News

Home sales hit three year high – 1 million expected to move in 2013

The Royal Institution of Chartered Surveyors has just published its latest survey of house buying in the UK, using data up to the end of March 2013. Its findings are that activity in the housing market has hit a three year high, fuelling hopes that it may underpin an economic recovery in the coming year. Chartered surveyors handled an average of 17 home sales during the first quarter of 2013, the highest number reported since Spring 2010.

In a separate report, the Ernst & Young Item Club, which uses the Government’s economic models to make its forecasts, has predicted that the number of people moving house this year will increase 7.5% to 1 million. In 2014, with the introduction of the Help to Buy scheme, where £12 billion of taxpayers’ money will be used to underwrite up to £130 billion of mortgages, a further increase of 7.8% is expected, resulting in 1.08 million home moves. Home buyers are expected to be helped further by falling new mortgage rates, due to the Bank of England’s Funding for Lending Scheme, introduced last August.

Peter Spencer, chief economic adviser to the Item Club, said: "With export markets continuing to disappoint, the chancellor has focused his firepower on the home front. And the timing couldn't have been better. Real incomes are already starting to recover, mortgages are becoming more readily available, and homes are more affordable as the house price to earnings ratio continues to fall.”

If you are thinking of moving up the property ladder in 2013 and are looking for the best mortgage deal, you should contact an independent mortgage broker who will compare the most competitive mortgages on offer for your financial circumstances.

Interest-only becoming a niche product, arranged by specialist brokers

Following similar moves by other high street lenders as Nationwide and Royal Bank of Scotland, Yorkshire Building Society and HSBC this week joined those that no longer offer interest-only mortgages to borrowers. Yorkshire’s decision applies to all of its brands such as Chelsea Building Society and Accord Mortgages, but it will still offer interest-only buy to let mortgages via Accord Mortgages.

HSBC also announced that it will now only offer interest-only mortgages to its premier banking customers who have savings of at least £50,000 or earn at least £100,000 annual income. A spokesperson for HSBC said that the decision had been made in advance of the Mortgage Market Review, which is expected to classify interest-only mortgages as a ‘niche product’, coming into effect from April 2014.

This clamp-down on this type of lending has come about because there are thousands of mainstream borrowers in the UK who have interest-only mortgages but no effective way of repaying them. Whilst interest rates remain low, this does not constitute a problem, but in the long term it is not good for the UK property market. The Financial Services Authority (FSA) – to be replaced by the Financial Conduct Authority (FCA) in April - is trying to make sure that this situation does not happen again in the future by issuing guidance to lenders, requesting them to look carefully at how interest-only loans will be repaid and to ensure that such lending is not unacceptably risky. Some lenders are responding in a knee-jerk fashion and withdrawing all their interest-only mortgage products for the time being, on the grounds that the FSA has not defined exactly what ‘unacceptably risky’ is.

Interest only lending has its place, especially for the self employed, company owners, young professionals and those whose only route into home ownership is with an interest only loan, but, it is a higher risk for lenders and a product that is fast becoming niche rather than mainstream. There is now a great opportunity for niche lenders who are prepared to understand and correctly manage the risks of interest only lending. There are interest only solutions – offered by specialist lenders - to be found at good rates through specialist private finance brokers.

Spring comes early to the UK housing market

Hometrack (www.hometrack.co.uk) the property analytics business, has just released its latest figures for the UK housing market and they show that February saw a seasonal upturn in sales agreed, demand and an increase in the supply of homes for sale. Headline prices grew by 0.1%, which is the first time that values have grown for nine months – since May 2012.

However, as we have pointed out before, there are significant variations across the country, with 14.8% of postcodes registering price rises, while 8.0% of postcodes saw prices fall. London and the Home Counties are the drivers of house price growth while prices are under downward pressure in northern regions.

Of those markets registering a price rise, 74% were in London and the South East. Almost half of London postcodes (48%) registered an increase in values over the month. In the South East 26% of postcodes registered price rises.
New buyers registering with agents over February increased by 14% - a level consistent with previous years – showing that this sector of the market is beginning to move as a result of the Government’s Funding for Lending Scheme.

The number of new properties coming to the market in February rose by 8.7% - albeit off a low base - and lack of supply and rising demand means that prices in areas where there is the greatest mismatch between buyers and sellers are seeing the strongest price growth.

If you are thinking of moving up the property ladder in 2013 and are looking for the best mortgage deal, you should contact an independent mortgage broker who will compare the most competitive mortgages on offer for your financial circumstances.