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Lending to first time buyers with small deposits in UK falling
First time buyers in the UK are still finding themselves left out in the cold as lending to small deposit borrowers is falling as a proportion of all home lending, a new report shows. The Autumn Statement from the Chancellor of the Exchequer accompanied a house purchase jump in November with approvals up 1.3% to 70,511, according to the latest Mortgage Monitor from chartered surveyors e.surv. However, it explained that while the Autumn Statement focused on helping more people get on the housing ladder, first time buyers are yet to see the same benefits as other areas of the market. Despite the rise, lending to small deposit borrowers, that is buyers with a deposit worth 15% or less of their property’s total value, totalled just 11,493 in November, showing no improvement on 11,489 in October. Small deposit borrowers are falling as a proportion of overall house purchase lending, accounting for just 16.3% of approvals granted, down from 16.5% in October. The latest First Time Buyer Tracker report from Your Move and Reeds Rains reveals a similar picture. First time buyer sales dipped by 1.7% month on month from 28,600 in September 2015 to 28,100 in October 2015. ‘The Chancellor’s proposals coincided with a climb in November’s mortgage market. More prospective home buyers are find their applications successful as we near winter,’ said Richard Sexton, director of e.surv. ‘However, for first-time buyers it’s a different story. For those struggling to get their foot in the front door, promises of starter homes are of little consolation. Theoretically, first time buyers should be benefitting from measures such as the extended Help to Buy Scheme and the Help to Buy ISA which has finally come into force but home ownership still remains a distant dream to many,’ he explained. ‘Mortgages may be available, inflation low and wages rising but whether there are enough homes is another question. Supply must be addressed if aspirational home owners are to see a real difference and only time will tell if words can translate into real benefits for first time buyers,’ he added. November saw over 10,000 more mortgages approved to home buyers than a year ago, with 70,511 loans, jumping a fifth since 59,262 in November 2014. This was the highest year on year rise seen since March 2014, as the lending market went from strength to strength amid rising confidence. On an annual basis, this jump in overall home purchase lending has allowed an improvement in small-deposit lending. Home purchase lending to borrowers with smaller deposits grew 44% year on year from November 2014 to 8,000 approvals. However, the current total for small deposit loans, which stands at 11,493 this November, is crucially much smaller compared to the unsustainable pre-recession heights of November 2007, when 16,227 were granted. ‘When compared to last year, mortgage lending is in a much healthier place. Some 12 months ago, home buyers were still suffering from the impact of Mortgage Market Review changes,… Continue reading
Older home owners in UK underestimate the value of their home by almost £90,000
Older home owners in the UK underestimate what their property is worth with 60% not having it valued since first buying it, new research shows. It leaves many over 55s with far greater housing wealth than they realise, which could be used in later life to help fund a more comfortable retirement, according to the research from the Equity Release Council. The study found that the average UK home owner aged 55 and over paid £100,756 for their existing home. Having lived there for an average of 17 years and 10 months, they now estimate it is worth £257,584. This equates to an overall house price rise of 156%, leaving them with an extra £156,828 of equity even before mortgage repayments are accounted for. However, the analysis suggests even this may underestimate the individual housing wealth as according to the Office for National Statistics (ONS), the average UK house price has risen by 244% over the last 17 years and 10 months. Having originally been bought for £100,756 at the start of this period, the average property among over 55 home owners could therefore have a value of £346,861 today, almost £90,000 more than they estimate. By examining market trends, the research suggests people's tendency to misjudge their housing wealth may be linked to low awareness of how price rises have affected the property market in the region where they live. Even those who have had their property valued since first buying it did so four and a half years ago on average. Asked to consider the role of pension savings and property wealth in funding later life, the research suggests that 80% of home owners aged 55 plus would consider using housing wealth to get the most from their retirement. Some 31% said that they feel the best solution is to use their pension savings before their property wealth, 10% said they would prefer to use their savings and property wealth at the same time and 9% said they would rely solely on property wealth or use it before their savings. This leaves 11% who want guidance or advice on the best option for them, while 19% say they do not care which approach they take so long as it gives them the best outcome. The remaining 20% feel the best outcome for their retirement will rely solely on pension savings. The research also found that 38% think unlocking money from the value of their home is likely to benefit them financially in later life, while another 29% are unsure. Among those who would consider using their housing wealth to help pay for retirement, downsizing is the main preference, cited by 42%. However, 22% would prefer to stay in their current home and use a lifetime mortgage to release some equity. The remaining 36% said they are open to either option based on their circumstances. ‘It is no secret that the property market has been kind to… Continue reading
Survey reveals satisfaction in UK rental sector with more families renting
The private rented sector in the UK has entered a more settled periods with over 80% of tenants satisfied with their landlords and more families renting homes, new research shows. The sector has seen some shifting demographics and overall satisfaction levels remain high, according to the latest survey from Paragon Mortgages, undertaken by BDRC Continental. It found that an increasing proportion of those making a home in the sector are couples with children who now make up 21% and couples at 29%. In addition to this 87% of those surveyed consider the rental sector to be their home and the average length of time spent living in a rented home currently stands at 12 years and 41% of landlords reported an increase in tenant demand in the third quarter of the year. Alongside a shortage of housing stock nationally, one factor driving this change is ever improving standards in the sector and 81% of those surveyed said they were ‘satisfied’ with their landlord while 66% of respondents considered their rented home to be either ‘good’ or ‘very good’ value for money. ‘The message coming through in this survey is that, for many people, the private rented sector is an increasingly attractive option over the long term,’ said John Heron, director of mortgages at Paragon. ‘This in many ways reflects the ongoing issue of affordability in the housing market, simultaneously however, competition and best practice are driving higher standards in the sector, making it a more attractive proposition for both individuals and families,’ he explained. ‘This data underscores the value of the PRS to the UK’s housing market. The UK’s PRS still has some way to go to before it catches up with its counterparts in Europe, but higher tenant satisfaction with both standards and affordability, show that there is room for increased growth in this sector,’ he added. Continue reading
