Posts with tag: finance

New Buy-To-Let Lending has Plummeted, but Remortgaging Within the Sector is Soaring

Published On: July 16, 2018 at 8:04 am


Categories: Finance News

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New buy-to-let lending


During May, 5,500 new buy-to-let home purchase mortgages were completed, which is down by 9.8% on an annual basis. By value, this accounted for £0.7 billion of new buy-to-let lending in the month, down by 22.2% on May 2017.

However, 14,600 new buy-to-let remortgages were completed in the month, which is up by a sturdy 15% on May last year. By value, this £2.3 billion of lending was up by 21.1% year-on-year.


First time buyer mortgages


By contrast, some 32,200 new first time buyer mortgages were completed in May, which is up by 8.1% on May 2017. The £5.4 billion of new lending in the month was 12.5% higher on an annual basis.

UK Finance found that the average first time buyer is 30-years-old and has a gross household income of £42,000.


Homeowners and home movers


The number of new home mover mortgages also rose in May, with 31,100 completions, which is up by 4.4% on May 2017. The £6.6 billion of new lending in the month was 4.8% higher year-on-year.

The average home mover is 39-years-old and has a gross household income of £55,000.

Additionally, there were 36,000 new homeowner remortgages completed in May, some 7.1% more than in the same month last year. The £6.3 billion of remortgaging marked a 6.8% rise in the value of last May’s remortgages.

The Director of Mortgages at UK Finance, Jackie Bennett, comments on the data: “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 home movers, after a period of relative sluggishness in this important segment of the market.

“However, affordability remains a challenge for some prospective buyers, and this is reflected by a gradual increase in loan-to-income multiples.”

She adds: “Meanwhile, purchases in the buy-to-let market continue to be constrained by recent regulatory and tax changes, the full impact of which have yet to be fully felt.”


Written by Rose Jinks

Interest Rate Hike won’t Affect Average Homeowner

Published On: November 1, 2017 at 9:03 am


Categories: Finance News

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An interest rate hike won’t affect the average UK homeowner, according to a leading property market expert.

The Founder and CEO of online estate agent, Russell Quirk, claims that UK homeowners have little to worry about if an interest rate hike is introduced this week.

Property owners have enjoyed record low interest rates since they were slashed to 0.5% in 2009 and then further squeezed to 0.25% after the EU referendum last year.

But, with the economy outperforming wider predictions, it is highly likely that an interest rate hike will be brought in this Thursday (2nd November 2017), after the Bank of England (BoE) indicated that it was coming in the next few months back in September.

If rates do rise, eMoov reassures UK homeowners that they have little to worry about, as the result is unlikely to affect them financially.

Quirk explains: “If interest rates do increase this week, it is likely to be marginal to say the least and probably no higher than a return to 0.5%, which is actually the norm.

“This slight hike is designed to counter the rising level of inflation and will increase the monthly cost of some mortgages, in particular, variable rate loans and tracker deals.”

He continues: “But any increase in monthly payments, like interest rates themselves, will be marginal and manageable for those impacted. On the typical £150,000 loan, homeowners will be out of pocket around £15 to £30 a month, certainly no grounds to shout financial meltdown.

“I’m old enough to remember the unprecedented cost of money at a whopping 15% in 1989, resulting in homeowners posting their keys back to banks through their letterboxes. We’re leagues away from such a suffocating level and must not mistake this week’s likely tweak with anything more sinister or prohibitive.”

Quirk concludes: “House price growth and the market’s overall stability have been incredibly resilient despite the EU vote and a snap General Election. A few quid added to the average mortgage repayment will not deter this growth in the medium to long-term.”

Although you can be reassured by this news, it is always worth considering how an interest rate hike would affect you. Seek expert financial advice if you are concerned.

House Prices in 28 Locations Fail to Recover to Pre-Crisis Levels

Published On: October 19, 2017 at 8:04 am


Categories: Property News

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House prices in 28 towns and cities across the UK have failed to recover to pre-financial crisis levels, a decade after the market crash.

Property owners in these locations have suffered a lost decade of house price growth since the start of the crisis on 9th August 2007.

House Prices in 28 Locations Fail to Recover to Pre-Crisis Levels

House Prices in 28 Locations Fail to Recover to Pre-Crisis Levels

The latest Office for National Statistics (ONS) and Land Registry house price figures, for August 2017, sparked fears of a two-speed economy, as it emerged that the only places to suffer this fate outside of Wales were in the north of England, analysis by housebuilding investment platform Homegrown shows.

The most recent data gives us a clear picture of the devastating impact of the crash in the ten years since the start of the crisis on 9th August 2007 – the day when BNP Paribas froze three of its funds, suggesting that it could not value the sub-prime loans contained in the complex financial instruments on its books. Doomed Northern Rock chief Adam Applegarth later described it as “the day the world changed”.

Since then, house prices in Belfast, Hartlepool and Blackpool have suffered worse than anywhere else in the UK.

The average house price in the Northern Irish capital is now 43.7% lower than it was in August 2007, at just £120,351. Hartlepool has also failed to recover, with a 19.5% drop to an average value of £100,957, while prices in Blackpool are still 16.4% down, at an average of £105,057.

Even Liverpool and Newcastle – two of the cities centred in the idea of the Northern Powerhouse – never recovered. Liverpool is still 1.7% down, with an average house price of £126,862, while Newcastle is 1% down on ten years ago, at £162,876.

A stark north-south divide means that properties in the North East are still worth 5.6% less than they were a decade ago, while the North West is struggling with growth of just 5.5% over the past ten years.

Meanwhile, London, the South East and South West are 62.7%, 37.7% and 19.2% higher on average respectively.

Bradford, Oldham, Lancaster and Falkirk only just escaped lost decades of house price growth, recovering their ground to finish just £1,039, £1,765, £235 and £196 higher on average in the last decade respectively.

The Founder of Homegrown, Anthony Rushworth, says: “This is two-speed Britain in action. It’s now clear that great swathes of the UK have suffered terribly in the aftermath of the financial crash, while areas in high demand have shrugged it off and surged ahead.

“We are too reliant as a country on a small number of densely populated areas, particularly in London and the South East. The technology exists to take a much more balanced approach to where Britons live and work.”

He continues: “The Northern Powerhouse promised exactly that, but it will take more than a marketing campaign by one chancellor to really shift the balance and create a more stable property market for future generations.”

Landlords, do you own property in one of the locations that have failed to recover to pre-crisis levels? How has this affected your investment plan?

NLA Makes Recommendations to Treasury Ahead of Autumn Budget

Published On: September 25, 2017 at 9:45 am


Categories: Finance News

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The National Landlords Association (NLA) has submitted some recommendations to HM Treasury ahead of the Autumn Budget statement, which is due to be delivered on Wednesday 22nd November 2017.

NLA Makes Recommendations to Treasury Ahead of Autumn Budget

NLA Makes Recommendations to Treasury Ahead of Autumn Budget

The focus of the organisation’s recommendations was to ensure that fiscal and economic policy better supports investment in private rental property, and that sufficient funding is allocated to facilitate the implementation of the Homeless Reduction Act.

In summary, it makes the following recommendations:

  • Embark on an immediate review of the reduction in tax relief on finance costs for private landlords.
  • Introduce a package of Capital Gains Tax (CGT) reduction measures to encourage the sale of: poorly performing investment properties; properties where the proceeds of the sale will be entirely reinvested into the lettings sector; properties invested in and utilised for a period of more than ten years; and properties that are eligible and suitable for sale to existing tenants.
  • Introduce measures to facilitate the tax efficient movement of a lettings portfolio into a corporate structure.
  • Establish a Government-backed investment vehicle to allow the sale of properties into a managed fund.
  • Reintroduce the Landlords’ Energy Saving Allowance (LESA) and establish a level sufficient to improve the tax efficiency of carrying out relevant works.
  • Set LESA at a level sufficient to improve the tax efficiency of carrying out works.
  • Fund the expansion of Help to Rent nationwide.
  • Establish a national deposit guarantee scheme for the private rental sector.
  • Remove the CGT surcharge for property sales.
  • Introduce CGT tapering and business asset rollover relief for private residential properties that are let.
  • Abolish the Stamp Duty surcharge on additional properties.

You can read the NLA’s full submission to the Treasury by clicking here.

We will keep you updated with all of the developments surrounding the Government’s Autumn Budget online at Landlord News – don’t miss our daily updates.

Leeds Building Society Reveals its Buy-to-Let Portfolio Plans

Published On: August 8, 2017 at 8:56 am


Categories: Finance News

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Leeds Building Society is the latest lender to reveal its buy-to-let portfolio plans ahead of next month’s lending rule changes.

From 30th September 2017, the building society will expect landlords with four or more buy-to-let properties (portfolio landlords) to provide details of assets and liabilities, and declare future investment property intentions.

Leeds Building Society Reveals its Buy-to-Let Portfolio Plans

Leeds Building Society Reveals its Buy-to-Let Portfolio Plans

Additional information, such as cashflow, will only be required in more complex cases.

Leeds will also increase its maximum portfolio size from eight to ten, as well as raise the maximum number of holiday lets permitted to a third (33%).

However, the building society will not alter its core criteria of loan-to-value (LTV), maximum loan size, interest coverage ratio or stress tests.

The Director of Product and Distribution at Leeds Building Society, Jaedon Green, says: “We’re committed to supporting landlords and the buy-to-let market, so will continue to accept mortgage applications from portfolio landlords after 30th September.

“We’ve also increased the maximum number of holiday lets by 33%, which provides intermediaries with greater flexibility to mix and match, using the Leeds Building Society for up to four properties, whether buy-to-let, holiday let or a mixture.”

Under the Prudential Regulation Authority’s (PRA) buy-to-let portfolio plans, lenders will be required to conduct more in-depth portfolio and affordability assessments on investors.

Both Paragon and Aldermore have already revealed their stance on the buy-to-let portfolio plans.

Last week, Leeds Building Society reduced rates on its fixed rate buy-to-let deals by up to 0.25%.

New products include a 2.09% two-year fixed rate deal for purchase only, at up to 70% LTV, and a two-year fix for remortgage only, available at up to 60% LTV.

The products come with a 1% discount for three years following the end of their terms and a £999 completion fee.

Remortgage customers have the option of fees-assisted legal services or £250 cashback.

Green comments: “We’ve made reductions across our range of two and five-year fixed rate deals for buy-to-let borrowers.

“In addition to the reduced rates, we offer different fee and incentive combinations across the range, including cashback, as part of our ongoing efforts to improve our buy-to-let proposition.”

He adds: “Earlier changes we’ve made, such as simplifying criteria and removing the minimum income requirement, have been well-received by brokers. We continue to work closely with our intermediary partners to better meet their needs, and those of their clients, in this important sector.”

Will you be affected by the buy-to-let portfolio plans?


BoE Keeps Interest Rates on Hold Despite Inflation Fears

Published On: August 4, 2017 at 8:08 am


Categories: Finance News

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The Bank of England (BoE) has kept interest rates on hold, despite fears surrounding inflation, according to minutes from its meeting yesterday.

The Bank has warned households to expect interest rates to rise over the next year, but also predicted that living standards will be squeezed by higher inflation and sluggish wage growth.

The BoE’s rate-setting committee voted by six to two to leave official borrowing costs at their all-time low of 0.25%.

New economic forecasts released by the Bank at the same time cut the outlook for UK GDP growth this year and next, and painted a weaker picture for earnings growth. However, the Bank appeared to send a clear message that businesses and households should not expect borrowing costs to stay at their record low for much longer.

The meeting minutes noted that if the economic picture evolved as the Bank is predicting, interest rates could be raised by more than financial markets are currently pricing in. Those market expectations are for two rises to 0.5%, then to 0.75% over the next three years.

The minutes said: “If the economy were to follow a path broadly consistent with the August central projection, then monetary policy could need to be tightened by a somewhat greater extent over the forecast period than the path implied by the yield curve underlying the August projections.

BoE Keeps Interest Rates on Hold Despite Inflation Fears

BoE Keeps Interest Rates on Hold Despite Inflation Fears

“All members agreed that any increases in Bank rate would be expected to be at a gradual pace and to a limited extent.”

Key points in the BoE’s economic forecasts included:

  • GDP growth is now expected to be 1.7% in 2017 – down from the 1.9% predicted in May.
  • GDP growth in 2018 is expected to be 1.6% – down from the 1.7% forecast in May.
  • 2019 growth was left at 1.8%.
  • Inflation in the third quarter (Q3) of this year is expected to average 2.7% – up from the 2.6% predicted in May.
  • Average earnings growth is predicted to be 2% in 2017 – unchanged from May’s forecast.
  • 2018 earnings growth was cut to 3% from 3.5%, and 2019’s from 3.75% to 3.25%.

The decision to leave interest rates unchanged was as the vast majority of City economists had expected. However, some analysts had seen a small chance of a rate rise this week, following comments from the Bank’s Governor, Mark Carney, and other committee members that they were more open to higher rates to keep inflation in check.

Price pressures have risen since the vote to leave the EU last year knocked the pound sharply lower, thereby increasing the cost of imports to the UK. The Bank warned that this currency effect on inflation would continue to play out over coming years.

Two members of the Monetary Policy Committee (MPC), Ian McCafferty and Michael Saunders, wanted to put rates back to 0.5% immediately to curb inflation.

The Government set the BoE an inflation target of 2%, but the rate is currently above this, at 2.6%, with policymakers expecting it to pick up and peak around 3% in the autumn on the consumer price index (CPI).

But the other six members of the MPC felt it was better to wait before reversing the emergency cut it made to borrowing costs in the aftermath of last June’s Brexit vote.

Outlining the two sides of the debate over a rate rise, the minutes said: “There were arguments in favour of a moderate tightening in monetary policy now. CPI inflation was substantially above the target, and was projected to remain above the target throughout the three-year forecast period.”

On those wanting to hold rates, they added: “There were also arguments in favour of leaving the policy rate unchanged. GDP growth had been sluggish and was expected to remain so in the near-term. With some business survey expectations balances having weakened, there remained the possibility of a further softening in activity.”

The Director of chartered surveyor e.surv, Richard Sexton, comments on the decision: “One year on from the MPC’s historic rate cut, and the BoE has decided to keep the base rate at 0.25%. However, with the current political and economic uncertainty, it is not a question of if, but when will, rates eventually rise. It’s interesting to consider that for many current mortgage holders, they have never experienced a rate rise and the impact of any payment shock is unknowable at this time.

“Low interest rates coupled with rising house prices have led to borrowers struggling to save deposits and, instead, many are having to borrow larger amounts of money to get onto the housing ladder. e.surv’s latest Mortgage Monitor shows that June was the fifth successive month where large deposit borrowers accounted for less than 35% of the overall market. With more people taking on larger loans, an interest rate rise will be felt first in this segment of the market.”

Ishaan Malhi, the CEO and Founder of online mortgage broker Trussle, has also reacted to the news: “The BoE’s decision to hold interest rates has direct implications for every household, positive and negative. For existing homeowners, sustained low interest rates are good news because they keep mortgage repayments level. In this situation, we’d recommend borrowers review their mortgage to check if they’re on the right deal, should switch to a more competitive fixed rate deal, or even begin making overpayments to bring down their overall debt burden.

“Taking the time to review your mortgage is essential, especially as an estimated two million mortgage borrowers in the UK are on Standard Variable Rates, overpaying an average of £4,900 per year compared to a market leading deal. For those saving for a deposit, sustained low interest rates are bad news, since their savings will continue to grow slowly. The glimmer of hope, particularly for first time buyers, is that housing prices have begun to slow, making some areas that were previously unaffordable more accessible.”