WHY 70% OF BUYERS PREFER TO USE A MORTGAGE ADVISER

There’s an awful lot to think about when you’re looking for a mortgage. It’s not surprising that these days, 70% of buyers are choosing to work with a mortgage adviser to help ensure they get the most appropriate deal for their financial circumstances.

There are hundreds of deals on offer, so how do you find the right, most cost-effective deal? Should you fix the rate, if so, how long for? What about deals offering ‘extras’, would they suit your needs? Making the wrong choice about your mortgage could cost you hundreds, even thousands of pounds more than you need to pay.

By talking to us, rather than trawling umpteen websites and spending hours putting in applications to a range of lenders, you can save yourself stress and time. You’ll also be able to tap into a wealth of good advice that can help ensure you make a success of your property purchase.

GETTING THE BEST ADVICE

We are professionally-trained and know an awful lot of useful stuff, not only about the mortgage market, but about the whole home-buying and selling process. We can also offer tips on everything from finding a solicitor, to getting the right type of property survey

We’ll be able to help you every step of the way, offering advice on making sure your finances are in order before you put your application in, and helping you put in place the right type of insurance policies to protect your mortgage and your home.

MAKING YOUR APPLICATION

Although all lenders operate broadly the same lending criteria, the way in which they interpret the rules will differ. We can ensure that your application is made in the right way to the most appropriate lender.

A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

GETTING THE MOST FROM YOUR INSURANCE POLICY THIS WINTER

High winds and rain can cause major damage to property, so before winter tightens its grip, it’s worth checking (without putting yourself in danger) that your roof is in good repair, and that gutters are clear of leaves and other blockages. Make sure items like patio furniture and children’s play equipment are stowed safely away in a garage or shed. Clear paths of moss, and keep salt handy to clear ice and prevent falls.

MAKE SURE YOU HAVE THE RIGHT COVER IN PLACE

It’s also a good time to check out the details of your home insurance policy. If you’re not sure what sort of cover it provides, you should check your policy schedule now. Keep a note of your insurance company’s emergency and claims handling telephone numbers in case of need. Check you know what your policy excess is – this is the first part of your claim which you have to pay yourself. Knowing this will help you decide if it’s appropriate to make a claim.

If you want to increase the type of cover you have for home emergencies, then we can help you find the right policy for your needs. Home emergency policies typically cover problems that arise with plumbing and drainage, main supply pipes for water and gas, central heating, glazing and windows, home electrics and home security.

PREVENTING FURTHER DAMAGE

If you suffer damage, you may need to think about carrying out temporary repairs to prevent the damage getting worse. Call your insurer’s emergency number first, and ask for their advice. Keep the receipts for any work they suggest you carry out, as you may need these for your claim.

It’s a good idea to take pictures of the damage, but don’t put yourself at risk of harm by doing so. Don’t rush to get rid of damaged items, as your insurer may want to inspect them.

For advice call 01604 433 035

RESIDENTIAL PROPERTY REVIEW – December 2017

Buy-to-Let landlords continue to feel the pinch

In their latest ‘UK Cross Sector Outlook’, Savills Research have noted that following the summer budget of 2015, the government’s alterations to Buy-to-Let (BTL) regulations and taxation, have seriously dented the enthusiasm of many potential landlords. Savills report that UK Finance have calculated that the number of BTL mortgages granted in the year to August 2017 was 75,300. This represents a fall of 47% from the year to March 2016. Furthermore, the actual growth in the number of outstanding BTL mortgages is lower still – now standing at 24,800 – which suggests that landlords are divesting in this sector.

October’s data sees a boost to remortgaging

UK Finance have stated in their non-seasonally adjusted data release that loans for remortgaging and for house purchases rose, when compared with the previous month and with the same period in 2016.

Given the current economic climate, both capital and interest payments for new loans are at an all-time low, which reflects the increasingly competitive nature of the mortgage-lending market.

June Deasy, Head of Mortgage Policy at UK Finance said: “Over the last year, the number of loans for remortgaging have been at record levels; this trend looks set to continue further as we head towards the end of 2017 and borrowers seek to take advantage of low interest rates. Mortgage repayments as a percentage of income still remain at, or close to, their historic low point, and despite the recent base rate rise, we can expect monthly mortgage payments to remain affordable for the vast majority of borrowers.

Conflicting data released by the Land Registry

In its latest data release, the UK Land Registry, which collates completion data across the country, has recorded the average residential property price in the UK at £223,807 in October. This represents an annual positive price change of 4.5%, and a slight monthly fall of 0.5%. They stated that the Royal Institution of Chartered Surveyors (RICS), whose members they canvass for the data, reported that headline near-term price expectations slipped to -11% from -8% in September and has now been negative in each of the last three months. The Bank of England found that housing market demand has strengthened overall, but with the usual regional divergence

 

HOUSE PRICES HEADLINE STATISTICS

HOUSE PRICE INDEX (OCT 2017)* 117.4*
AVERAGE HOUSE PRICE £223,807
MONTHLY CHANGE -0.5%
ANNUAL CHANGE 4.5%
*(Jan 2015= 100)

  • An annual price increase of 4.5%, which takes the average property value in the UK to £223,807
  • The North West saw the largest monthly fall in value of -2.0%
  • Northern Ireland saw price growth of 3.0% over Q3 2017

 

HOUSE PRICES PRICE CHANGE BY REGION

Region   Monthly Change (%) Annual Change (%) Average Price (£)
England   -0.6 4.7 £240,860
Northern Ireland
(Quarter 3 – 2017)
  3.0 6.0 £132,169
Scotland   -0.7 2.8 £143,544
Wales   0.8 4.5 £153,316
East Midlands   0.2 7.0 £184,544
East of England   0.1 6.1 £289,168
London   -0.9 2.1 £481,102
North East   -0.1 2.4 £127,224
North West   -2.0 3.9 £154,056
South East   -0.5 4.6 £322,311
South West   0.2 6.7 £251,376
West Midlands Region   -1.1 5.2 £186,351
Yorkshire & The Humber   -1.1 3.3 £155,281
Source: The Land Registry
Release date: 12/12/2017 Next date release: 16/01/2018

 

UK UNEMPLOYMENT FIGURES

  • There were 32.08 million people in work, 56,000 fewer than for May to July 2017 but 325,000 more than a year earlier
  • 8.86 million people aged 16 to 64 were economically inactive
Jobless total
1.43m
Unemployment rate
4.3%
Source: Office for National Statistics
Release Date: 13/12/2017

 

MORTGAGE ACTIVITY

  • The number and value of loans for remortgaging and for house purchases rose in October
  • First-time buyers borrowed £5.1 billion, up two per cent on the previous month
  • Home movers borrowed £7 billion, up 2.9 per cent on September

Source: UK Finance (formerly Council of Mortgage Lenders)
Release date:
 12/12/2017

 

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.

Cohabiting couples warned of ‘common law marriage’ myths

Couple cooking in kitchen

Millions of unmarried couples who live together could be unaware of their rights if the relationship breaks down, a family law group has warned.

Resolution carried out a survey which found two-thirds of cohabiting couples wrongly believe “common-law marriage” laws exist when dividing up finances.

The number of unmarried couples living together has more than doubled from 1.5 million in 1996 to 3.3 million in 2017.

Resolution chairman Nigel Shepherd said current laws were “behind the times”.

He said: “The government must listen to the public, legal professionals and a growing number of politicians who all agree that we need reform to provide basic rights to cohabiting couples should they separate.”

Mr Shepherd said “society has changed”, as cohabiting couples have become the fastest-growing family type in the UK.

He said, under current law, it was possible to live with someone for decades – and have children together – but not take responsibility for the former partner if the relationship breaks down.

Cohabiting couples can be recognised under Scots Law in some circumstances – and Scottish legislation introduced in 2006 enables a cohabitant to apply to the court for financial provision.


Cohabiting vs marriage: Six ways your rights differ

  1. If one cohabiting partner dies without leaving a will, the surviving partner will not automatically inherit anything – unless the couple jointly own property. A married partner would inherit all or some of the estate
  2. An unmarried partner who stays at home to care for children cannot make any claims in their own right for property, maintenance or pension-sharing
  3. Cohabiting partners cannot access their partner’s bank account if they die – whereas married couples may be allowed to withdraw the balance providing the amount is small
  4. An unmarried couple can separate without going to court, but married couples need to go to a court and get divorced to end the marriage formally
  5. Cohabiting couples are not legally obliged to support each other financially, but married partners have a legal duty to support each other
  6. If you are the unmarried partner of a tenant, you have no rights to stay in the accommodation if you are asked to leave – but each married partner has the right to live in the “matrimonial home”

Source: Citizens Advice


The ComRes poll of 2,000 UK adults, by Resolution, found 84% of people thought the government should take steps to make sure unmarried cohabiting couples knew they did not have the same legal protection as married couples.

Of these respondents, 281 people were in a cohabiting relationship – two-thirds of which thought they were common-law married.

A further four in five cohabitants believed that the legal rights surrounding cohabiting people who separate were “unclear”.

If they have children, each cohabiting partner will still have the legal rights and responsibilities of a parent.

‘Completely unprotected’

Mother-of-five Yvonne, who was with her ex-partner 17 years, said she was “shocked to find out” her legal rights when they ended the relationship.

“I was entitled to nothing,” she said.

“I was no longer just dealing with a break-up – but with the fallout of not being legally entitled to share in any of what I thought were our joint assets.”

Yvonne
Yvonne said she was “devastated” when she realised she lacked financial support

Yvonne, who gave up paid work to look after their children, said she now has to move house – but has no independent funds or a pension.

“I’m devastated to have been left in this situation, and think it’s wrong that the law is unable to provide people like me with any support whatsoever,” she said.

Resolution, which represents 6,500 family practitioners, said it had seen an increase in the number of cases involving cohabiting couples.

Some 98% of Resolution members report having worked with a couple who they say they could not help due to the lack of legal protection.

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.

RESIDENTIAL PROPERTY REVIEW

Our monthly property 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.

 

Recent data on the UK housing market has been conflicting as the first two articles demonstrate.

UK housing market continues to lack momentum

In the UK Residential Market Survey of September, the Royal Institution of Chartered Surveyors summarise that the UK housing market continues to lack momentum. The slowdown is exacerbated by the combination of both new buyer demand and sales continuing to fall. As the market slows, the shift in interest rate expectations is contributing to buyer caution, with sentiment now flatter than at any point since the referendum result last summer.

In September, transaction weakness was widespread over the UK, with only the South West and Wales experiencing an increase in sales. The South East and the capital were at the forefront of the decline in sales.

Little change is anticipated in national sales activity over the next quarter, with expectations slipping from +7% previously to -1%. New instructions have been on the decline for the past 18 months and as a result, average stock levels on estate agents’ books are near record lows at just 43.3 properties.

Mortgage lending healthy as summer draws to a close

UK Finance (previously the Council of Mortgage Lenders) have released figures showing that lending for house purchases increased in August 2017. The largest increase in lending was for home movers, who borrowed £8.4 billion in August, a huge increase of 18% on July and over 20% on August last year. First-time buyers borrowed £5.7 billion in August, up 12% on August 2016. While buy-to-let lending totalled just £3.1 billion in August, a 3% decline on August last year.

June Deasy, UK Finance’s Head of Mortgages Policy, commented on the data: “Activity picked up in August, and recent resilience ensured that borrowing by home movers was at its highest since March 2016, when transactions were boosted by an imminent increase in stamp duty. Over the last 12 months, the number of people remortaging has been higher than in any period since late 2009. With mortgage rates close to historic lows and the likelihood of a rise in official rates moving closer, the popularity of remortgaging looks set to continue.

Supply and demand theory found wanting

The basic economic theory of supply and demand should result in rising house prices incentivising home-owners to sell up, thereby increasing supply. However, in the current UK real estate world that simply isn’t happening.

Given that residential property has enjoyed over a decade of price rises, the home-owner is more likely to stay put as the value of, probably their largest single asset, continues to rise in value.

These same rising prices no longer deter the demand side, as prospective home-owners continue to attempt to get into the market, before prices continue to rise through their price pain thresholds.

This dichotomy is no more apparent than in the London market where those with the lowest incomes have really suffered. In the 14 years between 2002 and 2016, a person in the lowest quartile of income looking to purchase a London house in the lowest quartile price range would have had to find 7.11 times their income to finance the deal. That same person in 2016 would have to find 13.52 times their income to achieve the same result.

 

HOUSE PRICES HEADLINE STATISTICS

HOUSE PRICE INDEX (AUG 2017)* 118.5*
AVERAGE HOUSE PRICE £225,956
MONTHLY CHANGE 0.5%
ANNUAL CHANGE 5.0%
*(Jan 2015= 100)

  • UK house prices grew by 5.0% in the year to August
  • The main contribution to the increase in UK house prices came from England
  • The largest annual growth was in the North West at 6.5%

 

HOUSE PRICES PRICE CHANGE BY REGION

Region Monthly Change (%) Annual Change (%) Average Price (£)
England 0.7 5.3 £243,520
Northern Ireland
(Quarter 2 – 2017)
3.1 4.4 £128,650
Scotland -0.7 3.9 £146,354
Wales -0.1 3.4 £150,258
East Midlands 0.3 6.4 £183,762
East of England 0.0 6.4 £288,440
London -1.0 2.6 £484,362
North East 1.4 3.7 £130,731
North West 2.3 6.5 £159,865
South East 1.1 4.8 £324,983
South West 0.6 6.4 £251,984
West Midlands Region 0.6 5.3 £188,447
Yorkshire & The Humber 1.4 4.8 £158,689
Source: The Land Registry
Release date: 12/09/2017 Next date release: 17/10/2017

 

UK UNEMPLOYMENT FIGURES

  • The unemployment rate was 4.3%, down from 5.0% for a year earlier and the joint lowest since 1975
  • There were 1.44 million unemployed 215,000 fewer than for a year earlier
Jobless total
1.44m
Unemployment rate
4.3%
Source: Office for National Statistics
Release Date: 18/10/2017

 

MORTGAGE ACTIVITY

  • Gross mortgage lending for August is estimated at £24.20 billion
  • Of which £15.10 billion was lent by High Street Banks

Source: UK Finance (formerly Council of Mortgage Lenders)
Release date:
 26/09/2017

 

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MORTGAGES – BANK OF ENGLAND TIGHTENS THE RULES

Home buyers are set to face stricter borrowing tests when applying for a mortgage, following the introduction by the Bank of England of tighter restrictions on lenders. Lenders will now be required to make sure that borrowers can manage repayments at an interest rate of around 7%, which in many cases is far higher than the rate borrowers are currently likely to be charged.

The Bank of England has made this move due to its concerns that families have been encouraged by record low interest rates to increase their borrowing. Borrowers will now need to show that they have enough slack in their household budget to cope with making larger monthly repayments if interest rates start to rise.

However, as many lenders have been operating under strict mortgage criteria for some years now, the general view is that this may not be the stumbling block to new mortgages it might appear. The Bank has estimated that if these rules had been in operation in 2016, it would only have reduced mortgage approvals by less than 0.5%.