Bank of England – Inflation Report August 2018

The outlook for the economy – “In a nutshell”

Report published by The Bank of England – August 2018

“We have raised interest rates to 0.75%”

Interest rates

Inflation is above our target

The squeeze on pay is easing

Growth is around its speed limit

Interest rate rises should be gradual and limited

Interest Rates

Our role is to set interest rates to influence the amount of spending in the economy in order to ensure inflation (the pace of price rises) returns to our 2% target sustainably.

The reason we focus on low and stable inflation is that it is vital for a stable economy that supports growth and jobs.

If we set interest rates too low, then the economy will run too hot, and inflation will stay above our target. But if we set interest rates too high or raise them too rapidly then the economy will be too weak, and inflation will fall below our target.

During the financial crisis, people reined in their spending and many lost their jobs. We had to cut interest rates to exceptionally low levels to support spending and jobs. Over the past few years, our economy has needed interest rates to stay very low as we recovered from the global financial crisis. But things have been changing.

Last November, we raised the official interest rate we set, known as Bank Rate, from 0.25% to 0.5%. And now we have raised it to 0.75%.

If the economy continues to perform as we currently expect, it will probably be growing about as fast as it can without overheating. In that case, we think we would need to raise interest rates further, reducing the amount of support we are providing to the economy. But we expect those increases to be gradual. And interest rates will probably need to stay lower than the 4-5% they used to be for some time to come. That’s primarily because there have been some big structural shifts in the global economy that are likely to persist.

A rise in interest rates might seem like a bad thing, especially if you have a lot of debt.  But it would be a sign of an economy growing about as fast as it can, and one that is able to support higher wages. And small increases in interest rates now can avoid the need for bigger ones later.

 

Inflation is above our target

The prices of the things you buy have been going up by more than our 2% target on average over the past year.

That’s been mainly due to the big fall in the pound following the Brexit vote.

The lower pound has meant that things businesses get from abroad cost more. Businesses have been passing those rising costs on to their customers. So that has meant higher prices in the shops. Most of the increase in prices due to the fall in the pound has now happened though.

The price of oil on world markets has also risen over the past year, pushing up prices for petrol at the pumps. Because of that, we think inflation picked up a bit in July.

But unless oil prices keep on rising, inflation should continue to fall back towards our 2% target.

Prices have been rising by more than our 2% target over the past year

 

The squeeze on pay is easing

Over 2017, prices were rising faster than wages meaning people were not able to afford as much. That is now starting to change.

Pay rises for most have been pretty low. But recently wages on average have started to rise faster than prices again. That is easing the squeeze on people’s living standards.

That squeeze should ease further over the next few years. The share of people out of work is at its lowest level for more than 40 years. And there are a lot of job vacancies. This means that companies need to compete hard with each other to recruit and retain workers. One way they do that is by offering higher pay.

The pressure in the jobs market means we’re expecting to see bigger, more widespread pay rises in coming years.  That greater spending power should support growth in the economy.

Pay has started to rise faster than prices, easing the squeeze on living standards

 

Growth is around its speed limit

The world economy is also growing relatively robustly, although it slowed a bit at the beginning of the year. Growth abroad benefits the UK by increasing demand for our exports . And it should encourage companies to invest to meet this extra demand.

We thought the dip in UK growth earlier in the year was probably temporary, but we couldn’t be sure until we saw what happened next. The latest data suggest that growth has recovered since then and that the dip was mostly due to the bad weather.

We think our economy is probably growing about as fast as it can without overheating. Find out more about how fast the UK economy can grow.

A few years ago many people were out of work and looking for jobs. So there was scope for the economy to grow quite quickly as a lot of those people found work.

Now, with a record number of people in work and businesses finding it hard to recruit people, there isn’t much more economic growth that can come simply from unemployed people finding work.

Instead, it will mostly need to come from higher productivity – people already in work producing more.  But productivity has barely risen over the past decade.

There is a limit to how fast the economy can grow before it leads to higher inflation

 

The interest rate decision

In May, we said that if the economy performs broadly as we expect, then we would need to reduce the amount of support we are providing to make sure inflation returns sustainably to the 2% target. We thought that would probably require modest rises in interest rates over the next few years.

Since then, the economy has developed broadly as expected. So we have removed a little of the support, raising interest rates from 0.5% to 0.75%.

If the economy continues to perform as expected, we think we will need to raise interest rates a bit more over the next few years. We expect any rises in interest rates to happen at a gradual pace and to a limited extent. Interest rates are likely to remain substantially lower than a decade ago.

We have raised interest rates to 0.75%

 

MME Residential Property Review – July 2018

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.

 

Three-year tenancies for renters causes concern to landlords

As reported by The Guardian, the Secretary of State for Housing, Communities and Local Government, James Brokenshire, has proposed stopping landlords of rental properties from evicting tenants at short notice and implementing a minimum three-year tenancy agreement.

Currently, approximately 80% of residential tenancies in England and Wales are agreed for either a six or twelve-month period. The assured shorthold tenancy agreement is the most widely used tenancy agreement by buy-to-let landlords. This type of tenancy entitles the landlord to a possession order immediately after the initial agreed period, meaning the landlord is therefore able to evict the tenant after the initial fixed term without a legal reason.

Referring to his recent consultation paper, Mr. Brokenshire stated: “It is deeply unfair when renters are forced to uproot their lives or find new schools for their children at short notice due to the terms of their rental contract.

 

London house price growth at nine-year low

The UK Cities House Price Index, published by Hometrack, a property research organisation, has shown that London is amongst five cities where home prices are declining in real terms, when adjusted for inflation. Their definition of a decline is where house price annual growth rates fall below the Government’s Office for National Statistics’ (ONS) Consumer Prices Index (CPI), which currently sits at 2.4%.

The Hometrack report states that London house price growth has slowed to a nine-year low, while prices in Edinburgh and Manchester are rising faster than in any other major UK city, with price gains of 7.1% and 7% respectively.

Richard Donnell, the insight director at Hometrack, commented: “We expect house prices to keep rising across regional cities such as Birmingham, Manchester and Edinburgh over the next two to three years. During this time house price growth in London will remain flat, with annual price rises of approximately 0-2%.

Faster redress for defective new-build properties?

In a report entitled ‘Better Redress for Homebuyers’, the All-Party Parliamentary Group for Excellence in the Built Environment, states that the landscape for buyers of new-build homes who are trying to resolve complaints about building defects is a confusing one. This problem is compounded by the complexity of the current number of housebuilding codes, building guarantees, and individual developer’s complaints procedures.

The All-Party Group have proposed setting up an independent ombudsman with powers to reimburse buyers by up to £50,000, or even give the buyer recourse to reverse the original sale contract. It is proposed that the scheme would be funded by a levy on housebuilders.

Land shortage challenges new homes supply

According to the most recent capacity survey from estate agent Savills, the policy environment for delivering affordable new homes is improving. However, the availability of suitable land was cited by 86% of respondents as being the number one barrier to achieving this, with the lack of subsidy or grant being claimed by 54% as the number two barrier. Meanwhile, Government policy was only cited by 24% of their participants as being a barrier.

The Government’s target of 300,000 new homes per year continues to put pressure on housing associations to ramp up their housebuilding to bridge the gap from the present supply of 220,000 houses.

 

House Prices Headline statistics

HOUSE PRICE INDEX (MAY 2018)* 118.7*

 

Average House Price £226,351

 

Monthly Change 0.1%

 

Annual Change 3.0%

 

*(Jan 2015= 100)

·         UK house prices rose by 3.0% in the year to May 2018

·         This is the lowest UK annual rate since August 2013 when it was also 3.0%

·         The East Midlands was the fastest growing region with an annual house price growth rate of 6.3%

 

House Prices Price change by region

Region   Monthly Change (%) Annual Change (%) Average Price (£)
England 0.3 2.9 £243,583
Northern Ireland
(Quarter 1 – 2018)
  0.3 4.2 £130,026
Scotland   0.1 4.9 £149,004
Wales -3.0 1.0 £148,894
East Midlands   1.7 6.3 £190,216
East of England   0.2 2.4 £288,808
London   0.1 -0.4 £478,853
North East   -0.5 1.3 £128,680
North West   0.1 2.9 £157,531
South East   0.0 2.2 £322,096
South West   0.1 3.9 £251,877
West Midlands Region   0.2 5.0 £192,322
Yorkshire & The Humber   1.0 2.9 £158,966

 

Source: The Land Registry
Release date: 18/07/2018 Next date release: 15/08/2018

 

AVERAGE MONTHLY PRICE BY PROPERTY TYPE – MAY 2018

PROPERTY TYPE ANNUAL INCREASE
DETACHED
£343,823
(4.6%)
SEMI-DETACHED
£213,606
(3.7%)
TERRACED
£182,373
(3.1%)
FLAT / MAISONETTE
£202,696
(0.0%)

Source: The Land Registry
Release date: 18/07/2018

Contains HM Land Registry data © Crown copyright and database right 2017. This data is licensed under the Open Government Licence v3.0.

 

Mortgage Activity

·         “The mortgage market is seeing a pre-summer boost, driven by a rise in the number of first-time buyers and strong remortgaging activity. It is also particularly encouraging to see an increase in homemovers, after a period of relative sluggishness in this important segment of the market.

Jackie Bennett,
Director of Mortgages at UK Finance

Source: UK Finance (formerly Council of Mortgage Lenders)
Release date: 12/07/2018

 

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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.

 

MME Your Home Finance – Summer 2018

In the edition find updates on:

PREPARATION IS KEY TO STRESS-FREE HOME BUYING

 

SMARTER WORKING

 

IMPROVE OR MOVE?

 

RETIREMENT MATTERS

 

DON’T UNDERESTIMATE THE VALUE OF INSURANCE

 

LOOKING FOR A MORTGAGE LATER IN LIFE

 

IT PAYS TO GET ADVICE

 

STAMP DUTY – WHO PAYS?

 

PREPARATION IS KEY TO STRESS-FREE HOME BUYING

A recent industry survey1 showed that 41% of people feel stressed by the mortgage process, taking the fun out of looking for a new home. This needn’t be the case and by following these top tips you can stay in control, save money and enjoy the experience.

SAVE, SAVE AND SAVE

In most cases, the bigger the deposit you can put down and the less you need to borrow, the lower your interest rate is likely to be. Don’t forget that your savings will also need to cover other charges like legal fees and survey costs, so budget for them to avoid any nasty surprises.

MONTHLY OUTGOINGS

It pays to take a long hard look at your income versus your outgoings; any lender considering your mortgage application will expect you to be on top of your bills and to be able to afford your monthly mortgage payments. Check your standing orders and subscriptions and cancel any you can manage without. Also, keep a keen eye on how much you spend on luxuries like entertainment and meals out.

CHECK YOUR CREDIT SCORE

Lenders will expect you to have a healthy credit score. A higher score usually means you are a lower risk; the more points you score the better the chances that you’ll get credit at better rates.

GET PROFESSIONAL ADVICE

Getting advice will save you time, money and stress. We are on your side, have access to a wide range of mortgage deals, know the industry and can offer useful advice on all aspects of the home buying process. We can help you get an in-principle decision from a lender, which gives a seller the confidence that you are a serious purchaser.

KNOW YOUR ESTATE AGENT

First-time buyers with mortgage offers in place are attractive to sellers as they can proceed more quickly than another buyer who has yet to sell. Make sure that the estate agent is aware of your position, so they can pass this information on to sellers. Keep in regular contact and build a rapport with the agent.

DON’T FORGET THE SURVEY

Once you’ve found somewhere you want to buy, make sure you get a professional survey. A surveyor will identify structural problems that could be expensive to remedy.

1Trussle, 2018

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.

 

SMARTER WORKING

The government has committed to making the home buying and selling process quicker, cheaper and less stressful. To this end, a programme of measures was announced in April, designed to streamline property sales.

TIGHTER CONTROLS

Under the proposals, estate agents will be required to obtain professional qualifications, and the practice of gazumping, where higher offers are accepted after a sale has been agreed, will be actively discouraged by the introduction of voluntary reservation agreements. (The existing process in Scotland already makes gazumping less likely there).

Local authority searches will be subject to a time limit, meaning that solicitors acting for buyers should be able to obtain the information they need within ten days. Managing agents and freeholders will be required to provide lease information for a set fee within an agreed timescale.

FINDING THE ANSWERS

To ensure that buyers and sellers are better informed about the property process, a series of guides are to be published that will cover the key facts about each stage. These will also set out pertinent questions that anyone buying or selling should ask to help ensure their property transaction proceeds smoothly.

 

IMPROVE OR MOVE?

New evidence suggests that, in England and Wales, many more of us are putting down roots and choosing to stay in our current homes for longer.

It used to be that homeowners moved four times after their first purchase but now it is closer to two. Research1 carried out by Queen’s University Belfast points to a major cultural change, and highlights that at least a million fewer people moved between 2001 and 2011 compared with 1971 to 1981.

RENOVATION WORKS

This trend is borne out by recent research from insurer Hiscox2. They have identified a five-fold increase in the number of homeowners who have chosen to renovate their existing home in the last five years. This choice is likely to be influenced by a range of factors such as the continued rise in house prices in some regions, predicted rises in interest rates, additional costs such as stamp duty, a lack of suitable property on the market, tighter mortgage lending criteria and economic uncertainty around Brexit. Additionally, in some parts of the country property prices have hardly moved, meaning that families are held back because they have made little or no profit on their existing home.

In 2013, the research2 showed that just 3% of homeowners chose to improve as an alternative to moving, but five years later, this figure has risen to 15%. Local council figures show that requests for planning permission have risen by 29% in the last ten years.

OUTWARDS AND DOWNWARDS

Increasingly homeowners are looking to adapt their property to meet their changing needs, with an extra bedroom high on the agenda of many families. Loft extensions head the list of alterations and digging out basements to create extra accommodation is becoming increasingly popular, especially in London.

1Queen’s University Belfast, Fewer people moved house in the ’00s than the ’70s, 2018
2Hiscox, Renovations and Extensions Report, 2018

 

RETIREMENT MATTERS

Homeowners approaching retirement face a number of challenges when considering their future and need to make their money work hard for them.

STAMP DUTY

The Adam Smith Institute believes that Stamp Duty Land Tax should be scrapped. Amongst their reasons is the view that the prospect of paying stamp duty on a smaller home acts as a disincentive to older people wishing to downsize. For example, stamp duty adds another £2,500 to the cost of buying a retirement property priced at £250,000; that is in addition to solicitor’s fees, surveys, valuations and removal costs. (Figures differ under Land and Buildings Transaction Tax in Scotland and Land Transaction Tax in Wales.)

RELEASING EQUITY

Those looking to raise cash to bolster retirement income are increasingly turning to equity release. It represents a way of accessing some of the value tied up in a property while avoiding the costs and upheaval of downsizing. Although there are set-up fees, most costs are delayed until you die or go into permanent residential care.

It’s important to remember that in most cases, equity release means that the loan you take out against the equity tied up in your property will increase over time as interest is rolled up. When you die, the property will be sold and the loan repaid. Although interest rates on equity release plans are higher than on a conventional mortgage, lower interest rates over the last few years have made equity release more attractive to many.

Remember to discuss equity release with your family as it will impact on the amount that they are likely to inherit.

INTEREST-ONLY MORTGAGES

Equity release is increasingly coming to the aid of those approaching retirement with an interest-only mortgage without the funds to pay back the capital on maturity and their retirement income insufficient to cover ongoing interest costs. Whilst they may not have paid off any capital, they may have built up equity, offering them a lifeline allowing them to stay in their home.

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.

Equity release may require a lifetime mortgage or home reversion plan. To understand the features and risks, ask for a personalised illustration.

 

DON’T UNDERESTIMATE THE VALUE OF INSURANCE

Insurance policies are designed to provide financial safeguards and valuable peace of mind. If you’re a homeowner then it makes sense to have plans in place that protect you, your family and your home.

LIFE INSURANCE TAILORED TO YOUR NEEDS

There are various plans designed to protect you and your family:

·         Life policies – these provide a taxfree sum for those you leave behind in the event of your death. If you have a mortgage, it’s a big financial responsibility and no-one would want to leave their family with money worries at a sad and difficult time.

·         Critical illness cover – this means that if you are diagnosed with a serious illness as defined in your policy, there’s a cash payout to help alleviate financial worries and protect your family.

·         Income protection – these policies provide a monthly pay-out that helps pay your mortgage and other living costs in the event of an accident, sickness or involuntary unemployment.

PROTECT YOUR POSSESSIONS AS WELL AS YOUR HOME

Buildings insurance covers you for damage to the structure of your home. When you take out a mortgage, your lender will require that you have buildings insurance in place and that it covers the cost of rebuilding the property and its permanent fixtures and fittings. The rebuilding cost isn’t the same as your property’s market value, it’s generally a lower figure which will be detailed in your lender’s valuation report or arrived at by using an online calculator.

Mortgage lenders don’t insist that you have cover for your home contents but it makes good sense to protect them against risks like burglary, fire and flood. You can also arrange insurance for valuable items like jewellery, and those belongings you use away from home, such as laptops.

If you would like some help in ensuring you have the right protection policies for your needs, do get in touch.

 

LOOKING FOR A MORTGAGE LATER IN LIFE

With people getting on to the property ladder at all stages in life, a growing number are looking for mortgage finance in their 50s and beyond. This has created demand for greater flexibility, and lenders are now beginning to address the needs of this age group.

THE OLDER BORROWER

Following the Mortgage Market Review in 2014, banks and building societies were required to adopt stricter lending criteria and affordability checks, and as a result many lenders restricted both their maximum borrowing and repayment age.

However, we know the lenders in the marketplace who are happy to cater for specific mortgage needs such as this and we can help with the process. Older borrowers still need to go through the usual checks to ensure they can afford to make their monthly mortgage repayments and they will also need to show proof of income and declare all outgoings, including any debts.

Lenders will consider issues that could affect an older borrower’s income, such as their state of health, and in the case of joint borrowers, what would happen to their finances if one of them were to die. A lender will assess whether a loan is affordable in the case of a potential borrower in receipt of a pension, as opposed to one who is likely to retire half way through the mortgage term.

On the other side of the coin, older borrowers can often be free of other commitments that can burden younger borrowers – they are further into their careers and probably earn more, their children may have left home, and many may have already come into money through a family inheritance.

TAKE ADVICE

Getting advice can really help. We know the marketplace and so are able to ensure that your application goes to a lender who caters for your specific mortgage needs.

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.

 

IT PAYS TO GET ADVICE

Buying a house involves making lots of decisions, some simpler than others. Finding the right house in your chosen location can be the easy part, finding the best and most suitable mortgage deal for your financial circumstances can prove to be more of a headache.

With so many mortgage deals available in the market how do you know which one represents the best value? The market is very competitive and if you’re not familiar with the way it works and the terminology, it can be hard to understand what is on offer.

FINDING THE BEST DEAL

We are seeing more people choosing to work with a mortgage adviser. They understand that it helps to work with someone who can explain all that is on offer to ensure they get the mortgage best suited to their needs. At this potentially stressful and expensive time it really does help to work with an expert and someone who shares your commitment to making the right choice.

Like properties, mortgages come in many shapes and sizes such as fixed, variable and tracker. You’ll also find that lenders offer mortgages with different interest rates that can be fixed for various time periods. However, looking just at the interest rate that’s being charged can be misleading. Although a low rate may look enticing, you also need to check out the fees and charges. These could be high, resulting in you paying more than if you had chosen a mortgage with a slightly higher rate of interest.

There are also special deals available that include extras such as survey fees, legal costs or cashback arrangements. We can help you work out which ones are worth going for.

SAVE MONEY AND TIME

Working with us will save you time, money and stress. We will be able to compare the deals available from various lenders, taking into consideration things like fees and charges that will affect the overall cost of your mortgage. We will ensure that your mortgage application goes to the most appropriate lender. What’s more, we are on hand from start to finish and can provide help with many other aspects of the house-buying process, like getting your offer accepted, finding solicitors and organising property surveys. We’ll also give you good advice about putting protection policies in place. These are designed to provide financial safeguards that mean your mortgage is paid if you experience one of life’s unexpected events.

So, if you’re a first-time buyer, second-stepper, re-mortgager or would-be buy-to-let landlord, looking for professional mortgage advice, why not put us to the test?

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.

 

STAMP DUTY – WHO PAYS?

Recent figures1 show that second home buyers and landlords head the list of those who paid the most in Stamp Duty Land Tax in 2017. Since the changes introduced in 2016, anyone buying a second home or rental property for more than £40,000 has had to pay an additional 3%.

The government raised £9.5bn from stamp duty payments last year, the highest level ever seen in the UK, and second home buyers and landlords paid almost half of that figure. A purchase of a second property worth £500,000 would now be subject to £30,000 in stamp duty; if the same property was bought as a main residence, the bill would be £15,000.

First-time buyers by contrast now pay no stamp duty on properties worth less than £300,000 and reduced tax duty on properties worth less than £500,000.

Despite the capital experiencing a cooling in its property market, London buyers accounted for 39% by value of all stamp duty payments in 2017. Figures differ for Land and Buildings Transaction Tax in Scotland and Land Transaction Tax in Wales; under both, a 3% surcharge applies on additional properties.

1London Central Portfolio, 2018

 

Are first-time buyers still underestimating the importance of a broker?

 “First-time buyers may not necessarily be factoring in support from brokers early on in their home buying journey”

Just 28% of potential first-time buyers plan to finance their property with a mortgage arranged by a broker, according to a survey by Yorkshire Building Society.

The research found that aspiring first-time buyers are underestimating the importance of a broker when they start their house-hunt.

However, of those who have purchased their first property within the last 12 months, almost half (47%) said they eventually turned to a broker for help with their mortgage.

Findings from the report also indicate almost a third (32%) of potential first-time homeowners would aim for a detached house as their first property and nearly half (49%) would consider a semi-detached house. Less than a quarter (24%) would be happy to settle for a studio or flat.

The findings also revealed how important purchasing a first home is to potential borrowers, with nearly two in five (39%) saying it is more important to them than any other life event, including getting married or having children.

Jeremy Duncombe, director of intermediary distribution at Accord Mortgages, said: “Buying a house is one of the biggest financial commitments someone can make in life so it’s no surprise that we see a shift in first-time borrowers turning to a broker for help in taking that important first step on to the property ladder.

“It does however highlight that first-time buyers may not necessarily be factoring in support from brokers early on in their home buying journey, perhaps because they’re unaware of how intermediaries can help. This shows there is still much opportunity for brokers to promote their services to help guide aspiring buyers to a mortgage best suited to their needs, at a potentially overwhelming time of their life.

“Our latest First-Time Buyers Report offers an insight into the world of first-time buyers and could help give brokers a better understanding of the challenges they face for example, or what they’re looking for in a property or mortgage which could help brokers when they are speaking to clients just starting out.

“From a customer point of view, it shows that an earlier conversation with a mortgage broker could help prospective first-time buyers consider their options and understand the possibilities sooner in the process.”

Article written by – Rozi Jones – Financial Reporter – http://www.financialreporter.co.uk/mortgages/are-first-time-buyers-still-underestimating-the-importance-of-a-broker.html

 

Alex was fit and Healthy

ALEX’S STORY

Alex always considered himself a fit and healthy person who led an active and busy life, working 60 hours a week as a self- employed field agent. He was diagnosed with colorectal cancer in June 2017 at the age of 66, and wanted to offer his advice to those thinking about taking out insurance.

“I felt perfectly well. One morning I went to the toilet and there was blood in the bowl. I went to see my GP who sent a sample off, which came back negative, which is common.

My GP decided I should still see a specialist who proceeded to carry out a colonoscopy and it was then that they found the tumour. I knew it was bad when the nurse started crying. The diagnosis was told there and then, that I had cancer.”

“I was surprised as I hadn’t felt ill. I saw a consultant who told me what was being planned – a four month course of chemotherapy followed by a procedure which would remove a bit of my bowel.”

“I carried on working as much as possible during the treatment as it gives you something to do but there are times when you really can’t work. I had regular hospital visits with treatment and drugs – I never knew how I was going to feel. I could be fine one minute and the next couldn’t face anything. It’s really horrible. One thing that made me feel really ill was the chemotherapy; now that I would not wish upon anyone. I cannot describe what that does to you. On one occasion I had to come home in an ambulance as I couldn’t walk and my vision was blurred. You just feel rotten.”

“I remember sitting in the hospital reception thinking ‘I’m going to die, I’m just going to die here’”.

Alex waited until just before his surgery before contacting us regarding his critical illness claim.

“It became clear to me that whatever happened, I knew I wasn’t going to be able to work again as I was going to have to wear a colostomy bag. It would be very difficult to do what I did with a colostomy bag due to the nature of the job. So that was when I decided to claim.

Alex was amazed at how easy the claims process was. “You usually feel like you are just a number but I was surprised when I rang up and was able to speak to someone who knew what they were talking about. They explained clearly from outset what would happen and what would be required, the person I spoke to was great. I was particularly pleased that the payment went through so easily. I was very pleased with the whole process.”

Alex also claimed on our unique claims support fund which can pay up to £300 for a variety of out of pocket expenses as a result of illness or a family members death.

“Small things like that make a huge difference. I wasn’t allowed to drive after my operation so I had to get a taxi to the hospital. £10 there and £10 back. My wife coming to visit me was also £10 there and £10 back. This amount adds up. So the support fund was enormously useful to cover those costs.”

“My intention was to work until I was 70 and then retire, but due to the surgery I had to stop work earlier than I intended. This payment has aided me financially and that’s putting it mildly. Being self-employed and having not been able to work to full capacity since June 2017, means no money. There are other things too, things people don’t think about – contracts for TV, mobile phones, broadband, monthly outgoings and so on. All those things you don’t think about. For your income to fall or suddenly stop due to being ill, it can be very very difficult.”

“Anybody who is thinking about getting critical illness cover or looking for excuses not to do it – speaking to me for 15 minutes will change their mind, because it does make a difference. I wish I was 30 years younger with a mission to change attitudes towards insurance.”

For Alex, the surgery he underwent was successful and they managed to remove all of the tumour with the cancer not spreading any further and he is doing well.

AIG customer case study – claim paid in 2017. The image shown is for illustration purposes.

RESIDENTIAL PROPERTY REVIEW – MARCH 2018

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.

 

Remortgages hit a nine-year high

In their recent mortgage trends update, UK Finance revealed that remortgages reached a nine-year high in January. In addition, both the number of home movers and first-time-buyers increased, when compared with the same period last year.

Jackie Bennett, the Director of Mortgages at UK Finance commented on these findings: “Remortgaging in January reached a nine-year high, as a number of previous fixed rate mortgages came to an end while borrowers locked into attractive deals amid expectations of further interest rate rises. While an increase in remortgaging is expected in the New Year as people put their household finances in order, this strong growth is above the seasonal fluctuations we tend to see at this time of year.

Despite this marked increase in remortgaging, the appetite for buy-to-let remains subdued, as a direct result of the government’s tax and regulatory changes.

Improved transport links boosts residential demand

Savills ‘Market in Minutes’ UK development research paper on new homes and infrastructure has highlighted the vital role that transport plays in residential property development. Developers are taking advantage of the increasing demand for new homes and infrastructure in commuter locations, as an increasing number of people look to relocate from the Capital.

The research pinpointed that stations experiencing the highest increase in passengers over the last two years were those situated within a 19 to 39 minute journey from a central London terminal. Cheaper locations in the Home Counties, in up-andcoming areas, such as Luton and Ebbsfleet, look set to become increasingly popular, as transport links improve – helping to support residential property demand and prices.

When people are considering relocation to a new area, the presence of a transport hub, such as a station, can fuel demand, boosting house prices as a result. Over the last five years, stations with the largest increase in passenger use, such as Didcot Parkway and Aylesbury Vale Parkway, have experienced house price growth that is on average 5% higher than surrounding areas.

Is Help-to-Buy working in everyone’s interest?

The government’s popular Help-to-Buy housing policy has recently been criticised following beliefs from various housing market observers that it may have actually fuelled demand as opposed to addressing the housing market’s major issue – supply. Many feel the policy requires reform to prevent housebuilders exploiting it to enhance their profits irrespective of the number of homes they build.

Specifically designed to support would-be first-time-buyers in their efforts to step on the housing ladder, Colin Lewis, the Chief Executive of housebuilder Avant Homes, has called on other residential property developers to get a social conscience regarding the number of house builds actually started and their subsequent profit margins, he commented: “If we are to continue with this valuable initiative, changes must be made to rebalance the benefits of the policy to homebuyers and away from housebuilders.”

This follows the uproar caused over the recent executive pay deal at Persimmon, the UK’s second largest housebuilder. Accused of benefitting from the Help-to-Buy scheme, they were forced to reduce the bonus payments of three executives by £51 million.

HOUSE PRICES HEADLINE STATISTICS

HOUSE PRICE INDEX (JAN 2018)* 118.3*
AVERAGE HOUSE PRICE £225,621
MONTHLY CHANGE -0.3%
ANNUAL CHANGE 4.9%
*(Jan 2015= 100)

  • UK house prices grew by 4.9% in the year to January 2018, down from 5% in the year to December 2017.
  • The largest annual price growth was recorded in Scotland, where prices increased by 7.3%over the year to January 2018.

 

HOUSE PRICES PRICE CHANGE BY REGION

Region   Monthly Change (%) Annual Change (%) Average Price (£)
England   -0.5 4.6 £242,286
Northern Ireland
(Quarter 4 – 2017)
  1.0 4.3 £130,482
Scotland   1.4 7.3 £148,512
Wales   -0.5 4.5 £153,034
East Midlands   -0.1 7.3 £185,568
East of England   -0.7 5.3 £289,729
London   1.0 2.1 £485,830
North East   -5.5 0.7 £122,870
North West   -1.5 4.3 £155,788
South East   0.2 3.4 £323,435
South West   1.4 6.9 £255,307
West Midlands Region   -2.0 5.3 £187,905
Yorkshire & The Humber   -0.7 5.1 £156,484
Source: The Land Registry
Release date: 20/03/2018 Next date release: 18/04/2018

AVERAGE MONTHLY PRICE BY PROPERTY TYPE – JAN 2018

PROPERTY TYPE ANNUAL INCREASE
DETACHED
£341,478
(5.0%)
SEMI-DETACHED 
£212,833
(5.8%)
TERRACED
£181,256
(4.6%)
FLAT / MAISONETTE
£203,840
(4.0%)

Source: The Land Registry
Release date: 20/03/2018

Contains HM Land Registry data © Crown copyright and database right 2017. This data is licensed under the Open Government Licence v3.0.

MORTGAGE ACTIVITY

  • Gross mortgage lending in January is estimated at £21.9bn
  • 9.7% higher than one year earlier
  • Above the monthly average of £21.4bn for 2017

Source: UK Finance (formerly Council of Mortgage Lenders)
Release date:
 26/02/2018

Chancellors – Spring Statement

We have sought to pick out all of the key points from the Chancellors Statement on 13 March, including:

 The economy

Borrowing

Employment

Inflation and wages

Spending

Brexit

Skills

Other news

Closing comments

Taxation infographic 2018-19 tax year

Download – 07760 – Spring Statement 2018_4 page_My Mortgage Experts

 We do hope that you find this update both interesting and informative. Should you have any queries, or require more information on any of the areas covered or any other financial matter, please do not hesitate to contact us.

 

HOUSE BUYING – HOW TO KEEP THE UPPER HAND IN 2018

With the annual growth rate for UK residential properties having slowed to an estimated 1.8% at the end of 2017, this year could offer better prospects for would be first-time buyers.

New data from Barclays Mortgages shows that there are some simple but effective ways of making sure you get a good deal when buying a property. Their research shows that one in five first-time buyers who bought over the last five years wish they had negotiated a better price for their property. Those who had paid more than the asking price did so to the tune of around £8,000 on average, £13,000 in London. This was largely due to fears that they would lose their purchase if they made an offer closer to the asking price.

So, the advice is to take your time. By getting an ‘agreement in principle’ from a mortgage lender, this will give sellers confidence that any deal they make with you has a good chance of going ahead.

DO YOUR HOMEWORK

Many estate agency websites give you access to data regarding the actual sale prices achieved for properties in the area where you are looking to buy, rather than what properties are currently on the market for. This information can help you form a realistic picture of what the property is likely to sell for, meaning you can pitch your offer accordingly.

If you find a property you are really keen on buying, get a professional survey carried out. By doing so, if there are defects that you will need to put right, the report should tell you what the cost of repairs is likely to be. If you’re still keen to proceed with your purchase, you can often use the survey findings to negotiate the price down.

In addition, as part of the mortgage process, your lender will want to carry out a mortgage valuation to ensure the value of the property will cover the amount you want to borrow. If it’s overvalued, the report will show what it’s realistically worth. Don’t forget that being a first-time buyer can mean that, from the seller’s point of view, you are a more attractive purchaser than another potentially-interested buyer who has a property they need to sell before they can proceed.

RESULT!

One of the big stories from the Autumn Budget was the abolition, with immediate effect, of stamp duty for first-time buyers purchasing properties worth up to £300,000. To help those in expensive areas, the first £300,000 of the cost of a maximum £500,000 purchase will be exempt from stamp duty, with the excess of up to £200,000 incurring 5% duty. This is a huge positive for all those first-time buyers saving hard to get a first foot on the housing ladder. The Scottish Government is deciding on any equivalent Land & Buildings Transaction Tax change.