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First time buyers keep UK mortgage lending going in second quarter 2016
Home buyers in London borrowed £5.5 billion in the second quarter of 2016, down 23% compared to the previous quarter and down 3% year on year, the latest data shows. It was first time buyers who kept the market going in London, borrowing 10% more while those remortgaging borrowed less, the figures from the Council of Mortgage Lenders (CML) shows. They also increased in Scotland and Wales. Overall borrower took out 17,500 loans, down 17% on the previous quarter and 8% compared to the second quarter 2015 but first time buyers borrowed £3 billion, up 3% on the first quarter and 10% compared to the second quarter last year. This equated to 10,800 loans, up 3% quarter on quarter but down 1% year on year. Home movers borrowed £2.5 billion, down 41% on quarter one this year and 14% compared to a year ago. This equated to 6,700 loans, down 37% quarter on quarter and 18% year on year. The figures also show that remortgage activity totalled £4.3 billion, up 6% on the first quarter 2016 and 29% compared to a year ago. This came to 14,200 loans, up 5% quarter on quarter and 19% compared to a year ago. ‘First time buyers have continued to drive mortgage lending in London, with 10% more first time buyer lending in the second quarter than the first. The opposite is true for home movers, probably just reflecting a rebalancing after the very strong first quarter as many buyers sought to complete purchases before changes to stamp duty,’ said Paul Smee, director general of the CML. ‘The second quarter data largely pre-dates the European Union referendum. While it will take time to see how Brexit may affect the market, the London mortgage market clearly remains active and firmly open for business,’ he added. First time buyers were also key in Scotland, borrowing £920 million, up 42% quarter on quarter and 2% year on year, some 8,500 loans, up 39% quarter on quarter and 4% year on year. Home movers borrowed £1.2 billion, up 11% quarter on quarter but down 5% compared to a year ago. This totalled 8,100 loans, up 11% quarter on quarter but down 9% year on year. Remortgage activity totalled £850 million, up 9% both on the first quarter 2016 and the second quarter 2015. This came to 7,100 loans, up 11% quarter on quarter and 4% year on year. Carol Anderson, CML Scotland chair, pointed out that it is the 19th successive quarter of growth in first time buyers compared to a year earlier and the highest quarterly number of first time buyer loans since the middle of 2007. In Wales first time buyers borrowed £420 million, up 31% on the first quarter and 24% on the same period last year. This totalled 3,800 loans, up 31% quarter on quarter and 19% year on year. Home movers borrowed £490 million, down 6% on the first quarter of the year but unchanged compared… Continue reading
Property prices in Scotland down slightly in run up to Brexit, but up 4% year on year
Residential property prices in Scotland increased by 4% year on year in June but fell by 0.4% month on month, according to the latest data to be published. Overall prices flattened slightly in the run up to the European Union referendum with the first monthly decline since February but it was still the largest annual growth rate since May 2015, says the Your Move Acadata index. While monthly house prices were down compared to May, the average price of property was £170,404 in June, still 0.97% higher compared to the start of the year. A breakdown of the figures shows that a number of areas did not see prices fall in June, most notable Aberdeen where a fall in oil prices have hit the city hard in recent months, but it saw prices rise by 1.6% month on month. Prices increased month on month by 3.8% in Glasgow, by 2.8% in East Dunbartonshire, by 2.5% in Stirling, by 2% in Shetland, by 1% in Moray, by 1.3% in South Lanarkshire, by 1.2% in North Lanarkshire, by 0.5% in Argyll and Bute, by 0.4% in West Dunbartonshire, by 0.2% in Renfrewshire, the Borders and East Ayrshire, by 0.1% in South Ayrshire and North Ayrshire and were unchanged in Edinburgh. Prices fell by 6.4% in Inverclyde, by 5.9% in Fife, by 5% in Perth and Kinross, by 3.9% in East Lothian, by 3.5% in Dumfries and Galloway, by 3.3% in Orkney, by 3% in West Lothian, by 2.4% in Dundee, by 2.4% in Clackmannanshire, by 2.3% in East Renfrewshire, by 1.8% in Midlothian, by 1.3% in Aberdeenshire and by 0.1% in Falkirk. Christine Campbell, Your Move managing director in Scotland, pointed out that the data covers the period up to the end of June, so any impact from Brexit is not yet reflected in the figures. ‘What we can see is that the underlying fundamentals of the market remain strong. We’re benefitting from record low mortgage rates, high employment levels, and high demand for property. Following April’s introduction of the 3% tax increase on second homes, house prices and transaction figures remain arguably skewed in the second quarter of this year, as buyers pushed to complete before the surcharge came into effect,’ she said. She also explained that June was the first month that the spike in house prices as a result of the 2015 LBTT changes dropped out of the annual figures. ‘This previous distortion in property prices goes some way to explaining the seemingly significant annual price increase we saw this June,’ she commented. ‘Whilst market sentiment remains strong, with continued demand from both buyers and sellers, it will be interesting to watch how potential Brexit implications play into transaction and price figures over the coming months,’ she added. ‘Long term, the outlook for the housing market looks favourable. However, with housing demand continuing to vastly outstrip supply, it is important that we see a concerted focus on building new property to ensure there are… Continue reading
UK first time buyers deposit saving scheme criticised
Concerns have been raised about the UK’s Help to Buy Isa which is aimed at first time buyers saving towards a deposit for their first home. When the scheme was announced last year by then Chancellor George Osborne it was assumed that young people would receive the extra money put in by the Government towards the purchase of a home as part of their deposit. With the average deposit on a first home around £15,000 the Chancellor announced that if first time buyers saved £12,000 they would get the next £3,000 paid for them. But now it has emerged that the scheme will no pay out before a home is actually purchased, leaving first time buyers needing to save the whole £15,000 before they can actually complete a home purchase. The small print of the Government's flagship Isa states that the bonus will not be paid out until the sale is complete and a spokesman suggested that it was never designed as a deposit saving scheme but to be put towards the cost of a home overall. It is thought around 500,000 would be home owners have already taken out Help to Buy Isas and they now need to discuss with their banks what will happen when they are ready to receive the promised bonus from the government. Mark Hayward, managing director of the National Association of Estate Agents, said that it has changed the goal posts for first time buyers who have saved in a Help to Buy Isa. ‘Consumers have been putting money aside on the basis that they believed it would be applied to their deposit on a new home,’ he pointed out. ‘To now clarify that it is not actually available until completion is the perfect example of a painful lack of transparency and frankly nothing short of deception. First time buyers are already struggling with getting on to the housing ladder and this much hyped initiative was welcomed at the time as a way of helping them, but in fact could have ended up costing buyers if they have gone ahead with a purchase believing that the bonus counted towards the deposit,’ he added. Continue reading
