Diary of a Property Investor

Mortgage lending at 22-month high

2009-12-12T10:22:08+00:00

A total of 55,300 mortgages for house purchases were granted by lenders in October, the highest number since December 2007, the Council of Mortgage Lenders (CML) said today.

Activity in the housing market has increased markedly since reaching a trough in January when just 23,000 home loans were advanced during the month.

The bulk of the market is made up of home movers, with 35,600 of October's loans going to borrowers who already own a property, a 49% increase on the same period last year.

However, first-time buyer numbers have also recovered since the start of the year, more than doubling from 8,900 in January to 19,700.

The value of first-time buyer loans dropped by 4% on September's figure to £2.2bn, but was up 29% on last October's figure, reflecting rising house prices and an increased willingness by lenders to offer higher loan-to-value mortgages.

Yesterday, the chancellor, Alistair Darling, announced that the temporary stamp duty holiday, which increased the threshold from £125,000 to £175,000, would finish as planned at the end of the year, which could put a damper on first-time buyer numbers over the coming months.

However, the main reason total mortgage lending remains subdued is the continued lack of enthusiasm among borrowers to remortgage while interest rates remain low. In October, 33,000 homeowners switched lenders, the same as in September. The figure was 52% down on last October, while at £4bn the value of the loans was down 57%.

Low interest rates have also quelled demand for fixed-rate loans. The proportion of borrowers choosing to tie into a rate fell to 66% of the market in October, down from 73% in September.

The CML's director general, Michael Coogan, said we were witnessing "a two-speed mortgage market". "It appears that low interest rates for those with substantial deposits, coupled with this year's sustained increases in house prices, are encouraging more people to buy or move home.

"But the same low interest rates that are driving house purchase activity provide little incentive for borrowers to refinance their loans. This, coupled with ongoing tightness in lending criteria, continues to hold back the remortgage market."

This morning the UK's biggest building society, Nationwide, announced it was cutting mortgage rates with effect from tomorrow.

The society is cutting the cost of fixed-rate loans by up to 0.29%, reducing the cost of a two-year fixed-rate loan to 3.69% on borrowing of up to 70% of a property's value.

Most of the cuts are focussed on loans of up to 70% LTV, but the society said it was making some reductions for borrowers with deposits of up to 15%.

Source: Guardian.co.uk

Mortgage Borrowers Tend to Make Regular Overpayments on Loans

2009-12-04T14:24:43+00:00

The latest survey carried out by major UK mortgage lenders, the results of which were published by The Independent on Thursday, December 3rd, suggests that UK mortgage borrowers prefer to make larger repayments on their loans rather than spend extra money.

Several lenders were quoted in the article released by The Independent; those included Abbey, Lloyds Banking Group, HSBC, Nationwide and Barclays.

According to Abbey’s director of mortgages, Ms. Nici Audhlam-Gardiner, many borrowers of the bank were surprised to realise that keeping mortgage repayments at the pre-downturn level allows them to “make substantial overpayments without overstretching their monthly budgets.” The statement of Ms. Audhlam-Gardiner might well disturb the plans of the UK Government to boost the economic recovery of the country by encouraging consumer demand; as the rate of personal savings in the UK has been increasing since the beginning of the credit crunch, the Bank of England might be better off focusing on exports.

Owner of several UK banks and building societies, such as Bank of Scotland, Birmingham Midshires, Cheltenham and Gloucester, Halifax, and Lloyds TSB – Lloyds Banking Group – claimed that the number of its clients who made overpayments on their mortgage loans grew almost by 100% in 2009, when compared to 2008. An average monthly overpayment across the lenders owned by the Lloyds Banking Group amounted to £350.

Both, HSBC and Nationwide Building Society claimed that an increased willingness of borrowers to make overpayments on their mortgage loans has been noticed since mortgage interest rates dropped. Barclays even told The Independent that the number of people making regular overpayments rose 3 times when compared to 2008.

As we reported on Wednesday, December 2nd, the Bank of England’s data, released on Monday showed that October marked the record amount of credit repaid by UK borrowers

Source: E1 BTL Finance News

UK Mortgage Approvals Reach Record Level in October

2009-12-02T09:56:23+00:00

In its report “Lending to Individuals 2009”, published on November 30th, the Bank of England showed that mortgage approvals in the United Kingdom reached their highest level in 19 months in the month of October and that the pace of debt repayment by UK borrowers is extremely fast.

According to the report, the number of mortgage approvals in the UK grew to 57,345 in October, up from 56,205 in September. Bank of England’s estimates, which apparently differ from the estimates of the British Bankers’ Association, which we published earlier, suggest that UK mortgage approvals not only hit their 19-month high, as the figure is the highest ever since March 2008, but also marked 11th consecutive month of growth.

Bank of England also said that the number of mortgage approvals at the same time last year was 78.5% lower.

In addition to data on mortgage approvals, the report published by the Bank of England featured information on debt repayment in the UK. According to the Bank’s figures, UK borrowers, being concerned with potential job losses and deepening recession, tend to repay their debt very fast.

In the month of October, total unsecured debt was reduced by the Brits by as much as £579 million; this includes loans, credit card and overdraft debt. The figure represents the highest debt reduction ever since 1993 – the year when the Bank of England began to keep its records in the modern form. Also, October marked the second month in the history of Bank of England’s records, when loan repayments outperformed new borrowing.

In the opinion of Howard Archer, leading IHS Global Insight economist, Bank of England’s data suggests that the recovery of the UK economy is continuing at a rapid pace as the increased level of mortgage approvals, coupled with low interest rates and house prices, indicates firm mortgage activity.

Source: E1 BTL FINANCE News

UK Lenders Announce Mortgage Rate Cuts

2009-11-19T07:57:09+00:00

The latest announcement by Lloyds Banking Group is good news for borrowers waiting for a further decrease in mortgage interest rates.

Lender’s mortgage arm, Cheltenham & Gloucester, reported a 0.5% cut in mortgage interest rates on 2-year fixed and tracker mortgage deals that are offered through mortgage brokers.

Moreover, Cheltenham & Gloucester launched a new best buy mortgage deal. Lender’s borrowers with deposits of 40% or more are now offered to benefit from a 2-year tracker deal available at 2.29% above the base rate (a pay rate of 2.79%) and a fee of £995
.
Other cuts in Lloyds Banking Group mortgage deals, which signify slow recovery of the UK mortgage market coupled with easing of lending criteria, were also announced. They include a cut in the interest rate on a 2-year tracker mortgage deal for borrowers with 10% deposits, which is now offered at 5.99%, and a cut in the interest rate on a 2-year fix, which is now available for borrowers looking for 90% LTV at 6.99%.
Cheltenham & Gloucester, however, was not the only lender that surprised borrowers with cuts in mortgage rates. Abbey, another leading UK mortgage lender, recently introduced a new 2-year fix for borrowers with 30% deposits. The deal is available at 3.69% and a fee of £799, and is the market-leading offer for borrowers with 30% deposits.

Other British mortgage lenders also announced mortgage interest rate cuts earlier this month. They include Northern Rock and Nationwide.

However, average UK interest rates are still higher than they were in the beginning of 2009, with an average 2-year fixed mortgage deal offered at 5.02%, which is 0.41% more than in May 2009.

Mortgage brokers are determined, though, that the market is moving in the right direction as mortgage rates are definitely set to increase as the market recovers.

Source: E1 BTL FINANCE News

UK mortgage rates moving down

2009-11-10T12:00:19+00:00

Despite the fact that the Bank of England’s monetary policy committee decided to leave UK base rates unchanged, we have seen a number of UK mortgage providers reduce their rates. Indeed we saw Nationwide reduce its fixed rate by 0.31% and tracker rate by 0.2%, Northern Rock reduce its tracker mortgage by 0.5% and its fixed rate by 0.3% with Alliance & Leicester also following suit with a 0.4% tracker mortgage rate cut. So what next?

It would appear that finally UK mortgage lenders are starting to see some valid interest in the UK property market despite the fact that many people believe it is very patchy and there are a number of "hot spots" throughout the country. Quite why we have seen this sea change in the attitude of mortgage lenders this week remains to be seen but it would appear that competition is slowly but surely getting back into the market and we should see more competitive rates introduced in the short to medium term.

Whether it is the threat of the UK government introducing further penalties to those who do not increase their liquidity and their business to the consumer and business markets, or indeed it is time to go out there and compete for customers remains to be seen but hopefully both consumers and UK businesses will benefit in the end.

Source: FinancialAdvice.co.uk

Halifax Reports a 1.2% Rise in UK House Prices

2009-11-05T08:24:41+00:00

UK mortgage lender – Halifax – has just published its latest overview of UK house prices for October 2009, which marked the 4th successive month of house price rises. Moreover, the research of the market showed that the increase registered in October was almost twice as expected.

Let us remind that UK house prices increased by 2.9% since January 2009; market analysts expected to see a 0.7% rise in house prices last month; however, house prices jumped by 1.2%, leaving an average British house priced at £165,528.

Meanwhile, housing economist at Halifax, Mr. Martin Ellis, highlighted that house prices in the 3rd quarter of 2009 were still 4.7% lower than during the same period last year. He also added that the lender mainly attributed house price increases to lack of property supply and increased consumer demand rather than to market recovery.

Commenting on the yearly changes in UK house prices, Mr. Ellis marked that house prices grew by 7.1% from the level they stood in April 2009, and that increased consumer demand can be easily explained by low mortgage rates and house prices. Mr. Ellis also claimed that Halifax has evidence suggesting that more homeowners are planning to put their houses on sale in the near future, and this will definitely change the pace, at which house prices are rising.

Earlier, we have reported that Nationwide – another British lender – said that UK house prices grew by 0.4% in October 2009; the fact is not surprising as the figures published by Nationwide and Halifax rarely coincide. As such, Nationwide has been reporting house price rises for the past 7 months, which compares to only 4 months, reported by Halifax.

Halifax findings got proof in the data recently published by the Royal Institute of Chartered Surveyors and by the Chartered Institute of Purchasing & Supply.

Source: E1 BTL Finance News

UK mortgage approvals up 76.8 pct y/y in Sept-BBA

2009-10-24T09:33:08+01:00

LONDON, Oct 23 (Reuters) - The number of home purchase loans approved by British banks in September jumped 76.8 percent on the same month a year ago, a survey showed on Friday.

The British Bankers' Association said 42,088 mortgage applications were approved last month. That was slightly more than the 40,841 approved in August but 76.8 percent up from last year when activity ground to a halt due to the credit crisis.

The figures chime with other surveys showing record low interest rates have helped stabilise Britain's housing market after sharp price declines last year.

"Mortgage lending by the high street banks is continuing to improve from the lows seen earlier this year and the number of house purchase approvals continues to recover. Housing market activity will depend, however, on more properties coming on to the market," said BBA Director of Statistics David Dooks.

Source: Reuters

UK Mortgage Approvals Rise Further: BoE

2009-09-03T14:52:31+01:00

The numbers of loan approvals for house purchase in the UK stood at 50,123 in July, up from 47,891 in June, the Bank of England reported Tuesday. Economists were expecting a level of 50,100 for July.

Loans approved for remortgaging totaled 35,206 in July compared to 35,137 in June. Meanwhile, the number of loans approved for other purposes came in at 27,278, which was lower than in June and below the previous six-month average.

Source: RTTNews

UK mortgage agreements rise to 17 month high

2009-08-27T08:18:12+01:00

The number of UK mortgage arrangements confirmed in July this year rose to 38,181 which is a significant increase from June which saw 35,564 mortgage arrangements agreed. This is the highest monthly mortgage count since February 2008 and while the figures alone are very encouraging it was interesting to note that the average loan size has also increased by 1% to just under £140,000. So what next?

When you consider the increase in mortgage arrangements, positive comments by UK housebuilders and a feeling that the UK banking industry is ready to pump more mortgage liquidity into the system it seems that the UK housebuilding sector has turned the corner. However, it is surprising to see that over the last few weeks there have been a number of downbeat statements on the UK housing sector with some claiming a short-term rally will run out of steam and subsequently prices will fall further in 2010. Even though there is a feeling that the UK sector has bottomed out there is still concern as to why so many people are still remaining so negative for 2010.

Until the vast majority of analysts, mortgage lenders and homebuyers are singing from the same hymn sheet there will be volatility in the sector and there will be changing opinions over the coming weeks and months.

Source: FinancialAdvice.co.uk

UK mortgage approvals up almost a quarter

2009-08-27T08:15:49+01:00

The volume of mortgage applications approved for a residential property purchase, including that of new home builds, leapt by 23% in June, compared to the preceding month, according to the Council of Mortgage Lenders (CML).

CML data shows that this is the fifth successive monthly rise in mortgage approvals and the highest level achieved for a year.

There was also a sharp increase in the number of first-time buyers, who are seen as a key to the revival of the housing market, getting on to the property ladder. Many first time buyers are looking to take advantage of the recent market slump and buy cheap property, or a shared ownership home, which is becoming ever more popular.

No fewer than 17,200 mortgages were issued to people buying their first abode, up 26% compared to May.

CML’s research acts as yet another sign that the UK property market is now on the road to recovery, owed partly to a shortage of residential properties for sale, further stressing the need for the construction of more new home developments.

Additional research by the Department of Communities and Local Government shows that the decline in property values slowed to 10.7% year-on-year in June, an improvement on the 12.7% annual fall recorded in May.

The medium price of a home in Britain stood at £191,423 in June.

Source: What House?