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Over a year on from new UK mortgage rules, many are still unaware of the change
Two thirds of potential house buyers in the UK been left in the dark about the new mortgage rules which were introduced last year, new research has found. The survey by mortgage lender and broker Ocean Finance shows that some 31% of people who plan to buy a property within the next two years are unaware that mortgage rules were overhauled more than a year ago. A further 35% of potential buyers did know that mortgage regulations had changed, but said they felt confused by the new rules. In April 2014, the biggest piece of mortgage regulation in a decade came into force. The changes, brought in by the Financial Conduct Authority, mean lenders must take additional steps to ensure borrowers only get a mortgage they can afford. In practice, the new mortgage rules mean that borrowers will face increased scrutiny from lenders about their incomes and their expenditure including spending on things such as childcare, holidays and entertainment. Yet 70% of those questioned were unaware that lenders are required to look closely at their spending. Consequently, a quarter said they haven’t changed their spending habits to help them qualify for a mortgage. Of those who do know that lenders are required to examine spending, more than a fifth have reduced their spending on treats and have stopped contributing to life assurance and pensions to keep a greater proportion of their income in their bank accounts. Just 24% of aspiring home buyers questioned were aware that the new rules also test their ability to afford a mortgage if interest rates rise. And even fewer people, 16%, knew that the rules would also test their ability to withstand changes to their personal circumstances. To help demystify the new rules and ensure they are prepared to apply for a mortgage, almost a fifth of potential buyers have sought advice from an independent mortgage broker. Almost 30% have looked online for information about the rules and 14% have relied on their friends or family for advice. Worryingly, a third have not sought any advice on applying for a mortgage. The research shows that a third of potential home buyers are so concerned about the tougher mortgage rules that they expect to have to delay buying a house so they can save for a bigger deposit and get into a stronger position to obtain a mortgage. ‘More than a year after the new mortgage rules were introduced, potential buyers are still in a state of confusion about what they mean in reality. Even more worrying is that a large chunk of people who are gearing up to apply for a home loan are not even aware that the mortgage rules have changed,’ said Gareth Shilton, Ocean’s spokesperson. ‘As an industry, we need to do more to educate buyers and to guide them through a process which many people are finding understandably daunting. For anyone who plans to apply for a mortgage in the next year,… Continue reading
Research suggests potential buyers are not savvy about UK mortgage rules
Two thirds of potential house buyers in the UK do not understand the new mortgage rules which were introduced last year, new research has found. Some 31% of people who plan to buy a property within the next two years are unaware that mortgage rules were overhauled more than a year ago and a further 35% did know that the regulations had changed, the study by lender and broker Ocean Finance shows. In April 2014, the biggest piece of mortgage regulation in a decade came into force. The changes, brought in by the Financial Conduct Authority, mean lenders must take additional steps to ensure borrowers only get a mortgage they can afford. In practice, the new mortgage rules mean that borrowers face increased scrutiny from lenders about their incomes and their expenditure including spending on things such as childcare, holidays and entertainment. Yet 70% of those questioned were unaware that lenders are required to look closely at their spending. Consequently, a quarter said they haven’t changed their spending habits to help them qualify for a mortgage. Of those who do know that lenders are now required to examine spending, more than a fifth have reduced their spending on treats and have stopped contributing to life assurance and pensions to keep a greater proportion of their income in their bank accounts. The research also found that just 24% of aspiring home buyers questioned were aware that the new rules also test their ability to afford a mortgage if interest rates rise. And even fewer, 16%, knew that the rules would also test their ability to withstand changes to their personal circumstances. To help demystify the new rules and ensure they are prepared to apply for a mortgage, almost a fifth of potential buyers have sought advice from an independent mortgage broker and 30% have looked online for information about the rules. But 14% have relied on their friends or family for advice and a third have not sought any advice on applying for a mortgage. The research shows that a third of potential home buyers are so concerned about the tougher mortgage rules that they expect to have to delay buying a house so they can save for a bigger deposit and get into a stronger position to obtain a mortgage. 'More than a year after the new mortgage rules were introduced, potential buyers are still in a state of confusion about what they mean in reality. Even more worrying is that a large chunk of people who are gearing up to apply for a home loan are not even aware that the mortgage rules have changed,' said Gareth Shilton, Ocean’s spokesperson. 'As an industry, we need to do more to educate buyers and to guide them through a process which many people are finding understandably daunting. For anyone who plans to apply for a mortgage in the next year, it's key that their finances are in order, including checking their credit file… Continue reading
New development set to boost London’s Canary Wharf as a place to live
Canary Wharf in London is known as being one of Europe’s largest financial services employment clusters but it is also a leading prime London residential market with a new wave of development set to get underway. The new home building is accompanied by new infrastructure and amenities which will reinforce the area’s position as a prime residential address, according to a new report from international real estate Knight Frank. Already home to one of the busiest and most vibrant shopping malls in the city, as well as more than 300 shops, cafés, supermarkets, bars and restaurants, it says that Canary Wharf is already an attractive residential environment as well as a business centre. According Gráinne Gilmore, head of UK residential research at Knight Frank, the development planned for this area, which includes a new primary school, will augment its appeal to a wider demographic, attracting families as well as young professionals, and serve to further change perception away from ‘pied a terre’ to ‘home’. Meanwhile, the opening of Crossrail will enhance Canary Wharf’s connectivity. Property prices in Canary Wharf have risen by 27% since early 2013, comfortably outstripping the 10% growth seen across prime central London over the same time, according to Knight Frank’s index. Gilmore pointed out that such strong growth is partly underpinned by the improving UK economy, something which is also reflected in the commercial property market in Canary Wharf, with vacancy rates falling and upward pressure on office rents. The other effect at play on prices is the return of the ‘ripple effect’, with house price growth spreading outwards from central London, as it did in previous UK housing cycles. ‘However, despite this outperformance in price growth, average values are still significantly lower than those in more established prime residential neighbourhoods in West London,’ said Gilmore. She pointed out that Canary Wharf and its surrounds are also emerging as a hub for culture and entertainment as London’s ‘cultural centre of gravity’ is enhanced by activity in the East. There is a popular arts and events programme already hosted on the Canary Wharf Estate, with live music shows, outdoor dance performances, sporting events, open air theatre and exhibitions. There are 14 schemes of around 400 units or more already under construction or with full planning on the Canary Wharf Estate and nearby on the Isle of Dogs. Some of these schemes are in the very early stages of development and will take some years to deliver. Canary Wharf Group has already begun work on Canary Wharf Residential, a mixed-use scheme of over 3,000 new homes, including over 600 affordable units, a school and a medical centre. The scheme will expand the estate from 100 acres to 122 acres. Berkeley Homes has permission to build a residential tower on Marsh Wall, which, once complete, will be the UK’s tallest residential building, surpassing the 181 meter St George Wharf Tower in Vauxhall. Meanwhile Eco World-Ballymore is constructing twin residential towers at Wardian, just across the… Continue reading
