| Mortgage funding 'must be addressed by government' Date: 24.5.2010 The new coalition government in the UK must look into the issue of mortgage funding, according to the Council of Mortgage Lending (CML). Director general of the organisation Michael Coogan made his comments following the publication of its gross mortgage lending data for April, which showed a decline of 12 per cent compared to March. He suggested it is still unclear how the Conservative-Liberal Democrat coalition will remedy the funding gap that is set to appear in the mortgage market over the next few years. "Unless funding issues are addressed, any recovery in lending may well be curtailed as the repayment date on the support schemes gets closer," explained Mr Coogan. In his view, the government must "grasp this nettle". The CML recently revealed there were 45,000 loans for house purchases agreed in March, which is 25 per cent more than there were in the previous month, while first-time buyer numbers increased by 27 per cent during that time.
Source: www.mortgage.org.uk FTBs with deposits are better off than in 2007 Date: 19.4.2010 First-time buyers who scrape together a 10% deposit are in a better financial situation now than if they had bought in autumn 2007, according to analysis from Moneynet.co.uk.
The website agrees lenders’ demands for a large deposit are making it hard for first-time buyers to access the housing market.
But it calculates that due to corrections in house prices and the raising of the Stamp Duty threshold for first-time buyers to £250,000, first-time buyers are now paying less on their mortgage payments than they would have at the peak of the market in 2007. Based on Nationwide’s house price calculator, Moneynet works out that a property worth £130,000 in Q3 2007 has now fallen 11.5% to £115,000 in Q1 2010. A first-time buyer in 2007 would have needed a 5% deposit of £6,500 and had to pay Stamp Duty costs of £1,300. This would given access to a three-year fixed rate deal with Britannia Building Society at 6.19% with a £399 fee. But although a first-time buyer in 2010 would require a higher 10% deposit of £11,500, there would be no Stamp Duty to pay. The equivalent three-year fixed rate deal has dropped to 6.03% from Nationwide with a £995 fee. This gives a monthly repayment of £675.18 for the 2010 first-time buyer compared to £812.73 for 2007’s first-time buyer. A spokesman for Moneynet says: “The lower repayments mean that borrowers would recoup the extra £3,700 upfront deposit costs in just 27 months and the total cost of mortgage payments over the term of a three-year fixed rate mortgage work out to be £4,950 lower. “Raising a 10% deposit may still be too much to ask for some would-be home owners, but if they can make the effort to save the sum required their efforts will be rewarded with lower monthly mortgage costs for the next three years at least.” But the difference between rates at 75% LTV and 90% LTV still remain stark. Data from Defaqto shows that the average two-year fixed rate deal at a maximum 90% LTV is 1.90% higher than a deal at 75% LTV, while the average two-year tracker is 2.16% higher at 90% LTV compared to 75% LTV. Source: www.mortgagestrategy.co.uk Budget 2010: Darling stamp duty switch in pre-poll move Date: 24.3.10 Darling pledges to bring down borrowing without damaging the recovery or frontline services.
Chancellor Alistair Darling has axed stamp duty on house sales under £250,000 for first-time buyers, paid for by a rise in duty on homes over £1m.
In the final Budget before the election he also delayed fuel duty rises and put a 10% tax rise on cider and alcopops. He predicted the budget deficit would be £163bn rather than the £178bn forecast, but cut growth forecasts. The Conservatives said Labour had "made a complete mess of the economy and done nothing to clear it up". Tory leader David Cameron accused Mr Darling of stealing Tory policies on stamp duty and an extra tax on strong cider. And taunting Gordon Brown he said: "The biggest risk to the recovery is five more years of this prime minister." Lib Dem leader Nick Clegg said both the chancellor and David Cameron were "in denial" about spending cuts.
In his Budget speech, Mr Darling confirmed the government would stick to a 2.2% real terms rise on spending this year but warned spending cuts after 2011 would be the "toughest for decades".
But to cut earlier, as the Conservatives were demanding, would be both wrong and "dangerous" and would risk derailing the recovery, he said. He told MPs the stamp duty cut for first-time buyers would be funded through the introduction of a new higher stamp duty band of 5% on properties costing more than £1m from April next year. He also announced that next month's increase in fuel duties will be staged. It will rise by 1p in April, followed by a further 1p rise in October and the remainder in January. Duty on beer, wine and spirits will increase as planned from midnight on Sunday, including 10% on cider, with further increases to come on high strength cider. Alcohol duties will also increase by 2% above inflation for two further years from 2013. Tobacco duty will increase from today by 1% above inflation and then increase by 2% in real terms each year until 2014. He also provoked uproar in the Commons by announcing a crackdown on tax evasion through new agreements with the governments of Dominica, Grenada and Belize - home of Tory "non dom" donor Lord Ashcroft. In a series of measures aimed at boosting business, Mr Darling announced help for advanced manufacturing and said business rates will be cut for one year from October, meaning a tax reduction for over 500,000 firms in England. He extended a six month job or training guarantee for under 24-year-olds to March 2012, and announced a one-off £270m fund to create 20,000 extra university places. Mr Darling said that stronger than expected tax receipts meant that government borrowing would be £167bn this year - £11bn down on the £178bn he predicted in the pre-Budget report in December. 'Right calls' He said that the debt would continue to fall faster than previously forecast - dropping to £74bn in 2014-15, down £8bn on his earlier prediction. The chancellor said he was standing by his forecast that the economy would grow by 1 to 1.5% this year although he slightly downgraded his prediction for next year to 3 to 3.5% compared to the 3.5% in the pre-Budget report. His forecast for the following years is unchanged. He also revealed that the £2bn proceeds of a bank bonus tax was more than three times what the Treasury forecast in his pre-Budget report.
He also unveiled a guarantee to give everyone a basic bank account, giving up to a million more people access to bank accounts over the next five years.
Mr Darling said Labour had made the "right calls" during the financial crisis and would make the right choices to secure the recovery. "The challenge now is to bring down borrowing in a way that does not damage the recovery or frontline services people rely on," he told MPs. Some of the more controversial measures in the Budget may not make it into law before polling day, which could be just six weeks away. But the planned cut in stamp duty would stay in place whoever wins the election, as it is similar to existing Tory policy. Mr Darling's announcement on duty on strong ciders and alcopops - another Conservative policy - came after ruling out a minimum price for alcohol. 'Out of steam' If the Conservatives win the election they will produce an "emergency Budget" within 50 days of taking office which could reverse many of Mr Darling's other measures. The chancellor did not unveil any new tax increases, with the new 50% top rate of income tax expected to come into force on 1 April. The chancellor also outlined plans to boost future economic growth, with billions invested in digital jobs, broadband for all, high-speed rail and biotech industries, using money from existing budgets. Labour and the Conservatives have clashed over when the government should start reducing spending to tackle the budget deficit, which is among the highest in Europe and is expected to hit about 12.6% of GDP this financial year - well above the EU target of 3%. Last week the European Commission criticised the government's plans to halve the deficit in four years, saying they were not ambitious enough. Conservative leader David Cameron has called on the government to scrap its plans to increase public spending this year and warned that without prompt action to tackle the deficit, Britain risks entering the "danger zone" of rising interest rates and falling confidence on the money markets. He said: "The choice is between a government which has completely run out of steam, completely run out of ideas, is not being honest about the mess we're in and has got no plans to clear it up, and a Conservative Party that's got the energy, the dynamism, the leadership to get the economy moving again. "That's what we need, is to get this economy growing, get things going again. And that's what our Budget will do straight after the election." Meanwhile, the Public and Commercial Services union are staging their first Budget day strike with pickets at key Westminster locations in a row over redundancy pay.
Source: www.bbc.co.uk/budget Increase in number of mortgage deals Date: 9.3.10 The number of mortgage products available for borrowers to choose from continued to increase last month. According to financial data firm Moneyfacts, there were 1,798 different mortgage products on the market by the start of March, an increase of 6% on a month ago and 68% more than one year ago. There are still very few mortgages available at 95% loan-to-value, but there has been considerable improvement in the availability of deals at 85% to 90% loan-to-value. In fact, there are 90% more mortgage products on offer for those with a 10% to 15% deposit than there were a year ago, at 489. "There are a growing number of mortgage providers who are becoming a little more accommodating with their credit criteria and this bodes well for consumers who will benefit from a growing competitive mortgage market," says Michelle Slade of Moneyfacts. "It is pleasing to see that the average mortgage rate is falling at the same time as deposit requirements are getting smaller," she adds. A number of lenders have reduced the interest rate charged on some of their mortgages in the last couple of weeks, including Lloyds, RBS, Cheltenham & Gloucester, Northern Rock and Alliance & Leicester. The cuts have been between 0.1% and 0.5%. In further evidence that lenders are loosening criteria, RBS has also hiked its maximum advance for first time buyers from £150,000 to £300,000. "The biggest reductions in interest rates have tended to be at the highest loan-to-value (LTV) levels, at 85% in particular," says Ray Boulger senior technical manager at mortgage broker John Charcol. "Increasingly in the last few weeks, some lenders have improved their offerings over 75% LTV, which is down to the consideration that it is more commercially viable - the risk is that much less," he adds. Source: www.yourmortgage.co.uk Four Sentenced For £3million Mortgage Fraud Date: 3/3/10 Herts Police, FSA & CPS successfully conclude a two year investigation into a multi million pound complex fraud case has come to a successful conclusion with the sentencing of four people involved in the scam. Dele Macaulay, Daud Macaulay and Felix Taggert were all brought to justice today (Tuesday, March 2), following a hearing at Luton Crown Court. Dele Macaulay, 39, of Palmer Drive, Bromley, was given 21 months imprisonment. Daud Macaulay, 41, of Orchid Close, Goffs Oak, received 15 months in prison, while Felix Taggert, 48, of Tythe Close, Mill Hill, London, received 12 month behind bars. Mabel Barnes, 29, of Lambkins Mews, Walthamstow, was sentenced at Luton Crown Court on Monday, February 22. She received a six month suspended sentence for two years and a prohibition order, which prevents her for applying for a mortgage. The Macaulays had pleaded guilty to fraud at a previous hearing at the court back in October 2009. Taggert was found guilty of obtaining money transfer by deception and fraud and Barnes was found guilty of obtaining money transfer by deception at Luton Crown Court on Thursday, January 21. Between 2005 and 2008, the Macaulays were responsible for a £2 million mortgage fraud. Police enquiries found that Daud Macaulay was responsible for introducing a number of people to his brother Dele, a Financial Services Authority (FSA) registered broker, who promised to obtain mortgages for them despite knowing they did not have the funds available. Working with Felix Taggert, an accountant, Dele ensured the mortgage applications were put through with false details regarding the applicants’ employment and income. These properties were then bought as investments for the applicants to rent out. The Macaulays were also involved in fraudulently purchasing a number of properties for themselves, including homes in Great Ashby, Stevenage and in Norwich. Both have admitted lying about their incomes to obtain the funds to buy these homes. Mabel Barnes has been convicted of lying on her mortgage application regarding her income to obtain a £247,495 mortgage on a property which she rented out in Great Ashby, Stevenage. Felix Taggert also lied about his income to obtain a £301,000 mortgage on his property in Mill Hill, London. Detective Inspector Paul Watts, of the Stevenage Money Laundering team, said “This has been a complex and detailed investigation and I am delighted it has reached a successful conclusion. These four people all played their part in this large scale mortgage fraud and acted dishonestly for their own selfish gains. Dele Macaulay broke the position of trust he held as a registered mortgage broker and I am pleased that he has been banned from practising. I hope this case illustrates how seriously Hertfordshire Constabulary takes mortgage fraud and the type of action those responsible can face. DI Watts continued “I would like to take this opportunity to thank all the officers involved in this case, in particular, the Stevenage Money Laundering Unit, who worked tirelessly to bring these people to justice. I am also grateful for the work of the Crown Prosecution Service and Financial Services Authority.” Hertfordshire Constabulary will now be looking to carry out a financial investigation into the assets unlawfully obtained by the Macaulays under the Proceeds of Crime Act (2002). Assets which are found to be the profits of crime can be seized by the police and a share of the value of this will go back to help fight crime. This investigation is an excellent example of the close working between Hertfordshire Constabulary and the Crown Prosecution Service (CPS). CPS Hertfordshire District Crown Prosecutor Jane Stansfield said “This case demonstrates the commitment of CPS Hertfordshire to show the public that crime does not pay. The defendants in this case abused their positions at work to lie about their earnings in order to secure mortgages and financial benefits to which they were not entitled. “Increasingly our prosecutors work closely with local communities in seeking their views on local crime and disorder priorities. As part of this, we are anxious to deconstruct the lifestyle of criminals. That is why we work closely with the Serious Organised Crime Group of Hertfordshire Constabulary to ensure that any profits from crime are ploughed back into supporting the community by providing a responsive criminal justice system.” Dele Macaulay has also been given a significant fine from the Financial Services Authority (FSA) for knowingly submitting fraudulent mortgage applications and has been banned from carrying out regulated financial services. Margaret Cole, Director of Enforcement and Financial Crime at the FSA, said “Macaulay abused his position as a mortgage broker for personal gain, but he was caught and has paid a heavy price. This fine and ban reflect the seriousness of his failings as well as the FSA’s attitude to those who abuse their approved status. “This case is also a good example of the benefits of a collaborative approach with the police. Between us we have dealt with Macaulay decisively and justice has been done.”
Source: www.policeoracle.com
| | Valuation levels hold up ahead of election Date: 4.5.2010 Connells Survey and Valuation has played down concerns that uncertainty over this week’s election has dampened down appetite in the housing market.
Its figures shows that the number of valuations carried out by Connells dropped 4% in April compared to April 2009.
But its data also shows that for the three months to April Connells actually saw a 3% boost in total valuation activity compared to the previous three months. There were 43% more valuations year-on-year. Ross Bowen, managing director of Connells Survey and Valuation, says: “The housing market has continued to recover steadily. “There were concerns that in the build-up to the election, buyers and sellers would be distracted and sit on their hands - but that hasn’t been the case. “Confidence is returning and this has been helped by marginal improvements in mortgage availability and news of the doubling of the stamp-duty threshold.” Connells saw a surge in the number of sellers requiring valuations with 37% more valuations carried out in Q1 compared to the previous quarter. Valuations for buy-to-let and remortgages also fared well, up 59% and 36% respectively. But first-time buyer activity has been hit in the past three months, down 32% against the previous three months. Bowen adds: “With the abolition of Home Information Packs on the political agenda, there was a concern that many sellers would to wait to see whether they might save money as a result of new government policy. “We have also seen the trend of house price inflation continue from the trough in February 2009. “Current homeowners have seen their properties regain the value lost in the downturn, and see now as a great time to move.” Source: www.mortgagestrategy.co.uk Tenant enquiries jump by almost 50% Date: 21.04.2010 Countrywide has seen a stark rise in the number of applicants registering to rent between January and March, with a 48% increase in the number of tenant enquiries.
The letting agent and property services company registered 48,332 new tenants in Q1, up 36% from the same time last year.
March alone has seen the highest number of tenant registrations at Countrywide since 2004.
According to Countrywide, on average there are now 4.9 tenants competing for every property compared to 2.9 tenants in January 2010.
John Hards, co-managing director at Countrywide Residential Lettings, says: “Demand for rental properties has rocketed over the last few months and the shortage of properties is pushing up demand across the country. “Buy-to-let landlords are using this as an opportunity to increase their property portfolios as rental yields improve in key locations, which is helping with the severe shortage of supply in many locations.” In the South West competition for two-bedroom properties is tough, with 10.5 tenants vying for each property. Two-bedroom properties are demand in the South East as 6.8 tenants compete for every available property. Meanwhile three-bedroom homes are most in demand in the North West with an average of 3.6 tenants to each property. Source: www.mortgagestrategy.co.uk
Some 276 households helped by Mortgage Rescue Scheme Date: 11.2.10 Figures out today show the government’s £285m Mortgage Rescue Scheme has helped 276 households since it launched in January 2009.
Some 182 households accepted an offer through the scheme in Q4 2009, more than double the amount that accepted an offer between January and October.
In Q4 there were 1,294 “live” applications - where action has been taken to stop the immediate threat of repossession.
Some 15,232 households approached their local authority with mortgage difficulties in 2009, 4,310 of which were in Q4 2009.
There were also 1,785 applications specifically for the Mortgage Rescue Scheme during Q4 2009. The scheme was launched by housing minister Margaret Beckett and is designed to help up to 6,000 households avoid repossession over the next two years. The mortgage rescue package has two elements, it offers shared equity
for those who have experienced payment shocks and need some help in paying their mortgage. The government also offers a “Government Mortgage to Rent
” which means the registered social landlords will buy a home for 97% of its market value. The homeowner stays in their home and pay rent to the RSL as their tenant. The rent will be 20% less than the market rate for the area. John Healey, housing minister, says: “More than 15,000 households have received free advice from their local authority since January 2009, with over 1100 receiving tailored information, or referral to their lender or independent money adviser between October and December. “In the last three months, over 9,000 cases facing legal action were seen by court desk advisers, of which over 7,500 had the immediate risk of losing their home lifted - meaning four out of every five struggling households advised were able to stay in their homes beyond the hearing. “And the last resort Mortgage Rescue Scheme has helped 1200 households stop the immediate threat of repossession, with a further 544 accepting an offer from a Registered Social Landlord to sell and rent back their property so they could stay in their homes. “A total of 276 homeowners have been helped since the scheme’s launch last year.” Wheathampstead (Hertfordshire) Surveyor Accused of Massive Mortgage Fraud Date: 5/1/10 A SURVEYOR from Wheathampstead (Hertfordshire) is among six charged on suspicion of committing a £50 million mortgage fraud. Ian McGarry, 40, from Nomansland, was a chartered surveyor at London commercial property company Dunlop Haywards Lorenz when the alleged offence took place. Following an investigation by the Serious Fraud Office which lasted well over three years, McGarry was charged in December with the offences of conspiracy to obtain a money transfer by deception and dishonestly obtaining a money transfer in December. He appeared at Southwark Crown Court on Monday for a preliminary hearing. It is alleged that the six defendants committed fraud by dishonestly obtaining loans from banks or building societies that were secured on six commercial investment properties. Each property was allegedly transferred between companies controlled by one of the defendants and his associates at highly inflated prices in a series of back-to-back transactions. On the basis of those prices, fraudulent valuations and forged leases were allegedly made before the defendants secured mortgage advances totalling nearly £50 million. The mortgages were allegedly defaulted on and the lenders suffered significant losses. McGarry will appear at court again in March and has yet to enter a plea. Surprise jump in asking prices Date: 15.2.10 Sellers have pushed up asking prices by 3.2% over the last month, the highest monthly rise in asking prices since April 2007. Rightmove’s House Price Index for February shows that average asking prices increased by over £7,000 over the last month, going from £222,261 in January to £229,398 in February. Miles Shipside, commercial director at Rightmove, says the rise is unexpected given the difficult outlook for the UK economy. Source: www.mortgagestrategy.co.uk Repossessions falling in prime and sub-prime market
Date: 17.2.10 Repossessions across both the prime and sub-prime sectors stabilised in December, according to Moodys.
The latest indices from Moody's Investors Service on the UK prime and sub-prime residential mortgage-backed securities (RMBS) market revealed that the trend for sub-prime repossessions fell to 1.7% in December from 3.5% in December 2008. The proportion of sub-prime arrears by over three months was at 19.7%, a small increase from the 19.4% rate six months ago but up from the 13.7% recorded at the same time in December 2008. The number of prime arrears by over three months rose slightly from 1.8% in November to 1.9% in December. Redemptions reached 1.5% in December 2009, which compares with 1.3% in December 2008. The total redemption rate fell into single digits, recording 9.7%, which is substantially below the 20.7% recorded in December 2008 and 31.9% in December 2007. However, Moody's outlook for the UK residential mortgage backed securitisation (RMBS) market is negative as it expects the unemployment rate to continue to increase in 2010, peaking at 8.6% in Q2 2010. It expects the continuation of low interest rates for most of 2010 will support households and help to contain the number of repossessions. It said the current weak but stable performance of the UK non-conforming market is largely in line with economic forecasts. It also believes the property market will resume falling in coming months and continue doing so until late 2010. Source: www.mortgagesolutions-online.co.uk Valuers fuelling mortgage fraud increase Date: 1.3.10 CIFAS - the UK’s fraud prevention service, says for the first time since 2006 there is a year-on-year increase in mortgage fraud, which it partly blames on valuers.
Its report - Fraudscape, shows a 0.20% increase in mortgage fraud in 2009, which it says indicates that serious organised fraudsters are seeing a recovering housing market as an attractive proposition.
In turn, they are making more attempts to profit by using deception to purchase a property and then sell it on at a higher price. It says: “A very real problem is that this is with the assistance of intermediaries like valuers to help make sure that they buy low and sell high. “There are elements of organised mortgage fraud that are not specifically related to the value of the property being mortgaged. These frauds can involve the use of corrupt solicitors, and revolve around the mortgage lender releasing the funds, which are then pocketed by the criminal.” Its says the most opportunistic mortgage fraudsters tell lies on their application to make themselves seem capable of repaying a mortgage that they may not be able to afford - but with the intention of repaying the mortgage and keeping the property. Misuse of facility fraud increased 95%, up from 82 in 2008 to 160 in 2009, with identity fraud also increasing 75% up from 92 cases in 2008 to 161 in 2009. The increase in the number of misuse of facility cases indicates that making mortgage payments has become a struggle for more people. The most common offence relating to misuse of facility fraud is the paying in of cheques that they know will bounce and electronic payments that they know will be recalled. Mortgage application fraud decreased by 5.21% in 2009, down from 2,824 in 2008, to 2,677. When application fraud was identified for an all-in-one product, the fraudster was most frequently attempting to hide adverse credit information (by failing to disclose an address that they were required to provide). In 2008, this accounted for 65% of application frauds whereas in 2009 this has increased to over 74%. This increase is probably a reflection of the indebtedness of the UK population as well as the economic climate. Overall, total frauds increased by nearly 10% in 2009 compared with 2008. Peter Hurst, chief executive of CIFAS, says: “At a time when every responsible member of society feels the strain of current economic conditions, the findings presented in Fraudscape not only reveal the true nature of the frauds identified but also reveal many of the problems and challenges ahead. “This, however, is only the tip of the iceberg. Over and above the frauds recorded by CIFAS Members, there is an additional and unquantifiable volume of fraud that, due to tighter lending criteria, never got as far as the fraud department.” Source: www.mortgagestrategy.co.uk Valuations up 61% in February Date: 1.3.10 The number of valuations on residential housing grew 61% in February, compared to the previous month, according to the latest research by Connells Survey and Valuation.
The positive trend of year-on-year increases also continued, with the number of valuations conducted in February up by 22% on the number a year ago. Activity has now grown year-on-year for six months in a row.
The increase in activity has been fuelled by first-time buyers. In February, 63% more first-timers requested a valuation than in January - boosting the number above levels seen a year ago. There was also a substantial month-on-month rise in valuations conducted for current home owners looking to move +43%. Remortgaging and buy-to-let activity also surged upwards - valuations for buy-to-let investors rose buy 81%, and remortgaging levels doubled compared to January. However, this was from a low base. With mortgage finance conditions still difficult, remortgaging valuations were less than 30% their level in February 2008. Buy-to-let was 30% lower than 2008. Ross Bowen, managing director of Connells Survey and Valuation, says: “Traditionally, the valuations market begins to see a boost in activity in January following the Christmas lull. January witnessed a hangover from re-instating the lower Stamp Duty threshold while the arctic weather conditions disrupted some buying activity. However, February saw househunters back on to the streets in force, with activity bouncing back as a result.” He adds: “In January, we saw first-time buyer activity drop off slightly compared to December. Many first-timers had rushed to make their transactions before stamp duty holiday ended. In February, demand bounced back. “Consumer confidence has been buoyed by nine months of rising house prices, and more and more people are considering buying a home. Homeowners have seen their properties reclaim much of the value lost during the downturn. Many who previously delayed see now as the right time to move properties.” Source: www.mortgagestrategy.co.uk | | House prices dip 0.1% in April Date: 7.5.2010 House prices fell by 0.1% last month according to the Halifax house price index, following a 1% increase in March.
The average house price now stands at £168,202, 6.6% higher than the same time last year but 16% below the peak of August 2007.
Halifax says that the improvement in house prices since April 2009 has encouraged more sellers to come to the market. Martin Ellis, housing economist at Halifax, says: “The underlying rate of house price growth has slowed in recent months following the relatively sharp rebound, albeit from a low base, in the second half of 2009. “New sales instructions have risen, helping to push up the stock of unsold properties in recent months. “As a result, the imbalance between supply and demand is easing somewhat. “Our view is that house prices will be flat during 2010 as a whole.” Source: www.mortgagestrategy.co.uk More tenants struggling to pay rent Date: 10.2.10 The Association of Residential Letting Agents has reported that over half of its members have seen a rise in tenants who are struggling to pay their rents.
The latest survey from ARLA, which collates data from 733 letting agents and information from lenders.
Mortgage Express and Paragon Mortgages, shows that 55% of members in Q4 reported that tenants are having trouble making rent. Although this represents a drop compared to the previous three months, ARLA says this figure is still worryingly high. Ian Potter, operations manager at ARLA, says that if unemployment rises this year it is inevitable that the number of tenants forced to default on their rent will also go up accordingly. He says: “The housing market looks increasingly buoyant with demand for rental properties having risen strongly since October. “The problem of rental arrears will therefore persist and potentially grow in seriousness as tenants get caught in a web of debt.” Tenants missing their rent has the knock-on effect of a threat of eviction and landlords defaulting on their mortgage repayments. ARLA wants the government to create uniform legislation to help cultivate the improving housing market and protect both consumers and landlords. Buy-to-let lending falls to eight-year low Date: 09.2.10 The number of buy-to-let loans advanced during 2009 has dropped to its lowest level since 2001, figures from the Council of Mortgage Lenders reveal. There were 93,500 buy-to-let loans for 2009 as a whole, down 58% on the 222,700 buy-to-let mortgages advanced in 2008. Buy-to-let lending represented only 5.9% of all lending in 2009, compared to 10.7% in 2008. The total value of outstanding buy-to-let loans accounted for around 11.8% of the mortgage market. Gross buy-to-let lending was £8.5bn, down from £27.2bn in 2008. But the figures from the CML also show that buy-to-let lending seemed to pick up towards the end of last year, albeit from a low base. New buy-to-let lending increased for the second consecutive quarter in the last three months of 2009, with 25,800 new loans advanced in Q4. This is up from 23,700 in Q3 but down from 38,000 from Q4 2008. Between October and December gross advances totalled £2.4bn, an increase of £300m from the previous three months but down £1.6bn from the same period in 2008. All types of buy-to-let lending increased in the last three months of 2009. For 2009 as a whole, 60% of buy-to-let lending was for house purchase, compared to just 46% in 2008, which the CML attributes to an ongoing demand among investors to increase their portfolios if finance is available.
Buy-to-let arrears have improved from the levels seen in Q4 2008, going from 32,900 to 20,700 in Q4 2009.
Overall in 2009 there were 5,700 possessions, equating to 0.46% of the total book, and on a level with the 0.42% annual possession rate recorded for the wider mortgage market. Michael Coogan, director-general at the CML, says: “The figures show that the buy-to-let market continued to improve, albeit slowly, throughout 2009, and we are encouraged by this recovery. The new business market remains well below previous levels though, and below the level of activity which is needed to enhance a vibrant private rental sector in the UK. We are concerned that future, wrongly directed, regulation may actually prevent buy-to-let playing its vital role in providing good quality homes and wider housing choices for people who cannot afford home ownership or do not qualify for social housing.” New buyer enquiries soar 82% at Countrywide Date: 15.2.10 Countrywide Estate Agents, the UK’s largest estate agency network, saw new buyer enquiries rise by 81.7% in Jan 2010, compared to December 2009. Property instructions also rocketed by 107% in January 2010, compared to December 2009, with house sales increasing by 20% in January 2010 compared to the previous year. Grenville Turner, chief executive of Countrywide, says the final weeks of the Stamp Duty holiday in December pushed through hundreds of sales but a new wave of buyers and sellers have come through in 2010, which has caused a sharp increase in demand. Source: www.mortgagestrategy.co.uk Will house prices keep rising or fall again in 2010? Date: 9.12.09 By Ian Pollock. Personal finance reporter, BBC News
People who have been letting their homes may start selling them in 2010.
For close observers of the UK's property market, 2009 was a big surprise.
Contrary to almost everyone's expectations, prices started rising in the spring and have kept on going pretty much every month since then. According to HM Revenue & Customs (HMRC) completed sales rose steadily too, from the rock-bottom level of just 41,000 in January to 90,000 in October. The Nationwide building society estimates that if prices remain unchanged through December, then they will end the year nearly 6% higher than they started it. "I am very surprised," says the Nationwide's economist Martin Gahbauer. "At the start of the year I would have said there was next to no chance of that happening," he says. "I thought there was every chance that 2008 could have been repeated." About-turn The sudden change in direction brought an end to the sharp downturn of the previous 18 months, in which the banking crisis led to a slump of about 20% in the value of the average UK home.
Employment has been slow to fall, so there has been no drip-feed of forced sellers Ed Stansfield, Capital Economics Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics), has been equally surprised by this about-turn.
"Prices could have fallen further, but government policy has been successful, combined with low interest rates," he says. "The rise in unemployment has been only half the level seen in the recession of the early 1990s, which has stopped some distressed stock coming on the market." The key factor was probably the Bank of England's decision to take its base rate all the way down to 0.5% by March 2009, in an attempt to stave off the recession and keep the banking system afloat. This lifted a huge financial burden from millions of home owners, some of whom would otherwise have fallen behind with their mortgage payments and then been threatened with repossession. Ed Stansfield of Capital Economics highlights other factors. "The big influence was the relative resilience of labour markets - employment has been slow to fall, so there has been no drip-feed of forced sellers," he says. No forecast A year ago the Council of Mortgage lenders (CML) decided not to make a public forecast of house prices for 2009.
For Sale signs have reappeared as sales pick up
Its spokesman Bernard Clarke thinks that decision, repeated this year, has been fully justified. "It's a vindication of our decision not to forecast in such a volatile market," he said. "No-one forecast the rise this year and it is difficult with such a thin volume of transaction to do something that is reliable." So what about 2010? Will prices continue their upward path, slow down, or even fall again? Jonathan Davis, of financial planning firm Armstrong Davis, is certain that the past year has simply been a false dawn. "There has been an unprecedented level of government stimulus to the economy which has had a positive short-term effect - low interest rates, bank bail outs, the car scrappage scheme and the VAT cut," he says. "Take away all that and there's nothing holding up the economy," he says. Uncertainty Mr Davis is sure house prices will fall again this coming year by another 10%-15%, mainly in the second half.
I'm looking for an improvement in the number of transactions, but it still doesn't seem like a normal sort of market Martin Ellis, Halifax "The general election, tax rises, government spending cuts and unemployment above three million - all this will mean a significant rise in repossessions, both residential and buy-to-let," he predicts.
None of the other commentators we asked is as certain that prices will tumble sharply once more. Ed Stansfield comes closest, believing that house prices are still overvalued and could fall by 10% next year, if unemployment keeps on rising. But even he is hedging his bets. "Prices will fall back, the gains this year don't have a lot of foundation," he says. "But if firms continue trying not to shed labour it is conceivable prices would flat-line or even keep on rising." Martin Ellis, economist at the Halifax, thinks the prospects for next year are hard to judge, but he is forecasting that prices will be flat over the whole of the year. "It depends on the economic recovery, which currently is sluggish," he says. He thinks prices may be held back if more properties are put up for sale, with sellers encouraged by the price rises seen this past year. "I'm looking for an improvement in the number of transactions, but it still doesn't seem like a normal sort of market," he says. Stabilisation Martin Gahbauer at the Nationwide has a similar outlook on prices, though he believes the recent price increases should no longer be seen as a blip. "After seven consecutive months of rises, a stabilisation trend has been established, but I see prices flattening out, with prices by December 2010 about the same as now," he predicts. And Simon Rubinsohn at Rics agrees that more properties will come onto the market, with some people who had been letting their homes now choosing to sell. "Looking at our monthly survey and the momentum in the market I still see price rises in the early part of the year, but I don't see prices continuing to rise through the whole of next year; they may flatten out." Of all our commentators, Ray Boulger of mortgage brokers John Charcol stood out as the most confident that prices would pick up sooner rather than later. He too was surprised by how quickly that happened and he thinks sales and prices will stay on that path in 2010. "There will be a difference between the various indices, but I think the Nationwide will show a 4% rise next year and the Land Registry, which lags behind it, a 9% rise, catching up on some of the increase recorded by the Nationwide this year," he says. What seems unlikely to change much is the supply of mortgage funds to potential borrowers. Most first time buyers still need to put down a 25% deposit and just under two thirds of all mortgage deals on offer still specify this. "It [mortgage rationing] is easing somewhat but it is a slow process," says Bernard Clarke of the CML.  Mortgage boost for first-time buyers
Date: 3.2.10
The number of mortgage deals was squeezed in the credit crunch.
The availability of mortgages is on the rise, providing a glimmer of hope for first-time buyers, figures suggest.
The number of home loan deals on the market in the UK has jumped in the last month and the trend in lenders relaxing their criteria has continued. The number of deals on offer is up 20% compared with the start of the year, figures from financial information service Moneyfacts show. Some of these include deals requiring a relatively small deposit of 10%. First-time buyers The fall-out of the credit crunch has been felt particularly hard by first-time buyers who have needed significant savings to get on the property ladder.
We will see a bit more activity in the market this year
Ray Boulger, John Charcol mortgage brokers
Many have turned to their parents for financial assistance, although the debt risks associated with taking high loan-to-value deals has fallen. Mortgage providers have started to become more generous with their criteria since October, when 66% of deals on offer required a deposit of at least 25%. This figure fell to 61% at the start of January, and fell further to 58% at the start of February. The availability of mortgages could have been affected by recent property price rises, making the deals less of a risk for lenders. Competition The number of deals on the market - some 1,700 - is the highest since November 2008 and suggests there is more competition in the market. This trend could continue if lenders start to raise the cost of their variable rate deals and pick certain mortgages to promote to those who might be considering remortgaging. "Better rates and an increase in appetite to lend could indicate that lenders are opening their doors just a little wider and trying to compete for business," said Darren Cook, of Moneyfacts. "If standard variable rates continue to rise, many customers will be forced to find a better deal elsewhere and lenders may now be wise and gearing towards the prospect." Ray Boulger, of mortgage broker John Charcol, said: "It is a continuation of the trend we have seen for the last three or four months, none of the cuts have been massive, with lenders cutting a few selected rates rather than all of their rates. "The reason for the trend is due to a bit more competition in the market. We will see a bit more activity in the market this year." | |