Value of A Mortgage Broker Report – Legal & General

WHAT IS THE VALUE OF A MORTGAGE BROKER?

Buying a home is one of the biggest purchases people will ever make and it’s not always an easy process. From surveys, stamp duty, and solicitors’ fees to the baffling number of products and different interest rates, there’s a lot to wade through. But this is where you come in.

Legal & General have conducted a survey, ‘Value of a Mortgage Broker’ their research reveals a quarter of respondents (25%) said they had used a broker because the mortgage market was complex and they needed guidance. In fact, 81% of homeowners thought the advice of a broker would be quite valuable or extremely valuable when securing a mortgage.

Mortgage brokers could be seen as being in a strong position as the research shows:

  • 71% of homeowners used a broker in their most recent house purchase

  • Of these, 82% said they would use a broker for their next mortgage

  • 92% of those surveyed who had used a broker were quite likely or very likely to recommend using a broker to their friends when getting a mortgage

Education is Key

The research highlights the role a mortgage broker plays in helping people find the right mortgage for their individual needs, through invaluable information and support. However, for this success to continue, education is needed as people remain, in many cases, unaware about the work of Mortgage brokers and the benefits they could bring:

  • 55% didn’t know a broker could offer them more product choice for mortgages

  • 48% who didn’t use a broker thought their bank or building society offered them a good deal

  • 23% thought Mortgage brokers were expensive

  • 18% of homeowners who didn’t use a broker didn’t see the value they would add

To help your business grow you need to tackle these myths, particularly as the market becomes more competitive. Use our new ‘Value of a Broker’ report and infographic to find out more about what UK homeowners think about the mortgage market and the role that you play.

*Research conducted by Census Wide survey between 22 August 17 to 29 August 17. Surveying 500 who have bought a home in last 12 months (with a mortgage) and 500 first time buyers who plan to buy in the next 6 months (with a mortgage).

 

Download the full L&G Report here – Value of a Broker Report

AUTUMN BUDGET

AUTUMN BUDGET 
November 2017

BUILDING A BRITAIN FIT FOR THE FUTURE
 

In Philip Hammond’s first Autumn Budget, the second Budget of 2017, the Chancellor of the Exchequer promised that his Government would, “invest to secure a bright future for Britain“.

Set amid a backdrop of political and economic constraints, and with Brexit negotiations at a critical phase, the Conservatives are under intense pressure. The abolition of stamp duty for most first-time buyers and an array of other housing measures were prominent announcements.

OBR Forecasts

The Chancellor began by confirming that government borrowing is forecast to be £49.9bn this year, £8.4bn lower than forecast at the Spring Budget. He went on to add that the Office for Budget Responsibility (OBR) had downgraded its forecast of economic growth from 2% to 1.5% in 2017, 1.4% in 2018, 1.3% in 2019/20, up to 1.5% in 2021, and then 1.6% in 2022. At the same time, they predicted CPI inflation would peak at 3% in Q4 2017 and then begin to fall back towards the target of 2%. The percentage of public sector net borrowing to Gross Domestic Product (GDP) would equate to 2.4% in 2017, 1.9% in 2018, 1.6% in 2019, 1.5% in 2020, 1.3% in 2021 and1.1% in 2022/23.

Housing

The Chancellor kept a key announcement until the end of his speech when he unveiled an ambitious house building initiative, promising to facilitate construction of 300,000 new homes each year by the mid-2020s. He will achieve this through a number of initiatives, including: pressurising developers sitting on unused planning permissions to either develop those sites or face compulsory purchase; developing five new ‘Garden Towns’ across the UK and ensuring that local authorities permit more homes for first-time buyers and ‘affordable renters’.

Financially, within housing market support worth £44 billion over five years, he will commit £2.7bn to the Housing Infrastructure Fund, £630 million for ‘small-site’ allowances and £34 million to develop construction skills across the country. His ambition is to concentrate developments within existing urban areas, including city centres and around transport hubs, thus protecting the green belt.

On the demand-side, he surprised the House by announcing the abolition of stamp duty for first-time buyers purchasing properties worth up to £300,000. To help those in very high-priced areas, such as London, the first £300,000 of the cost of a £500,000 purchase by all first-time buyers will be exempt from stamp duty, with the remaining £200,000 incurring 5% duty. This to take effect immediately in England, Wales and Northern Ireland. It will not apply to Scotland, unless they decide to adopt the measure.

Properties left empty by owners will face sanctions as he will give the relevant local authorities the right to increase the Council Tax premium from 50% to 100%.

Personal Taxation, Savings & Investments

On the tax front, the income tax personal allowance will be increased to £11,850 with effect from April 2018, with the higher rate tax band threshold increasing to £46,350. (Rates and bands may differ in Scotland, where a Draft Budget is due on 14 December.)

The ISA savings allowance for 2018/19 will remain at £20,000. The allowance for JISAs and Child Trust Funds will be uprated in line with CPI to £4,260.

The taxation of Trusts will be subject to a consultation in 2018 to make it simpler, fairer and more transparent.

From April 2018, investors will be able to double their investment in Enterprise Investment Schemes (EIS) to £2 million, provided these are ‘knowledge intensive’ businesses. These firms may now receive £10 million – up from £5 million – of investment through either an EIS or Venture Capital Trust.

Employees on maternity and parental leave can pause their contributions to Save As You Earn share schemes for 12 months, rather than the current six months allowed from April 2018.

Tobacco tax will be increased by RPI inflation plus 2%, with hand-rolled tobacco attracting an additional 1% surcharge over this. Tax will increase on low-cost, high-alcohol drinks, including some ciders, but the tax on most ciders, wine and beer will remain frozen at current levels. Fuel tax will remain frozen as well.

Pensions

For the first time in seven years, April 2018 will see the pension lifetime allowance increase, by £30,000 to £1,030,000. The basic State Pension will increase by the triple-lock formula. Therefore, April 2018 will see it rising by 3% (£3.65 per week) – for the full basic pension. The full new State Pension will, likewise increase via the triple lock by £4.80 a week.

Business

Corporation Tax will follow the currently proposed levels. However, help was offered to small businesses, as after consultation with the British Chambers of Commerce, the Confederation of British Industry, and the Trades Union Congress, the Chancellor agreed to a range of business reliefs. The threshold for VAT registration will also remain at £85,000 for the next two years.

Given the ‘Digital Consumer Age’, Mr Hammond concentrated on the large consumer internet sites that have been seen to pay royalties to subsidiary companies domiciled in low-tax jurisdictions. In future, such payments will attract income tax payable by the UK domiciled company.

Addressing what he believed was existing VAT fraud, amounting to non-payment of up to £1.2bn on online sales, internet site owners facilitating such sales will also be held responsible for any outstanding VAT payments as well as the original vendor. He said that because of these moves, the “UK now leads change to find solutions” here and dubbed it a “Tax for the digital economy.”

NHS

Close to everyone’s heart is the NHS, which he confirmed this year had seen the highest number of patients treated ever recorded. He has committed an additional £10bn of capital investment this parliament for the NHS in England, with an additional £2.8bn of Resource Funding, £350 million of which will be made immediately available, with £1.6bn in 2018 and the balance by 2020. He further promised to listen to his Health Secretary ‘favourably’ after his future staff pay agreements have been concluded.

Regional Development

As Mr Hammond strived to “build an economy fit for the future” the English regions and devolved parliaments of Wales, Scotland and Northern Ireland also benefited. Scotland will see the most benefit of his largesse to the tune of £2bn, Wales £1.2bn, and Northern Ireland benefiting by £650 million of investment.

Philip Hammond closed his Budget Speech with these words:

In this Budget I have set out a vision for Britain’s future, and our plans for delivering it. By getting our debt down, by supporting British families and businesses, by investing in the technologies and the skills of the future, by creating the homes and the infrastructure our country needs.

Other key points

  • Further £10bn to support ‘Help to Buy’ Equity Loan scheme
  • National Living Wage rises in April to £7.83 per hour
  • £406 million investment in Maths and Technical education
  • Railcard availability extended to 26-30 year olds
  • Plastic waste reduction to be reviewed
  • Company car/van benefit charges increase by RPI in April

It is important to take professional advice before making any decision relating to your personal finances. Information within this newsletter is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor.

Residential Property Review – November 2017

Our monthly residential market review is intended to provide background to recent developments in property markets, as well as to give an indication of how some key issues could impact in the future.

Bank of England’s Base Rate increase to have “modest impact

One of the UK’s leading mortgage providers, Nationwide, believes that the recent increase in interest rates from 0.25% to 0.5%, announced by the Bank of England, following the Monetary Policy Committee’s meeting in early November, will have only a “modest impact” on most UK households, because an increasing number of homeowners are now on fixed-rate mortgages.

The Chief Economist at Nationwide, Robert Gardner, believes that the number of homeowners on variable mortgage rates and therefore those most likely to encounter higher payments, has fallen to a record low of around 40%; this is a dramatic reduction from 70% seen in 2001.

He went on to add: “Moreover, a 0.25% increase in rates is likely to have a modest impact on most borrowers who are on variable rates.

By their calculations, given the 0.25% increase in interest rates, the average borrower will see an increase in their monthly payment of just £15 a month to £665 for the mortgage, equivalent to an average annual increase of £180.

Government seeks to make home buying “faster and less stressful

Sajid Javid, the UK’s Communities Secretary, has announced a Government sponsored eight-week review of the home buying/selling industry and announced that to achieve his aim of streamlining home-buying in England and Wales he wants to “hear from the industry.” By inviting feedback from mortgage lenders, solicitors and estate agents, he intends to “help save people money and time so they can focus on what matters – finding their dream home.”

This may be a timely intervention given that there are approximately one million homes bought and sold in England each year. Of these, nearly a quarter of transactions fall through as a result of multiple factors. Of these factors, by far the most contentious practice is that of gazumping. This is where a vendor, having already accepted an offer from one prospective purchaser, then accepts a higher offer from another purchaser.

Mr Javid hopes to be able to instil confidence in the industry by investigating the viability of schemes such as lock-in agreements and speeding up the entire process of home-buying and selling.

Some UK properties remain on the market for over six months

A recent survey by on-line estate agents Housesimple.com has found that more than 12% of UK properties remain on the market for six months or more. Their survey covered 50 of the UK’s major cities.

There was remarkable disparity in some of their findings. Belfast, in Northern Ireland, has the fastest turnover rate with only 1.9% of properties remaining on the market for 6 months or longer, followed by Reading and Northampton, at 3.6% and 3% respectively. At the other extreme is Sunderland, in the North East of England, seeing 28.5% of their properties still on the market after six months.

London reported that in the City of Westminster postal district, 22.5% of properties remaining unsold after six months.

HOUSE PRICES HEADLINE STATISTICS

HOUSE PRICE INDEX (SEP 2017)* 118.7*
AVERAGE HOUSE PRICE £226,367
MONTHLY CHANGE 0.4%
ANNUAL CHANGE 5.4%
*(Jan 2015= 100)

  • An annual price increase of 5.4% which takes the average property value in the UK to £226,367
  • The main contribution to the increase in UK house prices came from England
  • London saw the lowest annual price growth with an increase of 2.5%
  • London and Scotland saw monthly price falls in September

HOUSE PRICES PRICE CHANGE BY REGION

Region   Monthly Change (%) Annual Change (%) Average Price (£)
England   0.6 5.7 £243,945
Northern Ireland
(Quarter 3 – 2017)
  3.0 6.0 £132,169
Scotland   -1.3 3.1 £144,924
Wales   0.6 5.3 £152,661
East Midlands   0.7 6.4 £184,399
East of England   0.3 5.9 £289,301
London   -0.2 2.5 £483,568
North East   0.5 4.4 £130,271
North West   2.1 7.3 £160,951
South East   0.3 5.5 £324,465
South West   0.5 6.6 £252,737
West Midlands Region   0.4 5.7 £189,038
Yorkshire & The Humber   1.0 5.6 £158,884
Source: The Land Registry
Release date: 14/11/2017 Next date release: 12/12/2017

UK UNEMPLOYMENT FIGURES

  • There were 32.06 million people in work, 14,000 fewer than for April to June 2017 but 279,000 more than for a year earlier
  • There were 8.88 million people aged from 16 to 64 who were economically inactive
Jobless total
1.42m
Unemployment rate
4.3%
Source: Office for National Statistics
Release Date: 15/11/2017

MORTGAGE ACTIVITY

  • Housing market activity has built up modest momentum since the start of the year, helped by an increase in first-time buyer numbers
  • Nearly two-thirds of September mortgage activity was carried out by High Street Banks

Source: UK Finance (formerly Council of Mortgage Lenders)
Release date:
 25/10/2017

 

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.