Posts with tag: first time buyers

‘We will help turn generation rent into generation buy’ says PM

Published On: October 7, 2020 at 8:22 am

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In yesterday’s speech, Prime Minister Boris Johnson announced plans for 95% home mortgage loans for young, first-time buyers to ‘help turn generation rent into generation buy’.

Mark Hayward, Chief Executive of NAEA Propertymark, comments: “We welcome the Prime Minister’s comments today which shows a positive change in tone by promoting a generation of renters to become a generation of buyers. We encourage lenders to come on board and support this initiative to enable first time buyers to enter the property market by future proofing the financial burden many face.”

“We want to see intent become action quickly so that first time buyers can make the most of the current stamp duty holiday and continue to stimulate the housing market.” 

James Forrester, Managing Director of Barrows and Forrester, comments: Today’s (6th October) announcement will no doubt excite a nation of aspirational homebuyers who have already been sent into a frenzy over the prospect of paying no stamp duty. 

“However, for Boris Johnson to claim this will help fix our broken housing market is not only laughable but quite frankly an insult to those who find themselves priced out of homeownership.

“The cause of the dire situation we find ourselves in is the Government’s sustained failure to build enough affordable housing year in, year out.  

“The inadequate supply of housing to meet demand is one of the driving factors that has caused house prices to spiral and to continue to mask this failure by further fuelling demand is irresponsible.

“Instead, their time would be better spent reallocating wrongly classified green belt land so it can be utilised for housing and preventing the big housebuilders from drip-feeding housing supply in order to keep their profits up.”

Marc von Grundherr, Director of Benham and Reeves, comments: “Creating two million more homeowners is a lovely bit of rhetoric for Boris to fuel market sentiment, but it comes with a clear and obvious problem. Where are they going to live? 

“Yes, the affordability of homeownership is a problem at present and providing buyers with a foot up via a smaller deposit will help many to overcome this hurdle. In the more inflated markets such as London, it reduces the deposit required by some £25,000 and so the initial saving is notable.  

“However, we’re simply not building enough homes and the Government’s head in the sand approach to this burning issue is going to bring about problems when those securing these new mortgages actually look for a home. 

“Unless we address this, we will see house prices continue to climb ever higher as a result of this new initiative, to the detriment of those it’s ironically supposed to help.”

Islay Robinson, Group CEO of Enness Global Mortgages, comments: “While the UK is facing tough economic times this further boost to homebuyer demand should ensure that activity remains strong and house price growth remains buoyant.  

“This will not only maintain the health of the regular market but it will also cause a ripple effect that will benefit sellers across the board, even at higher price tiers. 

“The UK and London, in particular, remains the pinnacle of homeownership for many high-end international buyers. While this demand has been stifled due to Brexit and the restrictions of the current pandemic, we’ve seen international buyers return as confidence has built in the core segment of the market.  

“Ensuring this activity remains strong and prices continue to increase will bring further interest from foreign shores and this will help boost the UK economy on a number of fronts, not just through healthy property price growth.”

Craig McKinlay, New Business Director at Kensington Mortgages, comments: “The ‘Generation Buy’ scheme will be, in effect, a replacement for Help to Buy. Only a few lenders are dipping in and out of the high LTV market at present with ‘flash sales’ due to sheer demand – so this should reassure some lenders to enter more permanently and support first-time buyers. 

“However, for others, the scheme could lead to further capacity issues for those being selective with their offering to manage demand. On the whole though, like the introduction of Help to Buy in 2013 helped boost confidence and ease lenders back into the small deposit market, we hope this scheme will do the same.”

First Time Buyers Take Advantage of Reduced Competition in Market

Published On: March 26, 2019 at 10:00 am

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First time buyers are taking advantage of reduced competition in the UK property market, as demand for housing dropped in February, according to the latest Housing Report from NAEA Propertymark (the National Association of Estate Agents).

Housing demand

The number of home hunters registered per NAEA Propertymark member estate agent branch dropped by 15% in February, from an average of 297 in the previous month, to 252.

This is the lowest figure recorded since July 2013, when agents registered an average of 250 prospective buyers per branch.

Annually, demand for housing has dropped by a fifth (18%), from an average of 209 potential buyers in February 2018, alongside a decline of more than two-fifths (41%) from 2017 and 46% from 2016, when 463 home hunters were registered per branch.

First time buyer sales

First time buyers took advantage of reduced competition in the market last month. As demand fell, sales to this group rose, hitting a seven-month high of 30%.

The last time that first time buyers experienced this rate of sales was in July 2018, when they benefitted from the annual summer lull.

Month-on-month, the number of sales to first time buyers increased by four percentage points, from 26% in January.

Property supply

The supply of available properties for sale fell from an average of 36 homes per member branch in January to 34 in February.

This figure has not changed significantly from February last year, when 35 properties were available to buy per branch.

Agreed sales

The amount of sales agreed increased in January and remained high in February, with an average of seven recorded per branch.

Year-on-year, this dropped slightly, from an average of eight in the same month of 2018. 

Mark Hayward, the Chief Executive of NAEA Propertymark, says: “With demand at a seven-year low, buyers are approaching the market with caution. As we move into spring, we would usually expect to see an increase in activity, but house hunters are evidently delaying their plans until the impact of Brexit is clearer. Over the last seven months, however, we’ve seen periods where first time buyers have taken advantage of reduced competition and driven their transactions forward, and this really picked up in February.

“The next few months will be very telling – will activity pick up once there’s further clarity on what Brexit means, or will it push the housing market into a deeper pool of uncertainty? Time will tell, but, in the meantime, both buyers and sellers should feel positive. There are still house hunters searching for properties and there are still new homes coming onto the market.”

Brokers Report Strong Levels of First Time Buyers Completing

Published On: March 18, 2019 at 9:00 am

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The number of first time buyers completing on mortgages through brokers remained strong at the end of 2018, according to the Intermediary Mortgage Lenders Association (IMLA).

The trade body reports that 89% of offers to first time buyers in the fourth quarter (Q4) of 2018 ended up completing. This was up from 81% in Q3 and is the highest rate for three years.

As well as strong first time buyer levels, mortgage intermediaries also saw stronger completion rates across the board in Q4 2018.

Overall completions were up by five percentage points on the previous quarter, to 87%, which is the highest overall completion rate recorded by the IMLA.

The organisation predicts that mortgage lending via intermediaries will rise to £169 billion this year, but warns that broker confidence has ebbed, with the percentage of intermediaries who claimed to be “very confident” about their own business falling from 60% to 54% at the end of 2018. 

Kate Davies, the Executive Director of the IMLA, says: “It is encouraging to see that, when an intermediary does apply for a loan on their client’s behalf, they are being accepted and completed at growing rates. Mortgages going from offers to completions are at more than three-year highs, as intermediaries and lenders continue to find solutions for clients.

“It’s significant that intermediaries are able to demonstrate such a high success rate, especially when helping first time buyers to navigate the complexities of an increasingly competitive and complex mortgage market. This is particularly true for those taking out Help to Buy equity loans, who may need even more expert guidance.”

She forecasts: “IMLA predicts that mortgage intermediaries will account for a growing share of the mortgage market this year and into 2020. These figures underline our firm belief that, during times of uncertainty, people still seek out a seasoned expert to help guide them through complex financial decisions.

“That said, even in the face of such strong evidence about brokers’ effectiveness, it’s not surprising that brokers themselves share the current general uncertainty about the future.”

Davies concludes: “But, whatever the outcome of the current Brexit negotiations, we are confident that brokers will continue to play an essential part in guiding borrowers through the market.”

First Time Buyers Borrowing More than Buy-to-Let Landlords

Published On: March 13, 2019 at 11:08 am

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More first time buyers are borrowing for home purchases than buy-to-let landlords are, according to the latest Mortgage Lenders and Administrators Statistics from the Bank of England (BoE).

The report shows that 21.2% of lending for home purchases went to first time buyers in the fourth quarter (Q4) of 2018, compared to 12.5% for buy-to-let landlords. On an annual basis, both of these figures were broadly unchanged.

However, the percentage of lending to home movers dropped by 0.9 percentage points in the 12 months to Q4, to 29.7% of gross advances. On the other hand, the share of lending for remortgage was up by 1.4 percentage points higher year-on-year, at 31.1%. 

Overall, the proportion of lending for home purchases (including home movers, first time buyers and buy-to-let landlords) was down by 1.0 percentage point, to 63.5%.

The outstanding value of all residential mortgages in Q4 2018 was £1,442 billion, which is up by 3.3% on the same quarter of the previous year.

The value of gross mortgage advances rose by 5.5% over the year, to reach £72.9 billion. Meanwhile, the value of new mortgage commitments (lending agreed to be advanced in the coming months) was £68.0 billion, which is 4.6% higher than in Q4 2017.

First Time Buyers Borrowing More than Buy-to-Let Landlords

4.4% of mortgages advanced in Q4 had loan-to-value (LTV) ratios exceeding 90%, compared to just 3.8% in the same quarter of the previous year.

The proportion of high loan-to-income (LTI) lending (loans greater than four times the value of the annual income of a single buyer, or greater than three times the annual income of joint buyers) remained at 46.9% in Q4, which is its highest value since records began in Q1 2007.

The value of outstanding balances with some arrears fell slightly in Q4, to £14.4 billion. As a proportion of total balances, it remained at 1.0%.

Shaun Church, the Director at mortgage broker Private Finance, comments on the data: “The mortgage market is playing a crucial role in helping buyers make their first step onto the property ladder, with as many as one in five mortgages advanced to first time buyers in the last quarter of 2018. Affordability and deposit criteria have long been the main sticking points for new buyers. However, with high LTI lending at its highest point since 2007, and high LTV lending continuing to grow, the industry is alleviating the primary financial obstacles faced by the next generation of homeowners.

“The fact that high LTI lending now represents almost half of overall lending should not be cause for concern. Rigorous stress testing remains in place, which ensures no borrower will be granted a loan they cannot afford in the long-term. The stress testing rates applied are much higher than the likely increase in interest rates, so, even when today’s low rate environment ends, borrowers should be able to afford higher repayments (assuming they haven’t seen a dramatic change in their circumstances).”

He adds: “As the number of product options available to first time buyers continue to grow, borrowers must shop around to choose the right product that matches their financial needs and ambitions.”

Help to Buy is Dying in London, New Report Shows

Published On: March 13, 2019 at 10:48 am

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The Government’s Help to Buy scheme appears to be dying in London, according to a new report from Project Etopia.

The modular homes provider has found that the number of properties available in the capital under Help to Buy has plummeted by 64.3% since 2017.

First time buyers sprang into action when the Government’s housing scheme was first launched in 2013, making the most of the equity loan, which, in the capital, covers up to 40% of the cost of a new build home worth up to £600,000.

However, homes available under the scheme are swiftly disappearing. The number of properties for sale under Help to Buy in London has dropped to 1,619, from 4,535 in December 2017. Houses available under the scheme have also been vanishing at an alarming rate; at the end of 2017, Help to Buy houses were extinct in a quarter of all boroughs, but that has now risen to nearly half (15 boroughs).

The borough worst affected by a shortage of Help to Buy homes is Hammersmith & Fulham, where, at the time of the study, there was just one property left – a £595,000 one-bedroom flat.

Among the boroughs with the lowest number of Help to Buy homes available, Kensington and Chelsea has three, while Westminster has four.

Housebuilding statistics appear to show that the Help to Buy drought is purely due to developers not being able to keep up with demand. The number of homes completed in London by private developers remained stable in the past 12 months, at 17,430. This was only marginally down on the 17,770 completions in the previous year.

Over the same period, the amount of homes purchased in the capital under Help to Buy rose by 23.7%, to 5,156.

In total, 20 of the 32 London boroughs have fewer than 50 Help to Buy homes for sale, compared to seven in 2017. Houses make up just 5.4% of the overall stock across the capital, declining form 13.3% of all Help to Buy properties in December 2017.

Joseph Daniels, the CEO of Project Etopia, says: “It’s all very well giving buyers a leg-up, but it’s no good if the properties aren’t there in the first place.Building rates in the capital are relatively stable, but the popularity of Help to Buy is surging, and developers just cannot keep up with demand.

“The gradual extinction of Help to Buy homes in London demonstrates that interest-free Government loans are not the answer to the housing crisis. Only rapid housebuilding on a large scale and innovative ideas, including modular construction, will prove to be a lasting antidote.”

He adds: “Families are being particularly hard hit, with houses available under Help to Buy now extinct in half of London boroughs, pushing overwhelming demand into other boroughs or forcing people out of the capital altogether.”

First Time Buyer Numbers Increased Across UK in Q4 2018

Published On: February 28, 2019 at 10:01 am

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First time buyer numbers increased across all parts of the UK in the fourth quarter (Q4) of 2018, according to the latest Regional Lending Trends report from UK Finance.

The trade body assessed the trends covering member mortgage lending in regions of the UK in Q4 and the whole of 2018. The data includes first time buyers, homeowners, home purchases and remortgaging in the residential markets of London, Scotland, Wales and Northern Ireland.

London

11,000 new first time buyer mortgages completed in the capital in Q4 2018, which is 5.8% more than in Q4 2017. The £3.2 billion of new lending was up by 7.4% year-on-year. In 2018 in total, 42,800 new first time buyer mortgages completed – up by 0.5% on 2017. The £12.6 billion of new lending was 2.6% higher on an annual basis.

There were 7,400 new home mover mortgages in Q4 – down by 1.3% on the same quarter of the previous year. The £3.1 billion of new lending was up by 3.3%. In 2018, 28,800 new home mover mortgages were recorded, which is 5% fewer yearly. The £12.0 billion of new lending was down by 1.9% on 2017.

In London, 15,000 new homeowner remortgages completed in Q4 – 2.7% more than in Q4 2017. The £4.6 billion of remortgaging was up by 1.8% year-on-year. Overall in 2018, 60,400 new homeowner remortgages completed, which is up by 6.2% annually. This is the highest annual number of remortgages in the capital since 2008, when this figure stood at 111,900. The £18.8 billion of remortgaging was up by 8.3% on 2017.

Northern Ireland

There were 2,900 new first time buyer mortgages completed in Northern Ireland in Q4 – up by 11.5% on the same quarter of the previous year. The £0.31 billion of new lending was 19.2% more on an annual basis. In 2018, 10,500 new first time buyer mortgages were recorded, which is 9.4% more than in 2017. This is the highest annual number of first time buyer mortgages in Northern Ireland since 2004, when this figure stood at 10,600. The £1.1 billion of new lending was up by 14.6% year-on-year.

1,900 new home mover mortgages completed in Q4, which is up by 5.6% on the same quarter of 2017. The £0.26 billion of new lending was 13% higher year-on-year. In 2018, there were 6,600 new home mover mortgages – 6.5% more annually. This is the highest annual number of home mover mortgages since 2007, when the figure was 12,700. The £0.9 billion of new lending was 9.9% higher on the previous year.

2,600 new homeowner remortgages were completed in Q4 – 18.2% more than in Q4 2017. The £0.28 billion of remortgaging was up by 21.7% year-on-year. In 2018, 9,500 new homeowner remortgages were recorded, which has risen by 11.8%. This is the highest annual figure since 2009, when it stood at 10,100. The £1.0 billion of remortgaging in 2018 was 14.8% higher on an annual basis.

First Time Buyer Numbers Increased Across UK in Q4 2018

Scotland

9,000 new first time buyer mortgages completed in Q4, which is up by 5.9% on the same quarter of the previous year. The £1.07 billion of new lending was 9.2% higher year-on-year. In 2018, there were 34,100 new first time buyer mortgages – 3.1% fewer than in 2017. The £4.0 billion of new lending was up by 2.0% on an annual basis.

There were 9,000 new home mover mortgages in Q4 – 2.3% more than in Q4 2017. The £1.46 billion of new lending was 5.8% higher yearly. In 2018, 34,300 new home mover mortgages were completed – down by 0.9%. The £5.5 billion of new lending was up by 1.5% on 2017.

9,600 new homeowner remortgages were completed in Q4, which is up by 14.3% on an annual basis. The £1.21 billion of remortgaging was 16.3% more on Q4 2017. In 2018, there were 35,400 new homeowner remortgages – up by 11%. This is the highest annual number since 2011, when it was 36,400. The £4.5 billion of remortgaging was 13.8% higher annually.

Wales

There were 4,800 new first time buyer mortgages in Q4, which is up by 4.3% on the same quarter of 2017. The £0.58 billion of new lending was up by 7.4%. In 2018, 16,800 new first time buyer mortgages were recorded – an increase of 1.2% on 2017. This is the highest annual level of first time buyer mortgages since 2006, when 16,900 were recorded. The £2.0 billion of new lending was up by 4.1% year-on-year.

4,400 new home mover mortgages completed in Wales in Q4, following a 2.3% rise on Q4 2017. The £0.69 billion of new lending was up by 6.2%. In 2018, there were 15,800 new home mover mortgages – 0.6% more than in the previous year. This is the highest number of home mover mortgages in Wales since 2007, when 25,600 were seen. The £2.5 billion of new lending was 4.7% higher on an annual basis.

5,400 new homeowner remortgages were completed – up by 22.7% on the same quarter of 2017. The £0.67 billion of remortgaging was 28.8% higher yearly. In 2018 in total, 20,100 new homeowner remortgages were recorded – 12.3% more year-on-year. This is the highest annual number of remortgages since 2008, when 38,600 completed. The £2.4 billion of remortgaging was up by 16.3% on 2017.

Comments

Nick Chadbourne, the CEO of conveyancing panel manager LMS, says: “Remortgaging continues to be the preferred route for many homeowners looking to save on their monthly payments. Similar to last quarter, London houses the bulk of regional remortgage lending in the UK, with £4.6 billion taking place. However, Scotland is where remortgage activity is proving most popular and is in double-digit growth. Last quarter showed a 13.6% year-on-year rise and today’s result shows a similar amount of activity.

“LMS data shows that 38% of these borrowers in December opted for a five-year fix as they finished their two-year deals. These longer-term fixed deals are providing certainty for borrowers during ambiguous times, as they choose to lock in during this current low interest rate environment.”