Tag Archives: london
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
US home sales on track to reach highest pace since 2006 despite market challenges
Relentless supply constraints and home price growth outpacing wages are testing the patience of home buyers in the United State this year, but existing home sales are still on track to come in at their highest pace since 2006. Monthly existing home sales were uneven in the first quarter but still came in at a seasonally adjusted annual rate slightly higher at 5.29 million than last year’s overall annual pace of 5.26 million, National Association of Realtors chief economist told the 2016 Legislative Meetings and Trade Expo. He pointed out that demand has mostly remained strong, especially in the top job producing metro areas and is being upheld by mortgage rates near three year lows and the 14 million jobs gained since 2010. ‘The housing market continues to expand at a moderate pace in spite of the fact that home prices are rising too fast in some areas because of insufficient supply fuelled by the grossly inadequate number of new single family homes being constructed. Pending sales in recent months have remained stable and should support a modest gain in home sales heading into the summer,’ he explained. Yun forecasts existing sales to finish 2016 at a pace of around 5.40 million which would be the best year since 2006 when it was 6.48 million. After rising to 6.8% in 2015, the national median existing home price is forecast slightly moderate to between 4% and 5% this year. Senator Elizabeth Warren told the meeting that college debt is hampering young people from getting on the housing ladder. She explained that seven out of 10 college graduates that need to borrow thousands of dollars to attend college and then spend countless years afterwards repaying the debt at high interest rates. ‘Student debt is crushing young people, it’s hurting the nation's economy and delaying the opportunity for many to buy their first home. Every monthly payment going to reducing their student debt could instead be money going towards saving for a down payment on a house,’ she added. Yun remarked that the ongoing absence of first time buyers is the missing link to a full housing recovery despite it being a time when conditions are ripe for a larger share of them buying homes. ‘Job growth has been strong for multiple years, rents have soared in many areas and mortgage rates are historically low. Unfortunately, a multitude of factors such as increasing home prices amidst flat wage growth, the lack of available starter homes and repaying student loan debt is thwarting many young would be buyers,’ he told the meeting. ‘Spectacularly low mortgage rates mean today’s prospective home buyers are the luckiest in a generation but the unluckiest in actually becoming home owners because of the roadblocks hampering their ability to buy,’ added Yun. Warren urged Congress to pass the Bank on Students Emergency Loan Refinancing Act, which would give a much needed break to student debt… Continue reading
UK landlords looking for cheaper properties due to stamp duty surcharge
Landlords in the UK are looking for cheaper properties in response to the new 3% stamp duty charge on additional homes, according to the latest lettings index to be published. Average price paid by investors in April fell by 8.3% month on month, from £194,000 to 178,000 and London saw the biggest change in behaviour with landlords buying homes costing 16.4% less than the previous month. At the same time, the number of homes sold to first time buyers increased by 19% between April 2015 and April 2015, while the number of homes bought by landlords halved, the data from the Countrywide Lettings index shows. It also reveals that average UK rental growth continued to slow. The rise of 2% in April was less than half the 4.7% recorded in April 2015. London saw the biggest fall in average price paid, down from £436,000 in March to £365,000 in April. While overall house prices in London rose 13.9% over the last year, the capital’s landlords paid an average of 8.2% less than they did in April 2015. However, generally lower priced markets saw a less marked response from landlords with average prices paid by investors rising month on month in the North East and Yorkshire. April also saw fewer landlords purchasing homes, after a spike in activity in the first three months of the year. Landlords rushed to complete on their purchases before 01 April to avoid a bigger stamp duty bill with 61% more landlords buying in the first quarter of 2016 compared to the first quarter of 2015. The report points out that many sales which would otherwise have normally completed in April were pulled forward into March. Around half the number of landlords bought in April 2016 compared to April 2015. The number of sales to first time buyers rose by 19% over the same period. Average rents increased 2% over the last year, leaving the average monthly UK rent at £932. Rental growth is now half the rate it was in 2015 and the report suggests that affordability constraints and the increase in the number of homes coming onto the rental market continues to slow rental growth. ‘April’s fall off in investor activity seems to be the consequence of landlords bringing forward purchases to beat the stamp duty deadline. Rather than being dissuaded by the new 3% charge it seems that landlords are already adjusting their behaviour. In response to the extra purchasing costs many are choosing to buy cheaper homes that offer a higher yield and of course a lower stamp duty bill,’ said Johnny Morris, research director at Countrywide. ‘There’s early signs that first time buyer numbers are increasing in as investor activity has declined. But it’s too early to tell whether this is simply the after effects of the stamp duty rush or the start of a longer term trend,’ he added. Continue reading
