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Mortgage Approvals on the Comeback

[ Posted June 27th, 2010 ]

Mortgage approvals have hit a new high this past month following the third consecutive month in a row of growing numbers and bringing the total number of new mortgages approved in the moth to roughly 36,700. While this is still far below last December’s two-year high of nearly 46,000 approvals it is the highest number to be seen in quite some time – especially since the early part of this year when mortgage approvals declined considerably following the reinstatement of the Stamp Duty along with the considerably harsher winter than normal.

Recent mortgage approvals are primarily being attributed to the continued low mortgage rates available to most buyers, though surprisingly enough the majority of mortgages being approved as of late are being attributed to first-time buyers and other buyers looking their portfolios rather than re-mortgages. In fact, re-mortgage approval has dropped substantially in recent months, with many experts believing that borrowers are taking advantage of the continued low interest rates to eliminate debt owed to lending institutions rather than run the risk of building up more – even if it may mean the elimination of some other potentially dangerous debt that may be hovering on their financial horizon.

This speculation has been substantiated by a marked increase in the amount of overall debt being paid off both in regards to housing and other loans in addition to credit cards and other forms of quick consumer debt. Individual financial savings rates have also dropped substantially over recent months, indicating that fewer and fewer funds are being put into savings accounts and more money is being used to eliminate existing debt before it can collect more interest to be paid off. Overall this is seen by many as having a positive effect on the country’s economy as a whole and is highly encouraged by many financial experts in order to help liquidate financial assets and stimulate economic recovery.M/P>

Budget Adjustments Hitting Harder than HIP Abolition

[ Posted June 26th, 2010 ]

According to many reports homeowners are becoming more and more concerned over the potential loss of profit on selling their home this summer following the recent talks of budget adjustments than the abolition of the home information packs (HIPs) had on the public. This feeling has been substantiated by Paul Holmes, chief executive of providing first time buyer solutions, in that he feels that the actual abolition of the HIPs has had little to no substantial impact on the market.

Nevertheless many reports indicate a rise of as much as 22% in the number of properties coming onto the market in June following the announcement of the abolition of the information packs, though many people are attributing this to being a mere coincidence as they point towards the general public sentiment that many home owners feel that this summer is the last opportunity for them to earn substantial gains on their home sales while at the same time taking advantage of the low interest rates continuing to be offered by many lending institutions.

Regardless this is particularly good news for many potential buyers out there, particularly first-time buyers that will still be able to benefit from many first-time mortgage bonuses that are being supported by the central banks and government policies in order to encourage more diversification in the market. Additionally the continued low fixed-rate mortgages being available  to buyers with considerable down payments available (either supplied by themselves or via family members working to support their children’s or grandchildren’s home purchase) has prompted many individuals and couples alike that have been hesitant up till now in regards to making a decision on their purchase and push for getting into the market. This is particularly true for many young couples that have even been putting off marriage until they felt that they were financially secure enough to purchase a home of their own for a future family – something many people looking at the current socioeconomic situation throughout the UK have been quite concerned about.

HIPs Working to Lower Home Cost

[ Posted June 25th, 2010 ]

The recent abolition of the HIPs that have affected so many home selling decisions throughout the country has caused a backwash boom in terms of house availability on the market – and subsequently worked to drive down the cost of many homes throughout the country at the same time. While up to the point of the HIP abolition many more homes were being seen on the market than in the past two years the value of these home remained relatively unchanged, though the recent explosion of available properties as of late means that the market has been flooded with available homes for purchase that has turned the market from a seller’s to a buyer’s paradise.

Coupled with the ongoing low mortgage rates that are being offered by many lending institutions this means that many buyers that have previously been shut out of the market due to the ever increasing and regularly unattainable costs are now able to get their foot in the door – particularly good news for first-time buyers that have been virtually excluded up till now due to market trends.

While many sellers may see the recent trend as a negative one due to the fact that their homes are devaluating over time in all actuality the higher competition on the market is seen by most experts as a good thing. As more and more individuals are able to both purchase as well as sell homes this is working to stabilize the current economic situation, helping to prevent further recessions in coming months should any market upset occur again. This is particularly good for many people who have previously been reliant upon bad credit mortgages to keep their homes afloat and may need to downsize their home as the higher market availability means they could easily move into a much more affordable location that could help them avoid countless thousands of Pounds in debt piling up over time.

Now is the Time to Buy

[ Posted June 21st, 2010 ]

According to many reports now is actually one of the best times to purchase a home in the UK – though only if you can afford to made a sizable enough deposit to successfully lock in a decent fixed mortgage for your home. The reason for this is that many experts feel that the continued low mortgage rates that have helped drive the strong housing market in the past few years coupled with the continued strong growth of housing supply may be near a tipping point in terms of shifting lending institutions away from a strong buyer-friendly scenario.

One of the leading factors of making now a strong time to buy than in the past when the real estate market first released many of its incentives to stimulate growth is that only in the past few days has the cost of a regular monthly mortgage payment actually been reduced below that of renting. In fact for first-time buyers in particular this is a great sign as the continued stamp duty holiday for first-time purchases means highly favourable conditions that allow for a strong buy now rather than in the future where these benefits may be changed.

Nevertheless the current time being seen as the best time to buy is highly dependent upon whether or not individuals can make a high enough down-payment in order to get the best interest rates possible on loans. A deposit of 25% and a total loan-to-value ratio of 75% will, for instance, yield significantly better interest rates than even a deposit of 10% and especially a low deposit of 5%. This equates to a total savings of hundreds of Pounds each month in mortgage payments or thousands over years of repayment. Unfortunately for most given the high cost of houses throughout the country making a sizable contribution at this time is difficult at best and may not be possible without help from friends or family – something that is a going concern with many economists given the need for extended debt for many pensioners looking to support their children’s purchases through re-mortgages.

Continued debt causing strife within families

[ Posted June 11th, 2010 ]

The current lending environment is adding more complications to life than simple higher debt ratios, according to many experts analyzing recent trends. Reports indicate that not only are the current lending requirements – regardless of the low mortgage rates offered by many lenders – helping to bog down millions of home owners with difficult to overcome debt they are also contributing highly to social stress and relationship difficulties for many families throughout the UK.

While this may be of no surprise to many families that have found themselves in a similar situation the recent studies conducted by banks have found that this trend has climbed in recent years in particular, with as of right now roughly one million households facing dire social situations within their walls. This has particularly affected not only parents but also older children, many of which are hoping to rely upon their parents to apply for a re-mortgage to allow them to purchase their first home in many areas due to the high initial deposit requirements stipulated by many lending organizations in order to get the best possible rate on the loans they offer.

Children looking to become first-time buyers are not the only ones affected, however, as even a large portion of pensioners are still finding themselves under debt in recent years as they have opted to simply re-invest their funds to pay off other debts rather than cover the existing debt of their home. This is leading even a large portion of homes owned by elderly individuals in danger of being repossessed by banks in the coming years – something that is only serving to add additional concerns for the younger generations who may in fact inherit additional debt along with property should they have any homes passed on to them, thus creating only a greater rift between household members.

UK sellers look to side-step effects of upcoming budget

[ Posted June 8th, 2010 ]

Much attention will be focussed in the emergency budget in the UK due later this month after indications that a number of property owners are already looking to sell their properties in advance of a suspected rise in capital gains tax, along with other measures. This seems to be especially true of prime property owners in central London, some of whom appear to be putting properties on the market now prior to the introduction of policies designed to bring down the UK’s government deficit, according to Prime Purchase, one of the UK’s leading buying agents.

In anticipation of the expected effects of 50% taxation rates, a bonus tax as well as the mounting threat to status of UK non-doms, those property owners that are able to relocate are using the current window to explore the market. Also, those owners with properties worth more than £1 million that stand to be hit by a new 5% stamp duty tax are aiming to get their properties onto the market, according to Prime Purchase. Investment buyers, especially those from overseas countries such as Hong Kong and South East Asia, as well as those seeing increased rental growth as yields are anticipated to keep climbing until the end of the year. Those buyers who sense that the exchange rate between the dollar and sterling will stay at low levels are also active in the market, Prime Purchase stated.

Guy Meacock, from Prime Purchase, sees a change in established patterns, with purchasers from South East Asia typically being reluctant in the past to instruct buying agents in other countries to conduct purchases for them, instead establishing their own private purchasing network and appropriate connections. This has been particularly true in the past for Russian buyers, though many purchasers in China have begun making the shift to agents to assist them – particularly with the skyrocketing home values in some key areas throughout the country.

Jo Eccles, the director of Sourcing Property, believes that government proposals to raise capital gains tax from its current rate of 18% to around 40 or 50% is likely to stimulate more short-term property supply, particularly in the mainstream market.

A quarter of buy-to-let investors set to quit

[ Posted June 7th, 2010 ]

According to recent research from LSL Property Services, a company that owns the largest lettings agency in the UK, more than a quarter of landlords might be pushed out of Private Sector Rental if the coalition government continues with its plans to raise Capital Gains Tax on all non-business assets.

The research shows that nine-out-of-ten landlords are against the new tax regime, with 26% willing to consider selling their properties before the introduction of the new scheme. The government’s plans would increase the level of Capital Gains Tax payable on the sales of all buy-to-let properties from the 18% flat rate to the individual seller’s highest personal tax rate, and this could be as high as 50%. LSL have cautioned that the new tax proposals could potentially have a real impact on possible future investment in the private rental sector, and 71% of landlords in the study said that any increase in Capital Gains Tax will ensure that they re-think any future property investments.

Simon Embley, CEO of LSL Property Services commented that over the past two years the property market in the UK has seen roughly 30% of all revenue generated through pure investment properties. While not directly affecting many markets this is generally seen by many experts as a potential problem in the future should further taxes be levies against landlords purchasing property for pure investment purposes due to the fact that any drastic change could lead to a major reversal of market interest by one of the primary driving factors in helping to restore the economy. This is particularly important in some still shaky areas, with even commercial property potentially suffering in the not-too-distant future as many areas have still not fully recovered enough to the point to be considered stable and able to resist any major changes.

A third of renters despair of ever buying

[ Posted June 6th, 2010 ]

According to a recent survey some 33% of people who are now renting properties believe that they will never be able to afford to buy their own homes. The research goes on to indicate that of the renters that are upbeat enough to feel that they will one day own their own place, some 65% are of the belief that they will not be in a position to buy for the first time in the next five years.

The survey also indicates that 77% of respondents anticipate that property prices will fall by at least 5% during the course of the next year, and 31% believe that house prices will drop by over 10% during this time.  Also, although 89% of those sharing flats currently indicated that they are doing so only due to the fact that they are unable to purchase their own homes, 52% of all renters stated that they would be content to rent for the rest of their lives if there were no pressure to purchase. The results show that those not sharing accommodation living alone or with a partner are more content with their lot than those sharing accommodation.

According to many reports the majority of young people today are becoming more and more comfortable with renting long-term, keeping watchful eyes on the market for a positive change that would allow them to become more able to secure a purchase in the near future. With the changing market and current instabilities, however, this is being seen as very much a long-term goal that, should the trend continue, may even result in long-term leases rather than purchases from many people that are unable to enter into the market for any number of reasons – even with lasting incentives for first-time buyers.

Rebound and Domestic Fears Sees Investors Turn to French Properties

[ Posted June 5th, 2010 ]

The number of people seeking to buy properties in France has risen during the last two months, with the number of new enquiries for mortgages more than doubling during May as compared to April. Many UK investors are especially attracted to France currently due to the current weakness of the Euro, as well as the competitive mortgage rates and the willingness of French banks to offer them to  foreign investors, industry experts stated.

Athena Mortgages, a French mortgages specialist, stated that it had witnessed a dramatic increase in the number of enquiries made by investors from the UK seeking to purchase French properties, with May being the company’s busiest month for new enquiries. In fact, May turned out to be the busiest such month for Athena Mortgages compared to any month in the last year.  The start of 2010 saw increased interest being generated by UK buyers, with new enquiries from British buyers seeking to purchase properties in France rising by 72% during the first quarter of this year as compared to the final quarter of last year, according to Athena.

The opening quarter of 2010 also witnessed the highest volume of UK investor enquiries of any quarter since the final three months in 2007.

Due to the fact that property prices in France have recovered during the past year, investors are regaining their confidence with regards to coming back into the market. It appears that the new-build market is especially strong at present. For instance, prices in Paris and Marseille respectively have risen by 8% and 11% as compared to the same period in 2009.

The increase market confidence has also been reflected in the volume of enquiries received by Athena that developed all the way through to a firm mortgage offer in February and March of this year, engendering strong overseas interest in the local market.

John Busby, director of Athena Mortgages, is upbeat about the prospects for foreign investors in France.

Post Office aims to be Top 10 mortgage provider

[ Posted June 3rd, 2010 ]

The UK Post Office has intensified its attempts to establish itself as one of the largest mortgage lenders in the land. The Post Office will offer a mortgage package that will require applicants to provide only a 10% deposit. The atypical part of the deal is that it is available to buyers on what many lenders have gotten rid of, an interest-only basis, and also on the usual method of capital and interest payment type. As a result, it will be both easier and cheaper for a number of borrowers to afford beginning repayments.

According to Aaron Strutt from mortgage brokers Trinity Finance Group, the scheme is a radical departure that will benefit customers. To do this many lending agencies have actually begin actively reducing many loan requirements for prospective home owners – positive news in particular for many first-time buyers previously cut out of the mainstream market.

The new offer of the 90% loan represents one portion of a whole range of mortgage products offered by the Post Office. Despite the fact that 90% mortgage deals are already on the market, the majority are still too expensive for the majority of borrowers due to the fact that rates are too steep.

The Post Office began lending back in 2007 for a trial period, and fully committed itself to mortgage offerings in October 2009. A spokeswoman for the Post Office confirmed that they were aiming to become one of the foremost lenders throughout the UK.

The loans offered by the Post Office can be sought and applied for over the Internet, by post or at one of the Post Office branches, and are financed centrally by the local Bank of Ireland – a central body with whom the Post Office established a joint venture.
The current level of the average deposit for a house purchase in the UK still stands at a formidable 25% and it has stayed at this level since the banking crisis and credit crunch seen in 2007 and 2008 prompted lenders to ration loans.

 
 
 
 
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