Latest property news from the industry

Friday 21st August 2009

Gross mortgage lending shot up by 26% in July. Although lending totalled £16bn in July (compared with £12.7bn in June) the figure was still the lowest July lending figure since 2001, and lower than the July average over the last seven years of £27bn. It was also down 36% from July of last year, when £24.9bn of mortgages were lent. The Council of Mortgage Lenders said that while there was further evidence of a modest improvement in the housing market, activity remains subdued by any historical comparison but it was still some good news.

August 2009

Rightmove, the UK's number one property website, reported that average asking prices fell by 2.2% (£5,102) as summer sellers price more realistically and ‘marginal’ buyers search hard for property that meets their restricted loan parameters, whilst the ‘creditworthy’ trawl for a limited supply of quality homes. New sellers in August are 48% below pre-credit crunch numbers as tight mortgage lending criteria continues to restrict transactions and stifle property coming to market. However, sentiment continues to improve as 75% of home movers don’t expect prices to fall in the next 12 months.

14th May 2009

While borrowers still need large deposits to be able to enter the market, and overall lending remains constrained, both first-time buyers and home movers are benefiting from the lowest debt servicing costs since 2004, according to the latest monthly lending survey from the Council of Mortgage Lenders. House purchase lending accounted for 35% of all mortgage lending in March, up from 31% in February and the highest proportion since December 2007. Remortgaging, on the other hand, still accounted for a higher number of loans in March, but the number was only 8% higher than in February and 45% lower than in March 2008.

Within house purchase lending, first-time buyers accounted for an increasing share - 40% of loans, up from 38% the previous month. This is the highest proportion since April 2005, although the absolute number of first-time buyers remains low - 12,500, up from 9,200 in February but well below the 17,800 recorded in March 2008. There were 18,900 home mover loans in March worth £18.9 billion, up from £14.9 billion in February - an increase of 27%, but still 34% down on March 2008.

Whilst lending criteria still remains conservative there are however some good signs and Abbey has today announced it is to increase the loan-to-value (LTV) on all its popular 2, 3 and 5-year fixed rate mortgages that had been available at 60% LTV to 70% LTV. The new deals will have the same price but by increasing the LTV, will be accessible to more borrowers.

The Budget 2009

On 22nd April 2009 the Chancellor confirmed an extension until the end-of-the-year for the stamp duty holiday on properties sold for under £175,000.

The government is to introduce a scheme that guarantees securities backed by mortgages, they will also will be giving an extra £80m to the HomeBuy Direct shared equity mortgage scheme, and they will be giving an extra £500m in financial support to help re-start building projects.

5th March 2009

The Bank of England has cut interest rates to 0.5% - a fresh all-time low - and said it was now boosting the money supply to help revive the economy. Interest rates have now been reduced six times since October, and the latest half a percentage point cut from January's 1% had been expected.

5th February 2009

The Bank of England has cut interest rates by 0.5 percentage points to 1.0% from 1.5%. The new 1.0% rate is an all time low. Mortgage customers on tracker deals are benefiting substantially from the recent rate reductions and those coming off fixed rate deals are now starting to benefit too because in a lot of cases the variable rates that they switch over to are lower. New borrowers are still struggling to secure good mortgage deals if they have a small deposit.

8th January 2009

The Bank of England has cut interest rates by 0.5 percentage points to 1.5% from 2%. The 1.5% rate is the lowest level in the Bank's 315-year history as it continues efforts to aid an economic recovery. Most mortgage customers with tracker deals will automatically have the cut in interest rates passed on to them by their bank or building society but those on standard variable rate deals must wait for a decision from their lender, most of which are currently saying their rates are under review.

4th December 2008

The Bank of England’s Monetary Policy Committee today voted to reduce the official Bank Rate paid on commercial bank reserves by 1.0 percentage points to 2.0% from 3.0%. Interest rates are now at their joint lowest point in the history of the Bank of England with the same rate only available over 150 years ago in 1852.

6th November 2008

The Bank of England’s Monetary Policy Committee today voted to reduce the official Bank Rate paid on commercial bank reserves by 1.5 percentage points to 3.0% from 4.5%. Interest rates are now at a 53-year low after the Bank's biggest cut since 1981.

8th October 2008

A day earlier than expected, The Bank of England’s Monetary Policy Committee today voted to reduce the official Bank Rate paid on commercial bank reserves by 0.5 percentage points to 4.5% from 5.0%. The previous change in Bank Rate was a reduction of 0.25 percentage points to 5.0% on 10 April 2008.

Daily Telegraph - 3rd October

At the start of the week there were 3,983 home loans available on the market, but this had fallen to 3,402 by the end of business on Friday, the lowest number ever recorded by MoneyFacts, the personal finance research publisher. The data also shows that the average cost of a mortgage has increased in the last week. The most popular deal with homeowners – a two-year fixed rate deal – has increased from 6.26 per cent to 6.33 per cent.

Michelle Slade, at MoneyFacts, said: "I am shocked by how quickly rates were pulled following the nationalisation of Bradford & Bingley on Monday. "For the last couple of months rates have been slowly improving and more lenders have returned to the market. It is quite alarming how quickly the market had deteriorated once again."

The figures pile further pressure on the Bank of England to cut interest rates when they meet next week, with some leading economists predicting the bank could take the radical step of slashing rates from 5 per cent to 4.5 per cent. "We've got a severe financial crisis that has worsened in the past week and clear signs the economy is falling off a cliff," Michael Saunders, chief European economist at Citigroup, said. "The balance of risks has shifted decisively to the downside." His bank, along with three other leading investment institutions, predicts a half-point reduction. If the Bank does implement such as drastic cut it would be the first time it had done so since November 2001, in the aftermath of the September 11 terrorist attacks.

Separate data highlighted the fragility of the consumer economy, with figures showing the families were starting to pay back more on their mortgages than at any time since at least 1970. Over the last three decades families have frequently cashed in on the rising value of their homes by re-mortgaging, and then using the money to fund holidays, new cars, school fees or other big purchases. Housing equity withdrawal, as it is technically called, is one of the most important drivers of the economy because the money unlocked from property is then ends up boosting consumer spending. However, in the second quarter of the year housing equity withdrawal turned negative for the first time since 1998, according to the Bank of England.

Families, in effect, paid back a total of £2.76 billion on their mortgages, the largest ever amount since at least 1970, when the Bank of England started compiling figures. With cheap mortgages increasingly hard to find and house prices falling sharply, most families would have found it impossible to re-mortgage their house in order to release equity. Howard Archer, chief UK economist at Global Insight, said: "Higher mortgage rates, markedly tighter credit conditions and falling house prices have increasingly reduced the attractiveness of, and scope for, housing equity withdrawal." "This reinforces our belief that we are in for an extended period of serious consumer retrenchment."

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (RICS), said: "Equity withdrawal turning negative for the first time since the late 1990s sends a clear message that the downturn in the housing market is reducing access to equity built up in property over recent years."

A RICS spokesman re-iterated that "A lack of mortgage liquidity is the key issue which is keeping the housing market from showing any real sign of recovery."

Tuesday 9th September 2008

House prices continued to fall in August and the number of new buyers on the market also dropped, according to the Royal Institution of Chartered Surveyors (Rics).

Rics said the lack of availability of finance in the mortgage market had impacted on the number of property enquiries by buyers, with 28 per cent more chartered surveyors seeing a fall in enquiries in August than those who saw a rise, compared with 27 per cent in July.

Rics spokesperson Jeremy Leaf said: "A lack of mortgage liquidity is the key issue which is keeping the housing market from showing any real sign of recovery."

Stamp duty threshold raised to £175,000

The current £125,000 threshold will be raised from Wednesday 3rd September 2008 for the next 12 months in a move aimed at kick-starting the housing market. Someone buying a home for £175,000 will save £1,750 under the scheme, which is likely to cost the Treasury £600m.

The government estimates half of all property transactions will now be exempt from stamp duty - up from one third when the threshold was £125,000. The latest house price figures from Nationwide Building Society put the average cost of a home in the UK at £164,654, below the new stamp duty threshold. However, there are very few transactions in our area below £175,000 but the measures may help first-time buyers and home-movers in other areas which in turn could help some local chains. After industry scepticism about the value of a stamp duty holiday to the wider market, government sources stressed that the move was designed to help individual families rather than boost the battered market.

Prime Minister Gordon Brown said the package of measures - including help for first-time buyers and families facing repossession - showed the government was taking action to help people through difficult times. But the Conservatives - who say they would scrap stamp duty for first-time buyers on properties worth £250,000 or less - said the measures were a short-term survival plan to keep Mr Brown in a job.

The government has not said how it will pay for the £600m estimated cost of the stamp duty move. Chancellor Alistair Darling said he would reveal more details in his Autumn Pre-Budget Report. He said the government was also considering ways of increasing the availability of mortgage finance - which many consider essential to really kick-start the housing market.

Other housing moves announced by the government include:

- "Free" five year loans of up to 30% of a property's value for first time buyers of new homes in England.

- Extension of powers for councils and housing associations to be able to pay off debt for homeowners who can no longer afford mortgage payments and then charge rent.

- Shortening from 39 weeks to 13 weeks the period before Income Support for Mortgage Interest is paid.

- Bringing forward spending from future years to encourage more social housing to be built.

Under the new loans system, called HomeBuy Direct, households in England earning less than £60,000 will be offered loans free of charge for five years on new properties, co-funded by the state and developers. Once the five-year "free" period is up, homebuyers will be asked to pay a fee - although no more detail of this was provided.

The Times, 12 August 2008 - The housing market ground to a virtual standstill last month as the drought in the mortgage market helped to drive down the number of homes changing hands to levels not seen for four decades, a key survey shows today. In the latest symptom of dire housing market conditions, the average number of property sales handled by surveyors across the country over the past three months tumbled to only 14.4, or fewer than five a month, according to the Royal Institution of Chartered Surveyors. RICS blames the near-freeze in housing transactions last month on the scarcity of home loans, with would-be buyers struggling to secure mortgages, and forced to pay significantly more for the loans that can be had. The institution also sounds a warning that the market is being further undercut as confused signals from the Government over the possibility of future stamp duty concessions from the Chancellor deter potential buyer.Today's RICS findings underline the scale of the national housing slump, after Halifax figures last week showed house prices falling at an 11 per cent annual rate, marking the first double-digit decline since the end of the last recession in 1992. However, there are some glimmers of hope for anxious homeowners, as well as potential buyers, with the RICS pointing to tentative signs that activity in the market may be close to hitting a floor, while the scale of price falls appeared to have eased a little. Bank of England figures also revealed a modest fall in some key mortgage rates during the past month. In a rare dose of more positive news, the RICS survey shows that the proportion of surveyors reporting falling house prices was lower last month, for a third month in a row. Some 83.9 per cent more surveyors still said that prices had fallen in July than said they had increased, but this compared with a low point reached in April of 94.7 per cent more talking of declining prices. At the same time, the survey also finds that numbers of new buyer inquiries rose last month, while expectations of future numbers of sales among surveyors also climbed amid signs of sellers cutting asking prices. There was also some relief for those struggling to secure a competitively priced mortgage as the Bank's figures showed that the average interest rate on a two-year fixed-rate home loan, based on borrowing 75 per cent of a property's value, dropped to 6.36 per cent last month, from 6.6 per cent in June. Meanwhile, the average interest rate last month on a five-year fixed-rate loan, for 95 per cent of a property's value, edged upwards, rising to 7.14 per cent to reach its highest since early 2000, the Bank's figures showed.

Latest property news from Whitehall

7th August 2008 - The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 5.0. The previous change in Bank Rate was a reduction of 0.25 percentage points to 5.0% on 10 April 2008.