Posts with tag: homebuyers

Property Transactions Down in August in Typical Seasonal Slump

Published On: September 21, 2017 at 9:54 am

Tags: homebuyers,property sales,property transactions

Property Transactions Down in August in Typical Seasonal Slump

The latest official property transactions statistics, for August 2017, from HM Revenue & Customs (HMRC) show that sales were down last month in a typical seasonal slump.

The provisional seasonally adjusted UK property transactions count for August was 103,490 residential and 10,600 non-residential sales.

The seasonally adjusted estimate of the number of residential property transactions dropped by 0.5% on a monthly basis in August, but is up by 6.6% on an annual basis – the same level as transactions in August 2015.

HMRC warns that caution should be used when making comparisons of transactions between August 2016 and 2017, as some taxpayers may have changed their behaviour as they considered the result of this year’s snap General Election and the EU referendum in June last year.

For August, the number of non-adjusted residential property transactions was around 6.6% higher than in July, and 5.6% up on August 2016.

The figures for the three most recent months are provisional, and are therefore subject to revision.

The Managing Director of West One Loans, Stephen Wasserman, comments on the data: “With widespread speculation about when a base rate rise will happen, it’s to be expected that there is some knock-on for the property market. However, we are confident that the sector will show its much-admired resilience, especially from an investor perspective, over the coming months, due to the fundamental supply and demand mismatch in this country.

“With the UK set to leave the EU in March 2019, there is going to be a lengthy period of uncertainty, but we are hopeful that the property sector can provide continued stability for investors and consumers alike. As the market picks up again, it is crucial that investors understand all the financing options that are available to them, which includes specialist solutions, such as bridging loans, a sector which has seen solid growth in the second quarter of the year.”

We remind all portfolio landlords to be aware of the new underwriting rules being introduced at the end of this month. A guide to the changes can be accessed here: /landlords-guide-pra-portfolio-underwriting-changes/

Buyers Wasting £370m on Unnecessary Mortgage Advice Fees, Broker Claims

Published On: September 19, 2017 at 9:52 am

Author: Em Morley

Categories: Finance News

Tags: brokers,homebuyers,mortgages

UK homebuyers are wasting £370m a year on unnecessary mortgage advice fees charged by brokers, according to independent broker One 77 Mortgages.

Buyers Wasting £370m on Unnecessary Mortgage Advice Fees, Broker Claims

All brokers receive a procuration fee from lenders for their work in arranging mortgages, the broker explains, which satisfies Financial Conduct Authority (FCA) and money laundering rules, as well as getting the business across the line.

However, One 77’s experts have hit out at the double dipping rife in the mortgage industry, which means that an extra charge for advice is levied on customers in approximately 75% of purchases.

That means that an additional fee, averaging £400, was slapped on 926,220 of the 1,234,960 residential property transactions completed last year, setting customers back a total of £370,488,000.

Homebuyers – who can be charged as much as 1% of the loan balance for advice by brokers – don’t realise that these charges are not essential and that, in many cases, a broker will negotiate these or back down on charging them altogether.

In many cases, brokers will not even raise them with their savvier or older clients, who are more likely to know that these fees are not set in stone. Instead, some brokers will levy them on less experienced or younger first time buyers, who know no different.

A minority of UK brokers, including One 77, only take the procuration fee paid by the lender.

The Managing Director of the firm, Alastair McKee, says: “It’s truly shocking that brokers are double dipping on fees in this way and stinging the consumer in the process. This is a colossal sum of money that’s being thrown away unnecessarily, in many cases by the people who can least afford it.

“As ever, it’s a case of buyer beware but, understandably, many less experienced buyers believe this is the norm across the board and that they have no choice but to pay. Many clients find it hard to believe that some brokers don’t charge broker fees.”

He continues: “This is a costly misconception, as that’s certainly not the case any more. If you shop around, there are a range of firms out there who don’t charge fees above and beyond what they receive from the lender, and that’s exactly the way it should be.

“Being paid twice for doing the same work is simply unjustifiable.”

The latest Home Buyer Survey from Tesco Bank reveals that some recent homebuyers were stung by unforeseen costs during the purchasing process, as well as how difficult it now is to buy a home – the average deposit needed has topped a huge £60,000!

Average Homebuyer Deposit Rises to over £60,000, Finds Tesco Bank

Published On: September 19, 2017 at 9:22 am

Author: Em Morley

Categories: Property News

Tags: deposits,first time buyers,homebuyers,homeownership,mortgages

In its second Home Buyers Survey, Tesco Bank has revealed that the average deposit needed to buy a home has risen to over £60,000.

Having assessed the finances of UK homebuyers, Tesco Bank found that most buyers wish to purchase a home to have an investment for the future, to provide security for their families and to be independent.

For most people, buying a home is the largest single transaction that they will ever make. Perhaps, then, it’s surprising that some homebuyers take a relatively short period of time to decide whether the house they are looking to buy is right for them.

Average Homebuyer Deposit Rises to over £60,000, Finds Tesco Bank

In fact, Tesco Bank found that 28% of homebuyers decided to buy their new property on their first viewing, while the majority (78%) made the decision to buy in less than a week.

The study also revealed that the main reasons for moving home are financial, with 42% of customers saying that their move was motivated by the desire to build equity and provide security for the future (29%). Other reasons included a need to move to a bigger home, to move in with a partner or to start a family.

Tesco Bank’s data shows that the average mortgage taken out by UK homebuyers is currently £170,994, with the highest mortgages being borrowed in London and the lowest in Wales.

It was found that homebuyers save an average of over £500 per month to help them buy a property, rising to £844 in the capital. Rather worryingly, almost four in ten recent homebuyers had no savings left after they’d moved home.

But perhaps the most off-putting statistic for those looking to buy their own homes is the average deposit size, which now stands at £61,607. For those in London, the situation is much worse, with an average deposit of £90,685, while those in Wales are perhaps better off, with just £41,407 needed to buy a home.

Given this, it is unsurprising that the research also revealed the reliance that many homebuyers place on parents or family to climb the property ladder. Tesco Bank found that 40% of recent homebuyers received financial support from their family to purchase the property, with 65% of those receiving these funds as a gift.

Disturbingly, the study showed that reliance on family continues with age, with almost a fifth of customers in their 40s relying on help from their family to purchase a home.

And it’s not just deposits that are denting homebuyers’ finances. The report indicates that the financial pressure of a house purchase does not stop at the time of the purchase, and homebuyers’ spending habits continue to change in order to make repayments.

While it is encouraging that 45% don’t have to make cutbacks, 30% did have to reduce social spending, a quarter have reduced the number of holidays they take, while one in ten are working longer hours or taking on an additional job to meet their mortgage repayments on a new home.

As a potential interest rate hike is frequently in the news at present, Tesco Bank has asked homebuyers what an increase in interest rates would have on their household finances. The study revealed that a third of customers would have to reduce their discretionary spending to continue meeting their mortgage repayments if rates rose even slightly.

But a positive did arise out of the research, with Tesco Bank finding that the average homebuyer can save on their monthly repayments by ensuring that they remortgage at the end of their fixed-rate term when compared to the Standard Variable Rate (SVR). With a current average SVR of 4.39%, compared to a typical two-year fixed rate of 1.95%, customers could save £274 per month on their monthly repayments.

Despite the financial challenges that buying a new home can bring, positively, more than four in ten homebuyers feel more confident about their financial situation over the next year, while seven in ten were prepared for additional moving fees, such as Stamp Duty, legal fees, estate agent fees and removal costs.

Nevertheless, over a third of respondents reported experiencing a nasty surprise during the home buying process, including the unforeseen maintenance needed on the property, move-in dates changing or being delayed and additional costs or fees.

This highlights the importance of being prepared for any eventuality that can arise; being informed about the home buying process is key.

Landlords, could you offer any support to tenants who are trying to buy their first homes?

Record High for Successful Mortgage Applications Seen in Q2

Published On: August 30, 2017 at 10:32 am

Author: Em Morley

Categories: Finance News

Tags: homebuyers,mortgages,property market

The second quarter (Q2) of the year saw a record high for successful mortgage applications, with almost nine in ten (88%) resulting in offers, according to the latest Mortgage Market Tracker from the Intermediary Mortgage Lenders Association (IMLA).

Record High for Successful Mortgage Applications Seen in Q2

This is 13 percentage points higher than in Q2 2016, when 75% of mortgage applications led to offers, and is the highest proportion on record since the Tracker began at the start of 2016.

The quarterly report, which uses data from BDRC Continental, follows mortgage applicants’ journeys through the intermediary channel, from initial enquiry through to completion.

In doing so, it contrasts the fortunes of brokers with a particular focus on first time buyers, home movers, remortgagers, buy-to-let borrowers and applicants for specialist loans.

The Tracker shows that, despite the political events of Q2 – the snap General Election and resulting hung Parliament – the mortgage market remained buoyant, with gross mortgage lending for the quarter reaching £603 billion – up by 3% from Q1 and 6% on Q2 2016.

Furthermore, of the intermediaries surveyed for the report, 96% stated that they felt confident in the future of the mortgage market, suggesting that this is a trend that may continue.

First time buyers, in particular, have taken advantage of an extended period of low interest rates and lender support, which, despite affordability pressures, meant that the number of successful mortgage applications by this group increased from 71% in Q2 2016 to 88% in Q2 this year – a rise of 17 percentage points.

This proportion of successful mortgage applications is the highest recorded since the Tracker began in Q1 2016, having continued to rise steadily over the past year. The percentage of offers resulting in completions has also grown year-on-year, from 75% in Q2 2016 to 81% in Q2 2017, with 71 of every 100 mortgage applications now resulting in a completion – up from 58 at the start of last year.

The Executive Director of IMLA, Peter Williams, comments: “While the second quarter of 2017 was dominated by political speculation and campaigning, any resulting uncertainty was not enough to send the mortgage market and the determination of aspiring homeowners off their course. The percentage of successful applications continued to grow across the board; a testament to the ability of the intermediaries to match consumers with suitable products in what is an increasingly complex marketplace.

“With house price rises softening and easing affordability pressures, borrower demand and lender supply remains unwavering, heightened by increasingly competitive residential and buy-to-let LTV [loan-to-value] pricing. Greater choice means that, for intermediaries, it is perfectly possible to match a wide range of aspiring homeowners and movers to suitable finance, without compromising on rigorous assessments of borrower capacity to service their mortgage underpinning the market.”

Portfolio landlords should remember that the second phase of the Prudential Regulation Authority’s buy-to-let underwriting changes will come into force next month. Get to grips with them here: https://www.justlandlords.co.uk/news/portfolio-landlord-underwriting-changes/

Mortgage Lending Up on Monthly and Quarterly Basis

Published On: August 16, 2017 at 9:26 am

Author: Em Morley

Categories: Finance News

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

The latest UK Finance data, for June 2017, shows that mortgage lending was up on both a monthly and quarterly basis.

Monthly figures

On a non-seasonally adjusted basis, UK Finance found that mortgage lending rose in June.

First time buyers borrowed £5.9 billion – up by 26% on May and 9% on an annual basis. This equated to 36,000 loans – up by 22% month-on-month and 6% on June last year.

Home movers borrowed £7.8 billion, which was up by 26% on the previous month and 15% on June 2016. This totalled 36,500 loans – up by 24% on a monthly basis and 9% compared to a year ago.

Homeowner remortgage activity totalled £6 billion in June – a rise of 5% on May and 7% annually. The number of remortgage loans reached 34,300, which was up by 5% on a monthly basis and 6% on June last year.

Gross buy-to-let lending totalled £3 billion – up by 3% month-on-month and 3% on June 2016. This equated to 19,700 loans – up by 3% on May and 6% on the previous year.

On a seasonally adjusted basis, lending to first time buyers and home movers remained relatively unchanged month-on-month, but there were increases by volume and value on an annual basis. Buy-to-let and remortgage activity remained relatively unchanged in June from May.

The proportion of household income used to service capital and interest rates continued to sit near historic lows in June, for both first time buyers and home movers, at 17.3% and 17.5% respectively.

Mortgage Lending Up on Monthly and Quarterly Basis

Affordability metrics for first time buyers saw the average loan size increase from £137,000 in May to £139,000 in June. The average household income rose from £40,500 to £41,000 over the month, meaning the income multiple went up from 3.58 to 3.59.

The average amount borrowed by home movers in the UK grew to £180,000 from £177,000 in June, while the average home mover household income increased from £54,900 to £55,200, taking the income multiple to 3,39, from 3.37.

Buy-to-let activity was driven by remortgaging lending in June, which accounted for over two thirds of total lending. Buy-to-let house purchase and remortgage activity remained consistent with monthly levels seen since the change in Stamp Duty on additional homes, which was introduced in April 2016.

The Head of Mortgages at UK Finance, Paul Smee, comments: “June’s figures show a busy month in the mortgage market, with home movers having their highest monthly activity levels for over a year, and an especially high number of loans for first time buyers. Buy-to-let activity remains subdued compared to its 2015 peak, but consistent month-to-month since Stamp Duty changes in April 2016.

“But there are also signs of a softening market, and we are not anticipating that this performance will be sustained in the second half of 2017. A slightly lop-sided market could well show some growth in house purchase lending but alongside reduced remortgage and buy-to-let activity.”

Quarterly data

In the second quarter (Q2) of the year, homebuyers borrowed £34.4 billion – up by 18% on Q1 and 24% on Q2 2016. They took out 183,300 loans, which marks an increase of 16% on the previous quarter and 9% on last year.

Within this, first time buyers borrowed £14.8 billion – up by 18% quarter-on-quarter and 10% on Q2 last year. This equated to 91,400 loans, which was up by 15% on Q1 and 6% annually.

Lending to home movers totalled £19.6 billion, which is up by 19% on the previous quarter and 21% year-on-year. They took out 92,200 loans – up by 17% on Q1 and 13% on Q2 2016.

Homeowner remortgage activity totalled £16.9 billion – down by 11% on Q1, but up by 1% on a year ago. The number of remortgage loans stood at 96,600, which is down by 12% on a quarterly basis and 1% on last year.

Gross buy-to-let lending hit £8.4 billion, which was down by 6% on Q1 but up by 5% annually. This equated to 55,400 loans – down by 6% on the previous quarter, but up by 5% on Q2 2016.

Independent Shops Replace Waitrose-Effect in Terms of House Price Premiums

Published On: July 26, 2017 at 9:21 am

Author: Em Morley

Categories: Property News

Tags: amenities,homebuyers,house prices,London

High streets filled with independent shops have replaced the Waitrose-effect in terms of adding house price premiums, according to estate agent Marsh & Parsons.

Independent shops are magnets for homebuyers, who are prepared to pay a premium in London for the privilege of living nearby, the agent found.

A street filled with vibrant, independent shops is now a more desirable amenity than the presence of a Waitrose. In the past, the so-called Waitrose-effect of having the supermarket in close proximity attracted a house price premium. Today, homebuyers would rather have the culture and character of independent shops in their neighbourhoods.

Marsh & Parsons has identified nine London streets where independent shops dominate and properties nearby command an average price premium of 10% more than equivalent homes further from such amenities:

Independent Shops Replace Waitrose-Effect in Terms of House Price Premiums

Chiltern Street, W1

Bars and restaurants in the area include The Bok Bar and Blandford Comptoir, while the Atlas Gallery is also close by.

Brecknock Road, N19

Future & Found is a popular shop in the neighbourhood, while The Pineapple also draws in buyers.

Fortess Road, NW5

Independent boutiques in this district include SK Vintage and Jessica de Lotz Jewellery.

Salusbury Road, NW6

The Iris Fashion boutique and Queen’s Park Books are just a couple of the reasons that house prices here cost more than the average.

Shoreditch High Street, E1

The Arts Club, Bull in a China Shop and Andina London are all popular restaurants and bars in this location.

Caledonian Road, N7

Around this area, Shillibeer’s, Kokeb and Hemingford Arms are all attractive to buyers.

Marylebone Road, NW1

In Marylebone, Margaret Howell, Gallery 1930 and Daunt Books are all reasons to buy here.

Queens Gate, SW7

Boosting house prices on this street are Royal Spades and Chic Elegance.

Golborne Road, W10

Potential buyers in this neighbourhood will enjoy Snaps & Rye, Lisboa Patisserie and Phoenix on Golborne being close by.

The Sales Director of Marsh & Parsons, Alex Lyle, says: “The predominance of chains in the high street has often meant that one is indistinguishable from another. People crave character and a street brimming with independent food shops, fishmongers, pubs with their own micro-breweries, bike shops, clothes shops and bookshops are a major draw.

“This adds great character to an area and is a major plus point. We have identified the new Portobello Roads – which 25 years ago helped put Notting Hill on the map. In an increasingly homogenous world, people seek diversity in their surroundings – a specialist coffee shop, a bespoke hat shop or a great world food restaurant can prove a real attraction to buyers. And that has taken over from the Waitrose-effect.”

Landlords, use these findings when considering your next property investment – young tenants will also be attracted to an area boasting independent shops, so find a great hotspot to boost your chances on the lettings market.

If you’re looking to make improvements to your properties, these renovations are the most profitable: /landlords-renovation-projects-profitable/