Tag Archives: tsi
Call for more to be done for older home owners in the UK
The Council of Mortgage Lenders, to which most mortgage lenders in the UK belong, has outlined a range of calls to action for regulators, government and the industry itself to improve the market for older people who legitimately wish to borrow in retirement. In a new report, the CML demonstrates that the issues around lending to older borrowers are complex and interconnected. The overarching message is that improving this market in a meaningful way requires significant collaboration both inside and outside the mortgage industry. However, it is clear that the will to improve this market exists and the CML says that one of the most significant achievements of the work to date goes beyond the production of this report itself, and lies in the fact that so many different participants have come together with a common will to address the issues. Those involved range from mainstream lenders and lifetime mortgage providers, from across the spectrum of CML membership, to pension providers, financial advisers, compliance experts, groups representing older customers, retirement housing providers, think tanks, other trade bodies, and regulators. The report follows the publication last month of externally commissioned research on the demand for retirement borrowing and identifies a range of next steps and calls to action. These include continuing to work with the intermediary sector towards a more seamless advice framework. In particular, there needs to be work to identify how to improve ‘hand-off’ arrangements between different advisers when this would best serve the customer's individual needs. There ought to be monitoring of emerging evidence about how pension freedoms are interacting with the mortgage market, including whether access to pension pots is feeding through to some customers repaying their interest only mortgages, for example. This knowledge can be used to inform future action, the report says. It will also involve exploring the potential for a market in the 50 to 75 age group for a product that can flex between capital repayment and interest only rollup over time, and also the potential for further product innovation for the 65 to 74 age group. The CML is calling on the Financial Conduct Authority to consider addressing how regulation could encourage a more holistic approach to mortgage, lifetime and investment advice in the round, which is what many older borrowers really need. Also to look at how different reasons for borrowing should be reflected in sales channels, for example health may sometimes be even more important than age in determining the quality and suitability of products and the sales advice that accompanies them. The report says there needs to be a standard definition of retirement and some of the Mortgage Conduct of Business rules would need to be changed to allow, for example, for a lifetime mortgage to be an acceptable repayment strategy for interest only mortgages. On top of this the CML is asking the Treasury to consider introducing tax relief on professional advice received at retirement, to encourage take-up, and ensuring that the… Continue reading
New Help to Buy scheme for London will make renting more costly
Monthly costs for purchasers of a new build property using the new London Help To Buy scheme will be significantly less than rental costs of a comparable property, it has emerged. The Chancellor of the Exchequer George Osborn announced that from early the government will increase the upper limit for the equity loan it gives new buyers within Greater London from 20% to 40%. It means that Londoners with just a 5% deposit will be able to get an interest-free loan worth up to 40% of the value of a newly built home. People then need to get a mortgage of up to 55% to cover the rest. On top of this the current restrictions on who can buy a home through shared ownership will be removed from April 2016. Shared ownership allows people to buy a share of a home rather than the whole house and then buy a greater share over time as they can afford to. They pay rent on the rest of the property. Currently, these are allocated in several different ways including criteria set by local councils, for example whether potential buyers work in the local area or if they are already in council housing. Help to Buy Shared Ownership will lift the limits so that anyone who has a household income of less than £80,000 outside London, and £90,000 inside London, can buy a home through shared ownership. Only military personnel will be given be priority over other groups. The scheme will apply across England. People can buy a share between 25% and 75% of a home. The rent on the rest of the property won’t be more than 3% of the amount left. For example, on a house worth £227,000 where the buyer has bought a 40% share, the rent won’t be more than 3% of the remaining 60% – in this case £4,000 a year, or £340 a month. Help to Buy Equity Loans are already open to both first time buyers and home movers on new build homes in England with a purchase price up to £600,000. Currently, if you’re able to pay at least 5% the value of your home as a deposit, the government will lend you up to 20% of the rest of the value of the property, alongside your mortgage of up to 75%. Equity Loan will be now available until 2021 and, to reflect the current property market in London, from early 2016 the government will increase the upper limit for the equity loan it gives new buyers within Greater London from 20% to 40%. Ray Boulger, senior technical manager at John Charcol, explained that monthly costs for buyers of a new build property using the new London Help To Buy scheme will be significantly less than rental costs of a comparable property, massively incentivising Londoners to find the 5% deposit and other costs. He also pointed out that the London HTB scheme will also result in much lower monthly… Continue reading
Continued low interest rates boosting UK property sales
Home sales in the UK have exceeded 100,000 per month for a fifth month in a row with buyers attracted by low interest rates and attractive mortgage products. The latest official transaction data from HMRC shows that the provisional seasonally adjusted UK property transaction count for October 2015 was 105,490 residential and 10,160 non-residential transactions. The seasonally adjusted estimate of the number of residential property transactions decreased by 0.2% between September 2015 and October 2015. This month’s seasonally adjusted figure is 6.3% higher compared with the same month last year. The data also shows that the number of non-adjusted residential transactions was 2.6% higher than in October 2014. Peter Rollings, chief executive officer of Marsh & Parsons, pointed out that October marks the fifth consecutive month that home sales have cleared 100,000, putting activity in a whole other league to the first half of 2015. ‘There has been a slight correction on a monthly basis, but we’re still head and shoulders above a year ago, as buyers ride high on the wave of low interest rates and attractive mortgage products,’ he said. He also pointed out that in London, supply and demand are moving in different directions. ‘We’ve seen the number of available properties for sale fall 5% during the third quarter of 2015 compared to a 4% boost in buyers over the same period,’ he explained. Continue reading
