Posts with tag: mortgages

First Time Buyers Must Earn £11k More Than the UK Average to Get on the Property Ladder

Published On: March 3, 2016 at 9:42 am

Tags: finance,first time buyers,homeownership,London,mortgages

The difference between the average UK salary and the income that first time buyers need to get onto the property ladder has hit a post-recession high, according to research conducted on behalf of mortgage insurer Genworth.

First Time Buyers Must Earn £11k More Than the UK Average to Get on the Property Ladder

Analysis of Office for National Statistics and Council of Mortgage Lenders figures shows that the average income needed to acquire a first time buyer mortgage is £38,977 – a huge £11,332 higher than the average UK salary of £27,645.

This is the greatest difference recorded since the recession, indicating how access to homeownership in the UK has become increasingly limited. It also signals how and why the private rental sector is likely to grow in the future.

Yesterday, we revealed that 30% of all households will rent from private landlords in 30 years’ time.

The difference in income needed and the average salary has grown significantly in recent years, due to stricter lending criteria and soaring house prices. Many prospective first time buyers will now have little chance of getting onto the property ladder without support from a partner, family member or Government scheme.

In fact, it was recently found that just 16 parts of the country are affordable for single first time buyers.

Comparatively, the gap between the income needed for a first time buyer mortgage and the average UK salary in 2000 was just £3,170 and £7,505 in 2011.

In London, the average salary needed for a first time buyer mortgage is almost £58,500, or 65% more than the UK average. Compared with regional salary growth of just 1.3%, the incomes of first time buyers have increased by 19.4% in the capital.

This means that the difference between the salary needed for a first time buyer in the capital and London’s average is £23,142, more than double the gap in the rest of the UK of £11,332.

This is 3.9 times more than in Yorkshire, where the income needed for a first time buyer and the average salary is the smallest gap.

It is therefore unsurprising that in the first ten days of the Help to Buy London scheme launching, a huge 15,000 hopeful buyers showed interest in the initiative.

Accord Cuts Buy-to-Let Remortgage Rates

Published On: March 1, 2016 at 3:02 pm

Author: Em Morley

Categories: Finance News

Tags: buy to let mortgages,finance,landlords,mortgages

Accord Mortgages Buy to Let has cut certain rates by up to 0.15% on its range of two-year fixed rate mortgages at 60% and 75% loan-to-value (LTV).

The intermediary-only lender, part of Yorkshire Building Society Group, is now offering landlords looking to remortgage with a 25% deposit a series of two-year fixed rate loans with £800 or £2,495 fee options and a range of incentives on select products.

Accord Cuts Buy-to-Let Remortgage Rates

Some highlights of the two-year remortgage range include:

A 2.34% two-year fixed rate mortgage at 75% LTV with a £2,495 fee.
A 2.49% two-year fixed rate mortgage at 75% LTV with a £2,495 fee, and free standard valuation and legal fees.
A 2.49% two-year fixed rate mortgage at 75% LTV with a £2,495 fee and £300 cashback on completion and free standard valuation.
A 2.64% two-year fixed rate mortgage at 75% LTV with a £800 fee.
A 2.89% two-year fixed rate mortgage at 75% LTV with a £800 fee and free standard legal fees, or £300 cashback on completion and free standard valuation.

Each loan is available with a discounted reversion rate of 4.04% for three years once the initial fixed rate period ends.

During the reversion rate period, landlords will not have to pay any early repayment charges and can redeem their mortgage at any time.

On the mortgage’s fifth year, the rate will change to Accord’s standard variable rate of 5.79%.

The National Account Manager of Accord Buy to Let, Chris Maggs, comments: “Not only does our new range offer enticing rates and a choice of incentives, landlords taking out a two or three-year product will also benefit at the end of the mortgage term, as they will revert to our discounted reversion rate, or have the option of transferring to another attractive product available for existing borrowers.

“We are constantly reviewing our buy-to-let mortgages to offer the best fit for landlords, and we hope that this combination of benefits will really appeal to both landlords and brokers looking for the best option to suit their individual requirements.”¹

We will continue to bring you the latest news of the mortgage market and buy-to-let finance.

¹http://www.mortgageintroducer.com/accord-cuts-75-ltv-rates/#.VtV9HVtLH8s

Skipton Building Society Cuts Interest Rates on Buy-to-Let Mortgages

Published On: February 24, 2016 at 9:39 am

Author: Em Morley

Categories: Finance News

Tags: buy to let mortgages,finance,mortgages,Stamp Duty

Skipton Building Society has launched a revised series of fixed rate buy-to-let mortgage products, with interest rates cut on certain deals by up to 0.18%.

This will come as good news to those landlords that are hoping to beat the 1^st April Stamp Duty deadline.

Skipton Building Society Cuts Interest Rates on Buy-to-Let Mortgages

Skipton is offering a range of buy-to-let mortgages on two and five-year fixed rate terms, with purchase and remortgage products priced separately for 60%, 70% and 75% loan-to-value (LTV) bands.

The new buy-to-let range for property purchase includes five-year fixed rates at 3.69% at 70% LTV and 3.89% at 75% LTV, both with £995 fees.

For those looking to remortgage, the two-year fixed rate range includes a 2.19% deal at 60% LTV with a £1,995 fee, a 2.49% deal at 60% LTV with a £995 fee and a fee-free 3.19% rate at 60% LTV.

The five-year series includes a fee-free 4.17% deal at 75% LTV.

All remortgage products offer a free valuation and standard legal fees, while all purchase products include a free standard valuation.

The Head of Products at Skipton, Kris Brewster, explains why the building society decided to launch the new range: “Thanks to our prudent approach to lending, buy-to-let has always been a valuable and high-performing part of our mortgage portfolio. Our buy-to-let deals continue to prove popular and we are delighted to offer this refreshed fixed rate buy-to-let mortgage range with lower interest rates.

“We believe the range offers great value for purchasers of buy-to-let property and for those wishing to remortgage their portfolio.

“We have a total of 36 products in our buy-to-let range, to give landlords and potential landlords plenty of choice and as many different options as possible to help suit their many different needs.”¹

From 1^st April, buy-to-let investors and second homebuyers will be charged an extra 3% Stamp Duty on properties worth over £40,000. As many landlords are already rushing to invest in the sector, could one of these buy-to-let mortgages help you beat the deadline?

¹https://www.landlordtoday.co.uk/breaking-news/2016/2/skipton-cuts-btl-mortgage-interest-rates

Homebuyers Stretching Their Mortgages to Get on Property Ladder

Published On: February 23, 2016 at 12:42 pm

Author: Em Morley

Categories: Finance News

Tags: Buy-to-Let,first time buyers,home movers,mortgage market,mortgages,property ladder

A record number of first time buyers and home movers took out mortgages for over 25 years in 2015, as soaring house prices make it harder to get onto, or move up, the property ladder.

Affordability issues have also increased the amount of borrowers taking on mortgages worth more than 4.5 times their income, causing the Chief Economist at the Council of Mortgage Lenders (CML), Bob Pannell, to warn that a “potential problem is building under the noses” of the Bank of England’s Financial Policy Committee (FPC).

Statistics from the CML found that in the second half of last year, 58% of first time buyers took out mortgages for longer than the typical 25-year term. At the peak of the last housing boom in 2007, this was just 42%.

Homebuyers Stretching Their Mortgages to Get on Property Ladder

Meanwhile, 36% of home movers took out mortgages over the traditional 25 years – double the proportion before the housing crash.

Higher retirement ages and pension freedoms may have encouraged these buyers to borrow for longer, but the CML believes it is mainly a result of the need to stretch incomes to get onto the property ladder.

The CML’s data also shows a sharp rise in the proportion of borrowers taking out mortgages worth over 4.5 times their income.

Around two years ago, this type of lending was cracked down on, due to fears of a housing bubble. Banks and building societies are now only permitted to approve 15% of lending at that level.

After the clampdown from the FPC, the proportion of borrowers taking on such large loans fell, but in the fourth quarter (Q4) of 2015, the number of first time buyers and movers borrowing high amounts almost returned to 2014 levels. Over the quarter, 11% of first time buyers and 9.8% of movers borrowed more than 4.5 times their earnings to purchase a home.

Pannell explains how the mortgage market has changed: “After peaking at 10% just ahead of the FPC action in mid-2014, the proportion of high income multiple lending eased back considerably over the following year, to just below 7%.

“But the picture has changed a lot over the past six months or so. [It] has increased sharply, especially for movers, and retraced a good chunk of the previous year’s reduction.”

Pannell notes that there may have been “a precautionary ‘knee-jerk’ response from lenders” to the new rules when they were first announced, which is now unravelling as they get used to working within the guidelines.

However, he says that lending at all levels above 3.5 times earnings has risen and there are signs “that borrowers are now stretching their incomes more than in mid-2014”.

He adds that the 15% cap on 4.5 times lending means “we should expect to see a build-up of lending just below the 4.5 times threshold”.

At present, the FPC is monitoring the buy-to-let mortgage market, following a boom in borrowing by landlords.

However, Pannell believes: “A potential problem is building under the noses of FPC policymakers, and it has nothing to do with buy-to-let lending.”¹

As buy-to-let investors seek to rush through rental property purchases ahead of the 1^st April Stamp Duty deadline, it appears that the mortgage market across all sectors will see vast change in the coming months.

The latest information for landlords on property and finance can be found at LandlordNews.co.uk.

¹https://www.cml.org.uk/news/news-and-views/affordability-bites/

Home lending values in UK continue to rise

Published On: February 18, 2016 at 9:33 am

Author: Em Morley

Categories: Finance News

Tags: Buy-to-Let,home lending values,lending activity,mortgages

Home lending values increased across all residential sectors during the final month of 2015, according to the latest figures released from the Council of Mortgage Lenders (CML).

However, there are differing pictures in terms of growth and decline.

Annually, the value of lending rose across all lending types, with the CML expecting further steady growth in the next couple of years.

Borrowing

First time buyers borrowed £4.5bn for house purchase purposes, up by 18% on December 2014. This amounted to 29,300 loans, up by 6% month on month and by 11% year on year.

Those looking to move home borrowed £6.6bn. This totalled 33,400 loans, up by 3% month on month and by 12% in comparison to December 2014.

Home owner remortgage activity however was down 16% by value in December 2015, in comparison to November. Year-on-year figures show a different story, with remortgage lending up 24% in value.

Gross buy-to-let lending saw month on month declines, but year on year gains.

Home lending value in UK continues to rise

Loans

Additionally, the data shows that first time buyers took out 87,100 loans, which totalled £13.3bn to purchase homes. By value, this was up by 8% year on year.

Home movers took out 101,900 loans, amounting to a total of £20.3bn and up by 18% year-on-year.

Gross buy-to-let activity saw considerable annual increases, with values up by 39%. In addition, buy-to-let lending was at its highest level since 2007.

Increases

‘Improving economic conditions, boosted by government schemes like Help To Buy, saw the highest quarterly number of loans to purchase a home for eight years,’ observed Paul Smee, director general of the CML. ‘The market has seen a gradual upward trajectory over the past few years, rather than rapid growth and we’d expect this trend to continue with gross lending steadily increasing over the next two years.’[1]

Kevin Purvey, chairman of Intermediary Mortgage Lenders Association (IMLA), believes the next figures will show a rise in buy-to-let lending ahead of the stamp duty changes in April.

Purvey said, ‘although gross buy-to-let decreased both in volume and numbers of loans month-on-month. IMLA’s latest research shows that the government’s interventions in the private rental sector will not throw continued growth off course and we’d predict gross buy-to-let lending to reach £48bn in 2017.’[1]

[1] http://www.propertywire.com/news/europe/cml-property-lending-data-2016021811573.html

New mortgage range launched at Accord

Published On: February 16, 2016 at 12:30 pm

Author: Em Morley

Categories: Finance News

Tags: Accord,borrowers,Buy-to-Let,landlords,mortgages,remortgages

A new mortgage range has today been announced at Accord Mortgages.

The firm has brought in a new five-year fixed rate residential range. This includes the option of extra incentives on selected products.

Options

This new range is available to borrowers with a 25% or 20% deposit and all come with a fee of £845. The range is available for purchase or remortgage and comes with reductions of up to 0.65% on currently available five-year options.

Products start from 2.49% at 75% LTV, rising to 3.39% up to 90% LTV.

New mortgage range launched at Accord

Those borrowers looking to buy a home with a 5% deposit can get a 4.49% five-year fixed rate mortgage. This is available with no product fee and £750 cashback on completion and free standard valuation. Additionally, first-time buyers will get a further £500 cashback on completion, bringing the total cashback on offer to £1,250

What’s more, there are also reductions on Accord’s three-year fixed mortgage range, with incentives for those able to raise a 20% or 25% deposit.

Value

David Robinson, National Intermediary Sales Manager at Accord, said, ‘we are always looking at ways to offer borrowers value for money and we believe that these mortgages will prove very attractive to those customers who are looking for a competitive rate with the security of knowing what the exact repayments will be for the next five years.’[1]

‘We believe these changes provide borrowers with a wide range of competitive options and will prove extremely popular with brokers,’ Robinson added.