Tag Archives: lending
UK home lending weaker than a year ago, latest data shows
Lending for homes in the UK in April was weaker compared to a year ago but remained steady month on month, according to the latest data from the Council of Mortgage Lenders. verall gross lending in April was £15.8 billion, down from £16.1 billion in March and £16.8 billion in April last year. First time buyers saw a decline in lending compared to March and April last year although loan sizes for this sector have increased since a year ago. The CML says that competitive mortgage rates mean first time buyers are paying less to service their mortgage than any time since it began tracking this in 2005. Home mover lending volumes went up slightly month on month but there was a decline compared to April last year. The average home mover loan size decreased in April compared to March, but increased compared to the same period last year. Home owner remortgage activity also declined compared to last year and on a month to month basis. It has remained relatively subdued since around 2009. Lending for buy to let in April saw a decline compared to March, but there was substantial growth compared to levels in April last year. The CML says this was largely due to the increased levels of remortgage activity in the buy to let sector seen since the beginning of the year. The composition of lending for buy to let is different compared to that of home owner lending. While over the past year about 30% of lending to home owners was for remortgage, in the buy to let market 52% of lending was for remortgage. ‘House purchase lending in April was relatively subdued compared to last year, but similar to activity in March,’ said Paul Smee, director general of the CML, ‘The economy is recovering, with employment up, earnings growing, and competitive mortgage rates, so we expect activity to continue building as the year progresses. Buy to let is showing stronger growth than home-owner lending, buoyed significantly by remortgaging, which continues to remain more subdued in the home owner market,’ he added. Continue reading
Second steppers in UK housing market get boost, new research shows
Most second steppers in the UK housing market are no longer trapped in negative equity as their position is boosted by rising house prices and an influx of first time buyers, new research has found. This is despite the fact that many face a £128,000 price gap to jump up the housing latter, according to a study published by Lloyds Bank. The research also shows that 33% of second steppers think it will be easier to sell this year, almost treble that of 2012 and 37% are keen to make the move now to take advantage of the more buoyant housing market. Overall first time sellers are in a much better position than they were five years ago which is good news for the housing market as they are the link between first time buyers and the rest of the housing ladder. They are living in the homes that the first time buyers need to buy to keep the market moving. Without movement from Second Steppers, movement on the ladder comes to a standstill on the second rung. Many had previously found themselves stuck in their starter home with little or no equity as the economic downturn took hold. Higher house prices have increased the equity of those still living in their first homes, with 71% feeling that their equity position has improved over the last year. The current crop of second steppers typically would have bought at the bottom of the market in 2009 when prices were at their lowest, with the average price of a typical first time buyer home in 2015 now 31% higher than in 2009. This has led to second steppers now having an average equity level of £87,096, equivalent to 29% of the average price of a typical second stepper home price of £304,963. The estimated average equity level has risen by over £36,000 in the past year from £50,655 due to an increase in the prices paid for first time buyer homes. The research also says that the price paid for a home by a typical second stepper is more affordable now than it was a year ago, when compared with earnings. Their housing affordability has improved significantly in the past year from 7.1 times UK gross annual average earnings in 2014 compared with 6.4 in 2015. Despite increasing house prices boosting equity levels for second steppers, the findings show people living in their first home still have to find an extra £128,390 to plug the gap between the sale price of their current property and the cost of the house they would ideally move to which is typically a detached property. This gap reduces to £17,864 if the second stepper moves to a semi-detached home. Continue reading
Survey reveals confusion over UK new mortgage rules one year on
Some 45% of people who planned to buy a property since the introduction of the UK Government’s new affordability rules last year have failed to do so, new research has found. And many feel less in control of securing a mortgage as the new Mortgage Market Review (MMR) introduced a year ago has created confusion, according to the research from Experian. A quarter claim that the MMR has impacted their ability to buy a property, while 37% report that the changes have made them feel less in control of securing a mortgage. The research also suggests that among those who were unable to buy since the introduction of the MMR, many still appear to be overlooking the basics in financially preparing to apply for a mortgage. For example, 46% have never checked their credit report, meaning they have no indication of how a lender might view their ability to repay money. ‘Preparation is the key to successfully navigating the mortgage market post-MMR. Understanding the affordability rules and how a lender makes their decision is the key to success,’ said James Jones, head of consumer affairs at Experian. ‘But it can take time to build a positive credit history and a solid track record of positive money management, so it’s important you start preparing as soon as you make the decision to buy,’ he added. The research also found that 62% were not aware that lenders may require bigger deposits, 23% believed they could apply for mortgages with smaller deposits than before while 37% didn’t recognise that lenders would now be more careful on whether they could afford repayments and 15% mistakenly believe that lenders have now relaxed their lending criteria as a result of the MMR. Some 13% do not know how much money they have left over at the end of the month, 18% don’t even know what monthly repayments they can afford, 14% did not have a big enough deposit for the property they wanted and 12% were unable to secure the size of mortgage they needed. Experian said it was concerned that 11% of those who were unsuccessful did not know why or haven’t asked their lender, leaving them at a significant disadvantage when it comes to improving their chances of being accepted in the future. Guy Shone, from Explain the Market, said that it seems many people remain stuck in a bit of a muddle.’ More needs to be done in 2016 to encourage personal financial planning and properly support aspiring home buyers, so that all buyers fully understand the rules of the game and stand the best chance of securing a property they can afford,’ he explained. Continue reading
