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EU vote contributing to slow down in home lending in the UK
A further slowdown in home lending in May ahead of the referendum on the future of the UK in the European Union means house purchase lending activity has fallen to a 12 month low. There were 65,113 house purchase approvals, down 1.7% from 66,250 the previous month, according to the latest Mortgage Monitor from residential chartered surveyor e.surv. This marks a 12 month low in lending levels and is the lowest monthly figure for home purchase loans since the 64,626 granted in May 2015. It follows monthly declines of 5.8% in April and 3% in March meaning volumes have fallen 10.5% over the last three months and the report says that the political uncertainty ahead of the EU Referendum may be causing caution amongst lenders and borrowers alike. The recent falls represent a marked turnaround from the peak in lending seen at the start of the year. January and February both saw strong numbers of house purchase approvals granted at 73,060 and 72,512 per month respectively as buy to let landlords and second home buyers pushed through purchases ahead of the stamp duty changes in April. Now, by comparison, the lending market is settling back into its usual rhythm. On an annual basis however, house purchase lending rose marginally in May by 0.8%. The proportion of small deposit lending also dropped slightly in May comprising 18.4% of total home lending, down from 19.1% the previous month. Meanwhile, lending to large deposit buyers, those with a deposit of 60% or more, picked up significantly and now makes up 30.7% of all borrowing. Richard Sexton, director of e.surv chartered surveyors, said that despite the uncertainty the mortgage market remains on an even keel and home buyers have more options than ever as lenders work to expand their range of mortgage options further. He pointed out that new mortgages with longer repayment terms and innovative inter-generational mortgages are offering financial buoyancy aids for buyers but there can be little doubt that the referendum is causing some nervousness within financial circles and bringing new unknowns with it. ‘This political milestone could impact the UK’s economic outlook and slowing growth could pose problems of its own for both lenders and borrowers. Juggling these challenges will be key to maintaining the current health of the mortgage market and lenders should brace themselves for possible surprises,’ he explained. ‘Faced with this uncertainty, it’s perhaps no surprise that home lending levels are falling slightly. The result is a slight tail off in the middle of the year as home buyers pause for thought and lenders are gifted more time to investigate the potential of offering additional mortgage choices. A lull in buy to let lending following April’s stamp duty changes has also added to this calming in the market,’ he added. The report also shows that small deposit loans(to buyers with a deposit worth 15% or less of their properties’ total value totalled 11,981 in absolute terms in May,… Continue reading
Demand for rental properties in UK increased in first quarter of 2016
Despite attempts by the UK Government to dampen the buy to let market and stimulate home buying, the first quarter of 2016 saw demand for properties to rent continue to rise, new research shows. The number of landlords reporting tenant demand as either increasing slightly or significantly stood at 39%, up from 34% in the fourth quarter of 2015. A further 36% of landlords described tenant demand as being stable. According to the latest survey by BDRC Continental for Paragon Mortgages, the sector is also witnessing high levels of tenant satisfaction. Some 79% tenants surveyed said they are satisfied with their current landlord. The research also found that 85% of tenants consider their current rental property to be their home and 69% believe the level of rent they pay to be good or very good value for money. Reflecting the changing balance in housing tenure, the average length of time tenants are spending in their current properties now stands at nearly seven years. The average length of time spent in the Private Rented Sector (PRS) in total was reported to be nearly 13 years. Landlords also agree that the PRS plays an increasingly important role in housing the UK. With the social housing sector having lost around one million homes since 1991, some 78% of landlords polled agreed the PRS compensates to some extent for the decline of the social housing sector. An overwhelming majority, 89%, of landlords also stated the PRS has an important role to play in accommodating those who are priced out of home ownership, while 74% agreed the PRS plays a role in accommodating those excluded from social housing by dwindling supply. ‘The rise of the PRS and the decline of the social housing sector have been the predominant trends in the UK’s changing housing tenure over the last 20 years. This data gives an interesting insight into how both tenants and landlords perceive these trends,’ said John Heron, director of mortgages at Paragon. ‘It’s good to see tenant satisfaction at such high levels. The sector often suffers from negative PR and the good work done by the vast majority of landlords to provide homes for those who cannot or do not want to buy goes unremarked,’ he explained. ‘This survey clearly demonstrates that the PRS is increasingly providing longer term solutions in housing and that responsible and professional landlords are supporting the provision of housing to those that rely on the PRS for their home,’ he added. Continue reading
Rents remained unchanged in capital cities in Australia in May
Overall rental prices in Australian capital cities were unchanged in May but rates fell everywhere apart from Melbourne and Hobart, the latest index shows. Weekly rents were unchanged but year on year they were down 0.3% taking the average rate to $489 a week for houses and $469 a week for units, according to the data from the CoreLogic Rent Review report. The firm’s research analyst Cameron Kusher expects that the weakness in the rental market will persist and on an annual basis rents will fall further over the coming months. The data also shows that over the 12 months to May several capital cities saw a rise in rents. In Sydney they increased by 0.9%, in Melbourne by 2.3%, in Hobart by 3.7% and in Canberra by 0.1%. But falling rents pulled the combined capital average lower with a drop in Perth of 8.8%, a fall of 16.9% in Darwin, and down 0.9% in Brisbane and Adelaide 0.9% year on year. ‘Since we started tracking annual rent changes back in 1996, the May 2016 results represent the lowest annual change on record. The rental market slowdown has been rapid over the past year with rents increasing by 1.5%,’ said Kusher. ‘A number of factors such as the softest wages growth on record have contributed to this slow down. At the same time, we also saw unit construction hit record high levels and a lack of population growth which has contributed to a lesser demand for rentals,’ he explained. He pointed out that with rental rates easing over the year and home values continuing to rise rental yields continue to sit at record lows of 3.3% for houses and 4.2% for units. However, gross rental yields for houses are now at record lows in Sydney, Melbourne and Canberra while unit yields are at historic lows in Sydney. Continue reading
