Tag Archives: loans
Mortgage approvals in UK rise for first time in six months
Residential mortgage approvals in the UK rose in December for the first time since June, suggesting that a steady slowdown in the number of loans for home purchases could be bottoming out. Data from the Bank of England shows mortgage approvals for house purchases numbered 60,275 in the final month of 2014, up from 58,956 in November, but overall the number of approvals fell in most months of the year. Experts point to tighter rules on mortgage lending requiring banks and building societies to make more rigorous checks on whether borrowers can afford their loans as being behind the change. Before the 2008 financial crisis, monthly mortgage approvals in the UK ran at around 90,000 and the data also shows, and net mortgage lending, which lags approvals, rose by £1.612 billion, slowing from November and below expectations. ‘The introduction of more restrictive mortgage regulation in the autumn took the breath out of lending for a while,’ said Adrian Gill, director of Your Move and Reeds Rains estate agents, adding that lending is climbing again. ‘As the market adjusts to these new measures this stranglehold has been loosened. There was an encouraging December uptick in mortgage approvals, as borrowing is once more starting to build up speed,’ he explained. He pointed out that the government’s flagship Help to Buy is a vital foothold for first time buyers looking for a leg-up onto the housing ladder and is also crucially going some way to iron out significant regional discrepancies in the housing recovery. ‘The scheme is leaving the biggest imprint on places outside of London and the South East, where property prices are still lower and growth is yet to seriously hit the ground running,’ he added. ‘With the combined support of Help to Buy, higher LTV lending, low mortgage rates and reduced stamp duty costs, the path was clear for many smart first time buyers to make tracks and find fantastic deals on homes,’ he concluded. Meanwhile, new research suggests that some 5.2 million UK mortgage holders are ill prepared for unexpected illness in terms of making mortgage payments. According to the survey from mutual life insurance company Royal London some 52% of UK mortgage holders who earn an income don’t have a plan in place to cover repayments if they fall too ill to earn for three months or more. The research also found that although 34% of those without a plan in place to cover repayments have thought about it, some 18%, or 1.8 million people, admitted they have not given it any thought. Royal London also found evidence that many mortgage-holders who earn an income, haven’t considered how long they could cope financially if they became too ill to earn with 50% estimating it would be six months or less, and 26% not knowing how long they could cope. ‘Our research highlights how many UK mortgage holders are in a vulnerable position unsure how they’d cope financially and who they… Continue reading
LTV lending falls as demand ebbs from bottom end of UK house market
Lending to higher Loan To Value borrowers in the UK has fallen 12% year on year with November seeing the smallest number since October 2013. Despite this the wider lending market is stabilising as house purchase approvals rise 2.8% in November, according to the latest Mortgage Monitor report from chartered surveyor firm e.surv. On a monthly basis, higher LTV approvals fell 6.8% from 8,854 in October. The November dip has compounded monthly falls in October of 18.3% and 5% in September meaning lending to higher LTV borrowers has dropped by 30.1% over the last three months. As a proportion of the market, higher LTV borrowers, typically first time buyers, continue to shrink from a five year peak of 17.8% in August 2014. Their share of total house purchase approvals also dropped in September by 17.7% and by 14.9% in October to hit a 10 month low in November of 13.5%. This comes as the number of first time buyer transactions shrank by 12.3% over the last three months according to the most recent First Time Buyer Opinion Barometer from Your Move and Reeds Rains. ‘Demand has ebbed from the bottom end of the market. After the summer flood of first time buyers, LTI caps introduced in October stemmed the flow of new borrowers into the mortgage market. The Bank introduced these caps against a backdrop of speculation about the market overheating. Now, this wintry cooling is a sign of their pre-emptive action taking effect,’ said Richard Sexton, director of e.surv chartered surveyors. ‘The Chancellor’s changes to stamp duty will make homes cheaper for first time buyers. This was clearly needed. It means that those first time buyers left high and dry by the old system are able to buy at last. Now that the cumbersome slab system has been replaced with a series of graduated rates, the goalposts have shifted for higher LTV home buyers. Whatever twists and turns the New Year takes, first time buyers can rest assured that more properties are now within their reach thanks to this long awaited reform,’ he explained. He also pointed out that in 2014 Help to Buy put capable home buyers in a stronger position to borrow. ‘This increased demand, but putting a finger on just one end of the scale simply inflamed the chronic issue of home shortages,’ he said. ‘The slowdown in higher LTV lending is due in part to the depletion of the UK’s stock of affordable housing. Suggestions in the Autumn Statement that the government will take direct charge of home provision, from the release of land to the building of new properties, will hopefully even the odds for stifled first time buyers,’ he added. Despite the slowdown in lending to higher LTV borrowers, total house purchase approvals grew to 61,108 in November, up 2.8% month on month from 59,426 in October. This uptick comes after a series of decreases, down 1.1% in July, a fall of 2.9% in… Continue reading
Low cost rental property programme launched in the UK
A new pioneering £400 million programme has been launched in the UK to boost the building of new affordable rental homes available at below market rates. Current schemes like Help to Buy have boosted house building and allowed 53,000 households buy a home with a fraction of the deposit they would normally require and now the government wants to do the same for the rental market. Communities Secretary Eric Pickles said that the new Rent to Buy provides more flexibility for people who want to rent affordably now, save for a deposit, and then either buy the new home or a different home later. Under the scheme, housing associations and other providers can bid for a share of £400 million in low cost loans to build up to 10,000 new homes across the country from 2015 to 2018. They will mainly consist of one and two bedroom apartments. Landlords must make the homes available for rent at below market rates for a minimum of seven years. Pickles said that this fixed period will give tenants the opportunity to save up for a deposit and get ready to buy their own home. At the end of the period, the tenant will have first refusal to buy the property or alternatively they may choose to move out and buy a different property, or rent another property either privately or with the housing association. If the home is sold, the housing association will then have the option to use any returns on their investment to build even more affordable homes in the area. Alternatively, they will still have a home, which they can look to rent at an affordable rate to another tenant who needs help to buy. This programme is part of a broader £23 billion affordable homes programme for 2015 to 2018, as well as other schemes like Help to Buy providing low deposit mortgages and Right to Buy which provides home ownership for council tenants. Pickles pointed out that these schemes are being arranged now, so construction works starts from 2015. ‘This government is standing by people who work hard and do the right thing, and helping them move on and up in life,’ he said. ‘Both house building and the number of first time buyers are now at their highest rate since 2007. But there is more to do. As part of our wider housing programme, this new scheme will help increase the provision of low cost rented accommodation and provide a springboard for young people to upgrade to home ownership down the line,’ he added. Under the deal housing associations will have up to 16 years to pay back the low cost loans. Until the loans are repaid, the homes must be made available for affordable rent. Only once the loans are paid can the housing association sell or rent it out at a market rate. Of the £400 million of government loan funding for this scheme, half of this will be available in London. London based housing associations… Continue reading
