UK buy to let mortgage lending rocketed in last 1/4 of 2014

Lending for buy-to-let soared by 26% during the last three months of 2014, far outstripping the growth in lending to first-time buyers, according to figures from the Council of Mortgage Lenders.

Banks and building societies handed loans worth £7.7bn to landlords in the fourth quarter of 2014, up 32% on the same period a year earlier. Meanwhile lending to first-time buyers was £11.6bn, down 2% on the previous quarter but up 5% over the year.

The number of loans for buy-to-let across the whole of 2014 totalled 197,700, up 23% compared to 2013. Mortgages awarded to first-time buyers also increased during 2014, but at a slower pace. First-time buyers in 2014 took out 311,500 loans, up 15% on 2013, boosted by the government’s Help-to-buy scheme.

Total lending for house purchase rose 1.5% month-on-month in December, although it was down by 5.1% year-on-year.

The figures will add to the growing controversy over the decline in home ownership in the UK and the scale of tax breaks given to landlords. Figures from campaign group Generation Rent suggest landlords could be gaining as much as £26.7bn a year from the taxpayer, equal to £1,011 each for the country’s 26.4m households.

Separate data from the Office for National Statistics on the property market during 2014 also confirm the slowdown in price increases in the latter part of the year. It said house prices rose 0.7% month-on-month in December after rising just 0.2% month-on-month in November and 0.1% in October. The year-on-year increase in house prices moderated to a nine-month low of 9.8% in December from 9.9% in November and 12.1% in September (the highest rate since July 2007).

The London market is coming off the boil, with the annual rate of increase in prices in the capital falling back to an 11-month low of 13.3% in December from a peak of 20.1% in May 2014. However, annual house price inflation outside London moved up in December to 8.5%

The average UK house price in December 2014 was £272,000, up £1,000 from November 2014 but below the peak of £274,000 in August.

Shelter’s chief executive, Campbell Robb, said: “Another rise in house prices is yet another blow to the millions of people across the country with barely a hope of getting on the housing ladder, no matter how hard they work or save.

“When young people have to save for more than a decade before they can scrape together a deposit, and their only choice in the meantime is to remain stuck in their childhood bedrooms or paying out dead money to landlords, there is a serious problem. The only way to solve this problem once and for all is for politicians to finally commit to building the genuinely affordable homes we desperately need.”

Source: www.landlordexpert.co.uk

More people are now mortgage-free than have loans

More people now own their home outright than have a mortgage, it emerged last night.

A third of households in England – some 7.4million families – now own their home mortgage-free, compared to 6.9million who have a loan.

This is the first time debt-free households have overtaken those with mortgages since records began in 1981.


Some 7.4million buyers in England now own their home outright compared to 6.9million who are paying off a mortgage, the first time debt-free households have topped those with loans

But home ownerships overall have plummeted to the lowest level in 30 years and campaigners warn soaring house prices have put owning a home out of reach for many.

In 2013-14, some 33 per cent of households owned their home mortgage-free while 31 per cent were paying off a loan, according to the English Housing Survey.

It is a dramatic change from 2000, when 28 per cent owned outright and 42 per cent had a mortgage.

The change is partly due to record low interest rates that have allowed many to pay off their mortgages quicker than expected.

An ageing population has also contributed, as baby boomers who bought when property was cheaper now find themselves debt-free in retirement.

But the drop in the number of people with mortgages is also driven by soaring house prices, which have made home ownership too expensive for many, forcing them to rent for longer.

The survey revealed that just 63 per cent of households now own their homes, with or without a mortgage – the lowest rate since 1985.

This is the 11th year in a row home ownership has declined. The younger generation has been hardest hit, with just a third of those aged 25 to 34 having a mortgage, compared to more than half ten years ago.

The growing cost of owning a home has also been reflected in Bank of England figures on debt. At the end of 2014, UK households owed £1.26trillion in outstanding mortgage debt – more than double the £550billion owed in 2000.

Campaigners said the English Housing Survey figures revealed a disturbing generation gap was opening up, with fewer young Britons able to obtain a mortgage.

Campbell Robb, chief executive of the charity Shelter, said: ‘These figures confirm what millions of people across the country are already feeling: a home of their own has become a distant dream, no matter how hard they work or save.

‘The shortage of affordable homes is leaving young adults with no choice but to remain stuck in their childhood bedrooms, or face decades paying out dead money to landlords. This can’t go on.’

David Orr, of the National Housing Federation, said: ‘The fact that the number of people owning with a mortgage is falling is a clear sign that it’s becoming more and more difficult to get a foot on the housing ladder.

‘Priced out of the housing market, young people are stuck in a cycle of private renting at an ever escalating cost that drains them of any spare money they could have saved for a deposit.

‘As house prices continue to rise we’re in danger of winding back the clock on home ownership, with only the privileged few having any hope of affording it.’

Estate agents Savills warned that the levels of home ownership will continue to slide due to higher interest rates, greater mortgage regulation and an acute housing shortage.

House building across England remains at its lowest peacetime level since the 1920s, pushing up property prices further.

The Government has tried to increase home ownership through its Help to Buy scheme, which offers people lower deposits.

Housing minister Brandon Lewis said: ‘Thanks to Government-backed schemes, nearly 192,000 people have bought or reserved a new home, and thanks to our efforts to keep interest rates at their record low we’ve helped keep mortgages more affordable.’

Source: www.dailymail.co.uk

Confidence in property market reaches three year high in UK

 









Confidence in the UK property market has reached a three year high, according to new research from Clydesdale and Yorkshire Banks.
 
Almost a quarter of people plan to change their current property either by extending or carrying out home improvements, the research found. A further 14% said they want to sell their house in the coming year.

Finances are also high on the agenda with 11% planning to either pay off their mortgage, make overpayments or re-mortgage in the coming 12 months.

The results, which show a consistently improving picture in the three years since homeowners were first asked about confidence levels, were revealed in the latest Annual Housebuyers Survey by the Banks.

The survey supports the latest findings from the Council of Mortgage Lenders which reported that 2014 lending levels were the highest since 2007.

Among those surveyed by the Banks in 2013, 62% of people said they planned to simply stay in their current home. The figure dropped to 58% a year later and dipped by a further 17% to 41% in 2015.

Of those planning a move in the next 12 months, Londoners are most likely to move with 22% putting up a For Sale sign. Within that group, some 8% of Londoners plan to move up the property ladder, a further 8% have aspirations to relocate and 6% hope to downsize. In contrast only 10% in Scotland and 8% of those in Yorkshire plan to move in 2015.

The optimism can also be seen with 44% expecting the value of their home to increase, while 54% think it will remain the same. Men are more optimistic about an increase with half of those surveyed anticipating an increase in value compared to 38% of women. Of those who believe the value of their home will increase the main reason is the increase in property prices in their local area, as well as an upturn in demand.

Confidence is at its highest in London where 64% believe their property will increase in value in 2015 in sharp contrast to Wales where just less than a quarter, 24%, share a similar view.

‘We have seen optimism returning to the property market over the last few years and this seems to be growing with more people planning house changes whether it is to move, make home improvements, pay off their mortgage or even help a family member to get onto the property ladder,’ said Steve Fletcher, head of Clydesdale and Yorkshire Banks Retail Network.

‘Whatever the circumstances Clydesdale and Yorkshire Banks have a range of products to suit different needs and budgets and to help make the UK's property aspirations for 2015 a reality,’ he added.

Source: www.propertywire.com

Signs of a strong house market recovery in the UK regions

 






The outlook for the UK housing market in 2015 is positive, despite some challenges, with signs of a strong recovery in the regions, according to the latest quarterly analysis report.


National estate agent Strutt & Parker is forecasting UK house price growth of 5% in 2015 overall and 9% in the Greater London area. But prime central London is expected to stagnate at 0%.

According to Stephanie McMahon, head of research at Strutt & Parker, there is still an imbalance between London and the rest of the UK but there are signs of strong recovery in the regions as buyers outside the capital look for affordability.

‘The holding off of interest rate rises, now not expected before autumn 2015 at the earliest, is a big positive. This combined with continued wage growth and low inflation, should give the national market the momentum it needs. We should see a flurry of activity up until the autumn as buyers take advantage of the low interest rate environment,’ she explained.

As part of the report, Strutt & Parker with its retained economic advisors Volterra, also analysed the behavioural profiles of its buyers who purchased country homes in the £2 million plus market outside of London throughout 2014.

It was clear that the majority, 79%, were buying a large country home for their primary residence while for 13% it was a second home and 8% were buying as an investment.


The firm believes that this could be linked to the increasingly high cost of buying and moving, meaning that people are choosing to buy one large house rather than two smaller ones or numerous buy to let investment properties.

‘The beginning of 2015 has seen a significant increase in new applicants registered with us looking for prime properties in excess of £2 million. We are witnessing at least double the amount of potential purchasers enquiring about properties we are currently offering or are now bringing to the market,’ said James Mackenzie, Strutt & Parker’s head of Country Department.

‘However, our viewing levels are not higher, which would indicate that there are a significant number of people who are beginning to look at moving but are waiting to see what the market has in store for this year,’ he added.

The report shows that 2014 saw a significant increase in the number of transactions compared to 2013 especially in the regions outside of Greater London, as well as in Scotland, both of which recorded 7.8% and 11.6% growth respectively. In Scotland, 93,972 homes were sold in 2014, worth a total of £15.4 billion.

In Greater London, 110,417 homes were sold in 2014, worth a total of £57.8 billion. ‘Given the pending election, we are pleasantly surprised at the levels of activity, most specifically in those areas closest to London, in the sub £2 million market,’ said Guy Robinson, head of Regional Residential Agency at Strutt & Parker.

Source: www.propertywire.com

Derbyshire town named as a UK property 'hot spot' as house sales boom

Alfreton's good road links and surrounding countryside are making it increasingly popular with home buyers.


A DERBYSHIRE town has been identified as a property "hot spot" after recording the second-highest number of house sales anywhere in England and Wales last year.

According to the latest Lloyds Bank property sales report, published today, Alfreton saw one of the highest increases in transactions in the first 10 months of 2014.

The report said that, compared to the same period in 2013, house sales grew by 53%. This was second only to Daventry, in Northamptonshire, where sales increased by 56%.

The Lloyds report tracks home sales movements across England and Wales. It is based on Land Registry data and covers 400 postal towns and London boroughs.

The report said: "Four towns recorded a 50% or more increase in sales between 2013 and 2014, with the biggest rises in Daventry (56%) and Alfreton (53%).

"Both towns are in the East Midlands, with the region accounting for four of the ten towns recording the largest sales rises."

Overall, Lloyds found that property sales across England and Wales were 21% higher in 2014 compared to the previous year – the highest since 2007, before the recession hit. All the regions saw rises, with the East Midlands leading the way with 26%, followed by the West Midlands at 25%.

Andy Hulme, mortgages director at Lloyds Bank, said: "The recovery in the housing market continued in 2014, with sales rising further in almost all areas of the country.

"Low interest rates, improvements in the UK economy and Government schemes such as Help to Buy, all appear to have contributed to the rise in home sales. Despite these improvements, sales both nationally and regionally are still significantly below their pre-recession levels."

Residential property expert Chris Brown, a director at Derby-based Sowter and Brown, said: "I have for some time thought that Alfreton is seriously underrated as a place to live.

"It is definitely a place on the up. Viewed by an outsider, the road communications are excellent, the town itself is more than adequate and the surrounding countryside is great for walking, with good stone-built Derbyshire pubs.

"Local schooling is good and employment is solid. In the Alfreton area you can buy a less expensive house offering larger accommodation at an affordable price – and that is why it's the place where more sales are going through."

Yesterday, Graham Penny Auctions held its first sale of the year at the iPro Stadium – with a number of Alfreton properties among the lots.

Director John Fearnehough said: "One property in the Alfreton area had a starting price of £65,000 and made £92,000. Another listed at £68,000 went for £94,000.

"There was a lot of interest in both and although they made good money, in comparison to other areas, they still represent good value. I think that is why Alfreton is proving so popular."

Source: www.derbytelegraph.co.uk

Will pension freedoms spark buy-to-let boom?

Brokers say improving market conditions, regulatory shifts and new pension freedoms have combined to make the buy-to-let sector the most attractive lending proposition in 2015.

A string of new entrants have either already joined the UK buy-to-let market in recent months or are planning to do so in the coming months. State Bank of India, which rejoined the sector last year after an 18-month absence, started to distribute through the broker channel last month and fellow Indian-based lender Axis Bank is rumoured to be weeks away from its own launch.

New specialist buy-to-let lender Foundation Home Loans is also close to launching into the market and Council of Mortgage Lenders data shows it is a market in the midst of a resurgence. Since 2009, the market has grown each year up to 2013, when a total of £20.7bn was advanced to landlords.

MMR slowdown

Tighter regulations placed on residential lending by the Mortgage Market Review have squeezed lenders’ margins, forcing them to consider other sources of revenue such as buy-to-let.

The new regulations were blamed for a dip in mortgage approvals over the summer, while British Bankers’ Association figures published in December showed year-on-year lending by the UK’s six largest lenders fell 12 per cent to £10bn.

Mortgages for Business managing director David Whittaker says: “Lenders who are struggling to match their ambitions with the state of the residential market will be looking to the buy-to-let space to make up for a lull in volumes.”

He adds that greater margins in buy-to-let lending will make it a more attractive market to new entrants.

“Any new lender at the moment will also be focused on buy-to-let quite simply because the returns are greater,” he says.

“If you look at the treatment of buy-to-let loans on a lender’s balance sheet, it is the same risk capital as residential loans but pays a higher percentage and bigger fees, without the regulatory overtones.”

TBMC managing director Andy Young says: “If lenders have been hit in terms of what they can do in the residential side of the market, they will naturally look to buy-to-let, which has really come on in recent years.

”Arrears are down, margins are good and there is an appetite to lend, so anyone new looking to lend in the UK would probably see landlords as their best bet.”

A boom from the pensions reforms?

The pension freedoms announced in Chancellor George Osborne’s Budget last year are another potential gift for the buy-to-let market. Following the announcement that anyone aged 55 or over would be able to access their entire pension pot from April 2015, experts forecast a boom in buy-to-let investment.

Buy to Let Club managing director Ying Tan believes the changes are likely to provide a boost for the market but says pension holders may not have the required risk appetite for investing in property.

He says: “The pension freedoms set to come in will help of course, but I wonder if most pension pots are big enough to buy a property and whether people who have saved into a pension have the kind of risk appetite to take on an investment property.”

However, a Bank of Ireland study in November found that 29 per cent of retirees nationwide were planning to use their pension to buy property.

John Charcol senior technical manager Ray Boulger says: “There is a definite logic to savers using their pensions windfall to invest in property. House prices will continue to rise despite the efforts to boost supply, and I think those who are smart enough to save a decent amount over their careers will also see the sense in property investment to gain better yields.”

A cleaner market?

The buy-to-let market has largely “cleaned” itself in the years following the crisis, says Tan, making it a better proposition for lenders. The credit scoring process, in particular, has improved, leading to falling arrears in the buy-to-let market. CML data shows the percentage of buy-to-let loans in three months or more arrears has fallen from 2.31 in 2008 to 0.92 per cent as of 2013.

Tan says: “I’ve been in the market through good and bad times and right now buy-to-let is as strong and as clean as it has ever been, so it makes perfect sense to see lenders joining the market now.

“If margins are best in buy-to-let and arrears levels are low, why wouldn’t you want to get into that market? Often you think if margins are higher than its riskier but if both margins and arrears are favourable, it’s a great time to enter.”

Source: www.moneymarketing.co.uk

UK buy to let sector surging ahead, it is claimed

 
 The UK’s buy to let sector surged ahead of other areas of the housing market in January, according to the latest research from Connells Survey and Valuation.
While most of the housing market began the year with a subdued outlook, buy to let bucked this trend and was the strongest performing sector with 37% growth in activity since the previous month, and on an annual basis the smallest dip of just 4%.


It means that the sector has bounced back from a disappointing performance in December 2014 when it recorded one of the biggest monthly falls, according to John Bagshaw, corporate services director of Connells Survey & Valuation.

He believes that as landlords are now ‘spoilt for choice’ with a record number of mortgage products to choose from, they are beginning to invest more. Low mortgage rates have also continued, posing even more attractive deals for potential landlords or those expanding portfolios.

The first time buyer sector of the housing market was the only other sector which saw a monthly increase in valuations activity. On a month on month basis, activity for first time buyers increased by 3% though on an annual basis it saw one of the biggest falls of 28% compared to January 2014.

‘First time buyer activity increased on a monthly basis despite a stark contrast in performance with January 2014 when this sector had dominated the housing market. This was largely due to the flurry of activity as customers rushed to secure deals before the Funding for Lending Scheme (FLS) stopped mortgage funding at the end of January 2014. At the time the policy had boosted the housing market, particularly first time buyers by lowering mortgage rates,’ said Bagshaw.

‘Since then however, a series of policies have been introduced that have restricted lending criteria which have affected first time buyers more than other sectors and consequently had a major impact on demand. However, this month on month growth is encouraging and indicates that as the sector stabilises and adjusts to the new regulatory landscape, it should continue improving in the coming months,’ he explained.

By contrast, activity for those already on the property ladder has been subdued. On a monthly basis activity dipped by 4%, though compared with January last year, valuations activity fell by a steeper 23%.

Similarly, remortgaging saw one of the biggest falls in activity both on a monthly and annual basis. Since December, recent activity fell by 25%, while compared with January 2014 it decreased by 28%.

‘The current economic outlook indicates that low inflation and therefore the low Bank rate will continue for some time. As a result it appears that this is giving rise to optimism as more borrowers anticipate that lenders will be able to lower their mortgage rates even further. They are now waiting before securing a deal,’ said Bagshaw.

‘However, it is worth noting that current mortgage rates might not get any cheaper as the deflation in the Eurozone may affect swap rates soon. As many households look for ways to cut monthly costs, taking advantage of these rates now is a good idea,’ he pointed out.

Overall, the total activity in January saw a 4% fall since December 2014 while on an annual basis activity was down 23% but Bagshaw explained that the expected post-holiday pickup in activity failed to materialise with the market making a very restrained start to the year.

‘Mediocre comparisons are due in part to the exceptional performance seen in January 2014 as a result of a healthy pipeline at the end of the third quarter of 2013. In contrast, the transaction market slowed dramatically towards the end of last year. However, this slow start is not a cause for alarm as January is typically a slower month with lower volumes of activity,’ he concluded.

Source: www.propertywire.com