Posts with tag: first time buyers

First Time Buyer Figures Return to 2007 Levels, Halifax Reports

Published On: January 29, 2018 at 10:38 am

The number of first time buyers has returned to levels recorded a decade ago, but those taking their first steps onto the property ladder are now spending double the amount in deposits, Halifax reports.

The bank estimates that there were 359,000 first time buyers in 2017 – up from 339,600 in 2016, which is a ten-year high, but is just below the 359,900 recorded in 2007.

However, first time buyers are now spending double the deposit than ten years ago, at an average of £33,339, compared with £17,740, while the average house price is £278,749, compared to £78,855 in 2007.

New buyers are also two years older than a decade ago, at an average of 31-years-old, or 33 in London.

Over the past decade, the amount of first time buyers in the capital has dropped by 26%, from 57,900 in 2007 to an estimated 42,983 in 2017.

The north is the only other region to see a decline in the number of first time buyers, from 17,300 to 16,430 during the same period.

Northern Ireland has experienced the greatest increase in first time buyers over the same period, up by 65% to 9,410, while the South East has the highest concentration, at 69,000.

Russell Galley, the Managing Director of Halifax, comments: “A flow of new buyers into homeownership is vital for the overall wellbeing of the UK housing market. This ten-year high in the number of first time buyers shows continued healthy movement in this key area, despite a shortage of homes and the ongoing challenge of saving enough of a deposit.

“Low mortgage rates, high levels of employment and Government schemes such as Help to Buy have helped first time buyers become a much greater segment of the market, and the recent abolition of Stamp Duty on purchases of up to £300,000 is likely to continue stimulating this growth, by reducing the upfront costs associated with taking the first step on to the property ladder.”

Will Stamp Duty be Cut for First Time Buyers in Autumn Budget?

Published On: October 19, 2017 at 8:45 am

Author: Em Morley

Categories: Property News

Tags: Autumn Bugdet,first time buyers,Stamp Duty

The Government is considering a Stamp Duty cut for first time buyers when they purchase their first homes, according to new reports.

Stamp Duty has soared over recent years, as house prices have spiralled out of the reach of many, with industry experts claiming that the tax bill is a major barrier for first time buyers and a huge extra expense for buyers of larger homes – meaning that they stay put and clog up the property ladder.

Will Stamp Duty be Cut for First Time Buyers in Autumn Budget?

Now, the Evening Standard has reported that Conservative backbench MPs are lobbying the Chancellor, Philip Hammond, to offer first time buyers a Stamp Duty holiday when he delivers the Autumn Budget on Wednesday 22^nd November.

Rumours have also been rife of plans to release land owned by public bodies for further housing stock.

A cut in Stamp Duty would save first time buyers thousands of pounds on the purchase of their first homes, especially in areas of the country where house prices are particularly high.

Currently, anyone buying a property worth more than £250,000 must find an extra 5% of the home’s value in cash to settle their Stamp Duty bill with HM Revenue & Customs (HMRC).

According to the Land Registry, the average price paid by first time buyers in London is now a whopping £428,546 – meaning a £11,427 Stamp Duty levy.

Even on a property worth £250,000, buyers face a £2,500 Stamp Duty bill on top of their deposit, legal and valuation fees, and moving costs.

The latest official house price figures can be found here.

The Founder and CEO of online estate agent eMoov.co.uk, Russell Quirk, comments on the proposals: “Stamp Duty is an archaic and anti-aspirational land tax that should be scrapped altogether or, at the very least, become the responsibility of the seller, which I pitched to Eric Pickles MP many years ago when he was Shadow Secretary of State for Communities and Local Government – to no avail.

“Despite efforts to level the playing field with the abolition of the traditional slab style system and the increased tax on high-end, second home or buy-to-let properties, homeownership has remained out of reach for many.”

He believes: “If the Chancellor does reduce Stamp Duty for first time buyers in next month’s Budget, it will certainly be a step in the right direction and act as a massive shot in the arm for the sector as a whole.

“While positive, one can’t help but be skeptical and see this reduction as a smokescreen of sorts, masking the real issue of a severe lack of affordable property stock and the Government’s failure to address it.”

He continues: “Lowering the barrier to entry is a step in the right direction, but the issue is an imbalance in the supply and demand for property that continues to keep prices overinflated and out of reach.

“Should Mr. Hammond bolster his intent to help readdress this balance with the addition of freeing up unused land owned by various public bodies, he will be showing a real intent to tackle the housing crisis head on, and it will no doubt put him on the Christmas card list of first time buyers across the nation. But, as we’ve seen time after time, a great deal of positive speculation often amounts to little else than just that.”

The National Landlords Association and Residential Landlords Association have already put forth their proposals to the Chancellor ahead of the Autumn Budget next month.

Do you believe that cutting Stamp Duty for first time buyers will help to get more young people on the property ladder?

Mortgage Lending Strengthened in August, Reports UK Finance

Published On: October 16, 2017 at 9:27 am

Author: Em Morley

Categories: Finance News

Tags: buy to let mortgages,first time buyers,homeowners,mortgages,remortgaging

The latest UK Finance data shows that lending for house purchase was higher in August 2017 than in both the preceding month and a year earlier.

Mortgage Lending Strengthened in August, Reports UK Finance

During August, first time buyers borrowed £5.7 billion – 16% more than in July and 12% up on August 2016. They took out 34,400 mortgages – 14% higher than the previous month and 9% higher on an annual basis.

Home movers borrowed £8.4 billion in August – 18% more than in July and 20% higher than in August last year. This equated to 38,500 loans – up by 17% month-on-month and 13% on August 2016.

Remortgaging by homeowners totalled £6.4 billion in August – 4% less than in July, but 8% higher than the previous year. The number of people remortgaging totalled 36,700 – down by 1% on July, but 5% up on August last year.

Buy-to-let lending totalled £3.1 billion in August – down by 3% on July this year and the same level as in August last year. This equated to 20,400 mortgages – the same as in July, but 4% higher than in August 2016.

The Head of Mortgages Policy at UK Finance, June Deasy, comments: “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 remortgaging 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.”

On a seasonally adjusted basis, borrowing by first time buyers and movers increased by both value and volume. There was a decline in both the number of people remortgaging and the value of lending. The value of buy-to-let lending was unchanged, but there was a small decrease in the number of buy-to-let borrowers remortgaging.

The proportion of household income taken up by mortgage payments edged up for first time buyers in August (to an average of 17.5%), but was unchanged for movers (17.6%). Overall, it remains low by historical standards.

The average amount borrowed by a first time buyer rose from £138,999 in July to £140,035 in August. There was a smaller proportionate increase in the average first time buyer household income, up to an average income multiple of 3.63. The average amount borrowed by movers increased from £180,000 to £182,750, while their average income multiple rose to 3.40.

Remortgaging accounted for more than two-thirds (68%) of buy-to-let lending in August, however, it was 5% lower than in July. Borrowing for buy-to-let house purchase rose by 11%. Nevertheless, borrowing for house purchase by buy-to-let landlords remains at a lower level than before the introduction of the higher Stamp Duty rate last year.

First Time Buyers Driving the Housing Market in Huge Shift

Published On: September 27, 2017 at 10:11 am

Author: Em Morley

Categories: Property News

Tags: first time buyer,first time buyers,housing market,mortgages

Although housing market activity has been growing modestly since the start of the year, first time buyers are now driving the market in a huge shift, according to the latest market commentary from UK Finance, for September 2017.

Overall housing market activity resembles what we saw just over two years ago, in 2015, the organisation reports.

The rise of the first time buyer

However, the mix of activity has shifted, with first time buyers driving the market, rather than cash and buy-to-let. The level of property transactions seen of late, of just over 100,000 a month since the turn of the year, is not expected to change much in the short-term, as the leading indicator of activity – house purchase approvals – has now returned to where it was at the beginning of the year.

First Time Buyers Driving the Housing Market in Huge Shift

The Bank of England’s (BoE) Agents’ survey suggests that part of the strength in first time buyer activity is down to demand for new build homes using the Help to Buy equity loan scheme. There are also several other Government schemes aimed predominantly at first time buyers, such as the Help to Buy ISA, which are no doubt helping to boost their numbers.

Benefitting much less from Government schemes, home movers have largely been treading water over the last few years. The shortage of homes on the market for sale has also meant that some would-be movers are struggling to find suitable homes, and so do not put their properties up for sale.

In the buy-to-let sector, Government interventions, coupled with regulation, have led to a flat market, with around 6,000 property purchases a month since April 2016, after the Stamp Duty surcharge on additional homes came into force.

Regional shift

As well as a change in the type of activity, there is some evidence to show that the regional mix has also shifted, away from London, the South East and East Anglia, towards the north of England, Wales and Scotland.

The common characteristic in this divergence is that regions that have typically been less affordable have shown signs of weaker activity, while regions that are relatively more affordable have been more buoyant. The latest Royal Institution of Chartered Surveyors (RICS) and BoE surveys also reflected this shift.

At a regional level, the difference in affordability (as measured by the typical income multiple for homeowners) between the most and least affordable regions has diverged since 2013, with the gap doubling over this period.

This trend may reverse, and we may see some rebalancing, if the shift in activity is sustained. It’s also the case that sentiment and price expectations in regions where affordability is stretched have weakened or are negative.

Remortgage activity

On the remortgage side, strong competition and low funding costs have meant a growing number of homeowners are taking advantage of the near record low mortgage rates. UK Finance expects more homeowners to refinance in the coming months, as prospects of the first interest rate rise in over ten years gain new impetus.

Buy-to-let remortgage activity has been growing until very recently, but the number of loans made over the past 12 months has been lower compared with the previous 12 months. Tax changes that come into effect in April this year are likely to restrict the ability or willingness of landlords to re-leverage their portfolios.

Lending in August

Despite the shift in housing market activity, by buyer type and region, total mortgage lending has been stable, estimated to be £24.2 billion in August. Adjusting for seasonal factors, this figure would be £21.4 billion, which is in the same ballpark as monthly lending over the course of 2017.

While we won’t have the breakdown of August lending for some time yet, the drivers of lending are likely to be first time buyers and homeowners remortgaging, as has been the case for July. The picture in July is also similar to that of April, May and June, so a continuation doesn’t seem too unreasonable.

Looking ahead, UK Finance expects more of the same, though it anticipates that the pace of growth will slow somewhat, dampened by a potentially more challenging economic outlook.

Portfolio landlords

From 30^th September 2017, portfolio landlords – those with four or more buy-to-let properties – will be subject to more specialist underwriting standards when applying for a new buy-to-let mortgage. This includes looking at the landlord’s experience in the buy-to-let sector, the cashflow associated with all of their existing properties, and inspection of their business plans.

UK Finance does not expect this to cause a surge in activity before the change, followed by a lull in buy-to-let purchases.

Is the Housing Market Starting to Rebalance?

Published On: September 26, 2017 at 9:40 am

Author: Em Morley

Categories: Property News

Tags: buy-to-let landlords,first time buyers,housing market,mortgages

The latest high street banking data and mortgage market commentary from UK Finance suggest that the housing market may be starting to rebalance…

UK Finance estimates that overall gross mortgage lending in August stood at £24.2 billion, of which high street banks lent £15.1 billion. Accounting for seasonal factors, this figure is in the same ballpark as monthly lending over the course of 2017.

Is the Housing Market Starting to Rebalance?

House purchase approvals by high street banks reached 41,807 in August, which is stronger than the monthly average of 41,133 over the last six months and 11% higher than in the same month last year, when the market was subdued following the EU referendum result.

The Senior Economist at UK Finance, Mohammad Jamei, is pleased to see the housing market starting to rebalance: “Housing market activity is in Goldilocks’ territory, growing only modestly since the start of the year, though the mix of activity has shifted towards first time buyers, away from buy-to-let and cash. There is also some rebalancing across regions, as activity picks up in the north of England, Wales and Scotland, away from London, the South East and East Anglia.”

John Eastgate, the Sales and Marketing Director of OneSavings Bank, also comments on the new figures: “Mortgage lending remains on a fairly even keel, if somewhat in the doldrums. Lack of confidence can be seen across the market, with the possible exception of first time buyers, who represent a Help to Buy-driven growth zone. The potential for a rate increase sooner rather than later might well stimulate some remortgage activity but, overall, the market remains relatively directionless.

“Meanwhile, the buy-to-let market faces up to yet more change. We have seen demand from many portfolio landlords seeking finance ahead of the PRA’s [Prudential Regulation Authority] next wave of changes to underwriting standards, although awareness is far from universal. It will take some time for the dust to settle and, in the meantime, the outlook for tenants is one of higher rents.”

The Marketing Director of Foundation Home Loans, Jeff Knight, continues: “Record low mortgage rates continue to sustain market activity but, given even the most dovish members of the Bank of England’s Monetary Policy Committee are now adding to the calls for an interest rate rise, this picture could very quickly change. A wait-and-see approach is best avoided for first time buyers and existing owners considering remortgaging.

“With the PRA changes for portfolio landlords fast approaching, we are likely to see a spike in activity from those hoping to finalise deals ahead of the underwriting changes coming in. While it will take some getting used to, the changes will go a long way to professionalise the sector and help to expel rogue landlords, so, in the long-term, it’s important that decent landlords are properly engaged and supported to ensure the rental sector remains a positive option for those not yet ready to buy.”

John Goodall, the CEO and Co-Founder of buy-to-let specialist Landbay, concludes: “Mortgage lending levels rose steadily in August, with borrowers continuing to reap the rewards of record low mortgage rates and loan-to-value deals. The Bank of England’s rate-setting committee has fuelled speculation that the first rate rise in almost a decade is now likely, and soon, so those looking to buy a property or remortgage their current property will now be moving fast to lock in a mortgage rate before the change.

“In the buy-to-let market specifically, October’s PRA changes are fast approaching, so some of this uplift is likely down to landlords making changes to their portfolios before the stricter lending and reporting criteria kick in. The changes are a good thing for the ongoing sustainability of the private rental sector, but many landlords are unaware of what the changes mean for them, so we could see a dip in Q4 [fourth quarter] lending levels while the industry adjusts to the new rules.”

Mortgage Process Proves too much for One in Ten First Time Buyers

Published On: September 26, 2017 at 9:19 am

Author: Em Morley

Categories: Finance News

Tags: buying a home,first time buyers,mortgages

The mortgage process is proving too much for almost one in ten (8%) first time buyers, who admitted that they were reduced to tears while attempting to secure their first mortgage, according to research from online mortgage broker Trussle.

Mortgage Process Proves too much for One in Ten First Time Buyers

That’s the equivalent of 27,000 first time buyers crying as a result of the mortgage process last year.

In the study of 2,000 homeowners, it was also revealed that roughly a quarter (23%) were forced to take time off work to make arrangements for their first mortgage. Applied to last year’s 338,000 first time buyers, this equates to 77,740 people.

Many find the traditional mortgage process to be opaque and time-consuming, with one in four (23%) borrowers reporting that they found the experience to be stressful, while 5% felt compelled to complain to their lender or broker about the service they received.

The negative experience so often associated with securing a mortgage is also leading to inertia among current borrowers. One in ten (9%) respondents – the equivalent of a million people – said that they’ve been discouraged from switching mortgage by their experience of being a first time buyer, while, for 13%, it’s actually discouraged them from moving home.

This switching inertia is costing UK homeowners billions of pounds every year, Trussle has found. There are roughly two million borrowers in the UK on a Standard Variable Rate (SVR) mortgage when they don’t need to be, and most will have slipped onto an SVR because they failed to switch when their initial term ended. A borrower on an SVR will almost always pay a higher rate of interest than they would on a competitive deal.

Trussle has calculated that the average UK borrower on an SVR pays £4,900 more in annual interest than they would on the lowest rate deal on the market – equating to £9.8 billion in excessive interest being paid by inert mortgage borrowers on SVRs each year.

The CEO and Founder of Trussle, Ishaan Malhi, says: “Buying a home is one of the biggest milestones in someone’s life and should be remembered with fondness, but, for so many, it’s an ordeal they’d rather forget. A lot of it comes down to the stress and inconvenience of the mortgage application process. It’s therefore understandable that so many people are reluctant to think about their mortgage when the time comes to switch, but the sad result is that homeowners are collectively losing billions of pounds a year.

“The good news is that things are improving, if in pockets. We’re already seeing dramatic progress in the mortgage customer experience, with the use of technology speeding up and simplifying the whole process. This in turn should help to address some of the causes of the inertia costing homeowners so much money.”

We’re reminding all portfolio landlords that the Prudential Regulation Authority’s new underwriting rules will soon be introduced. Get to grips with what they mean for you with our handy guide: https://www.justlandlords.co.uk/news/portfolio-landlord-underwriting-changes/