News on the general housing and mortgage market
An Improvement in First Time Buyer Numbers!
The number of first time buyers able to get themselves a footing on the property ladder has been something of a sore point in recent times, with the fall of the market in 2007 and 2008 building a hurdle that many have struggled to battle over ever since.
However a recent survey of lenders found that their ‘risk appetite’ is returning and they are planning to make mortgages more readily available and hand out more low deposit deals in the coming months. Read more
Remortgaging at Low Levels.
Before the credit crunch borrowers were actively encouraged to switch to a better deal every few years, but the tide turned during the recession.
Many borrowers were content to sit on their lender’s cheap standard variable rate (SVR), especially after they plummeted as a result of cuts to the Bank of England’s Base Rate.
However, it now seems that home owners choosing to remortgage currently are able to take advantage of some excellent rates from lenders thanks to the government’s Funding for Lending Scheme which has encouraged competition in the remortgage market.
Therefore some experts expect to see more home owners taking advantage of this over the coming months.
There are now dozens of new deals available at less than 3 per cent interest, which is significantly lower than the average standard variable rate of 4.86 per cent. So while it may not have been worth switching a mortgage a year or so ago, it’s certainly worth checking out the deals on offer now.
Figures from the British Bankers’ Association (BBA), the industry’s trade body, showed that just 13,696 remortgages were approved during January 2013
Although in April this year new figures showed that remortgage lending volumes increased by up to 17 per cent which is up from the £2.9 billion recorded in March to reach £3.3 billion and represent the highest proportion of total lending since October 2012, according to property services company LMS.
Data has also reveals that two thirds of home owners remortgaging their property did so in order to take advantage of better rates.
Total equity withdrawal from remortgaging stood at £454.5 million in April, up £20.2 million on the £434.3 million figure for March 2013.
However, according to recent figures from the Council of Mortgage Lenders (CML) remortgaging levels remain muted as last year saw the lowest number of borrowers choosing to refinance since 1997.
In 2012, remortgaging accounted for 316,000 loans worth £41 billion while in 1997 there were 293,000 loans worth £14 billion.
These figures suggest then that remortgaging is at a 15 year low.
This analysis comes despite a flurry of record breaking low mortgage rates and signs that lenders are becoming increasingly willing to grant mortgages.
David Hollingworth of mortgage broker London & Country said “banks were still offering many of the best remortgage deals, so the figures were likely to be a fair reflection of home owners’ appetite for switching loans”.
Mark Harris, chief executive of mortgage broker SPF Private Clients, added “It may
be that some home owners are holding off waiting for rates to fall further before taking the plunge. However, rates should be looked at in a historical context: two year fixes for less than 2 per cent and five year fixes for less than 3 per cent are by far the best rates we have ever seen.”
In conclusion it appears that these particular figures reflect just how dependent the high street lenders are on government support.
More Opportunities for First Time Buyers.
Recent months have seen a flurry of mortgage rate cuts by lenders, including on higher loan to value deals, and the figures suggest first time buyers are being tempted into the market.
Mortgage availability has increased sharply and lenders have been slashing their rates since the Government launched its Funding for Lending scheme last August. Read more
A mortgage default is a situation in which someone is not making payments on his or her mortgage, and the loan is considered to be “in default,” meaning that the lender who holds the mortgage can choose to take over the property.
Meaning that defaulting on a mortgage can result in the loss of a family home and it should therefore be avoided at all costs. Read more
Second Steppers Struggle Too!
In the years before the financial crisis it was almost guaranteed that property would go up in value enough to move in to a second, larger home however, many home owners have now found that their homes just have not increasing in value enough to fund this move.
It seems that stagnant and decreasing property prices across the country and the high costs involved with moving have meant that too many people are unable to move house.
Second Steppers are a subset of home movers and refer only to those looking to get on the second rung of the housing ladder.
Many second steppers bought their first home around the height of the property boom, meaning that they might have struggled to move on as they have little or no equity left in their property.
According to a new report by the Post Office almost one in three homeowners are unable to move up the housing ladder because of the high costs involved.
A recent report has found that home owners trying to take their second step on the housing ladder have seen their trading up costs more than double over the last decade.
It appears then that Home owners looking to take their second step on the property ladder are facing the toughest market conditions for over a quarter of a century as home affordability for second steppers is less favourable than for first time buyers.
The current affordability position for second steppers is similar to much of the 1990s when falling house prices in the first half of the decade and weak house price growth thereafter, adversely affected levels of equity.
Home affordability, negative equity, higher deposits, lack of buyers and cost of moving are just some of the challenges this group of home movers face.
Suren Thiru, housing economist at LloydsTSB, said“The current problems facing second steppers have serious implications for the wider housing market, creating a bottleneck that significantly limits the number of homes available to first-time buyers as well as stopping many homeowners who need to move, possibly for family reasons, from doing so.”
Lenders Sign Up To Help to Buy Scheme.
The budget in March saw the announcement of the help to buy scheme. The scheme offers equity loans up to 20 per cent to new build home buyers, who must then contribute a deposit of at least 5 per cent on properties valued at up to £600,000.
Help to Buy is intended to be a dramatic intervention to get the housing market moving. The initiative is however an extension to existing government programme New Buy. Read more
New Mortgage lenders Could Mean Rates Fall to New lows!
Is seems that many current mortgage holders would welcome new lenders entering the mortgage market as they believe that they will focus more on customers needs compared with traditional lenders.
According to new research from housing investment and equity loan provider Castle Trust, 82 per cent of home owners want more to be done to make it easier for new lenders to enter the mortgage market. Read more