifetime mortgages products has increased slightly year on year and it remains the most popular product. The value of drawdown products accounted for 60% of all loans, while the volume of loans was 67%, up 1% and 2% respectively from the first quarter of 2015. There were 3,450 drawdown loans agreed in the first three months of 2016, up 9% on the same period in 2015. Their value was £234.5 million, up by 22% in the same period. The value of lump sum mortgages accounted for 40% of total lending in the first quarter and 33% of the total volume of loans. The value of lump sum mortgages was £158.8 million, up 19% from the first quarter of 2015 and the value of home reversion plans sold remains less than 1% of the market. ‘These latest figures represent a strong start to the year for the equity release market, and place housing wealth centre stage in financial planning for later life. In a year that marks the milestone of 25 years of safe equity release, the market is continuing to build on the momentum of recent years,’ said Nigel Waterson, chairman of the Equity Release Council. ‘The recent decision from the Financial Conduct Authority to reduce affordability assessments for Lifetime Mortgages is a positive development that will help more people benefit from all that equity release has to offer. For a generation that are often asset rich and cash poor, their home is likely to be their greatest asset and should form part of everyone's planning for retirement,’ he pointed out. ‘As we look forward to the next 25 years, it is important now to maintain expert adviser support for customers as the sector grows, as well as continuing to innovate to satisfy customer demand, all the while preserving standards and consumer protections,’ he added. According to Alice Watson, product and communications manager at Retirement Advantage Equity Release, the figures highlight more clearly than ever how equity release is now an integral part of financial planning for retirees across the UK. 'The sector is… Continue reading
