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Lettings Market Faced with Lack of Supply Issues

[ Posted August 28th, 2010 ]

Latest reports from chartered surveyors around the country indicate that the buy-to-let market throughout the country is gearing up for a long-term all time high as more and more people turn to renting rather than purchasing a home and the demand for property far outstretches the actual supply available. This is causing a progressive rise in rents being collected for the second straight quarter in a row according to the Royal Institute of Chartered Surveyors (RICS), with little progress being seen looking towards the coming few months to indicate a slowing of the pace.

One of the primary limiting factors that has worked to stymie the market has been that regardless of the fact that mortgage rates remain at an all-time low the lettings market for all mortgages ranging from commercial mortgages to even highly sought after buy-to-let mortgages remain low. This is due to a number of factors, including lender uncertainties over the actual viability of some properties to high initial down-payment rates preventing many additional developments to be established throughout the country that would help alleviate many of the supply issues in some areas.

Experts expect that the current trends limiting the overall expansion of the buy-to-let market will continue throughout the remainder of the year as more and more people shift their attention away from individual home purchases and towards renting as a way to save up money for purchases of their own later on down the road. The fact that many feel the UK will follow the US property market in its progressive decline and work to drive down home costs in the future adds to this anticipation and fewer and fewer people are willing to purchase homes for fear they will decrease in value while lending institutions grow more weary each day over potentially unprofitable ventures.

Nelson Industrial Park Placed in Receivership

[ Posted August 27th, 2010 ]

Recent reports tracking industrial developments throughout the UK have noted that Profile Park, a substantial 150,000 square foot development comprising of a mixture of commercial sites in Nelson, has recently been shifted to the hands of LPA (Law of Property Act) receivers LPA Direct. This move would effectively cause all interests related to the park located on Junction Street to move focus to the new agency in the near future and potentially new regulations being established for many tenants located in the development zone.

The move for the Park to shift hands comes primarily as a result of the fact that the area is currently operating well below expected levels for commercial developments and a number of improvements are seen as needing to be made to bring about greater profitability for all involved. In fact only around one third of all available areas within the Park are currently leased at present, with a combination of poorly performing bad credit mortgages and other economic factors leading to high levels of loan arrears developing within the zone.

The move of the Park’s management to LPA Direct is seen by many as a positive move to help increase rental revenue while improving the value of the buildings located within the zone and establish a more sustainable local economy than what has been seen in recent times. The primary focus for LPA Direct will be in the currently empty buildings within the area while at the same time developing an effective marketing campaign to encourage further investment in the local offerings in order to foster new businesses and employment, further diversifying the income potential for individuals and improving the overall appeal of both work and commercial interest throughout Profile Park.

Arrears declining but little additional change anticipated

[ Posted August 22nd, 2010 ]

Recent reports show that while fewer people have fallen into arrears with their mortgage provider throughout the UK a strong number of core households remain and are likely to remain in the future. The second quarter of 2010 saw an overall reduction in the number of households throughout the country falling into arrears, dropping total numbers to roughly 9,400. This is a decent improvement over 2009’s second quarter figures of 11,800 and even the first quarter figures of 9,800.

Still, many experts anticipate the total number to remain roughly the same in the near future, nether increasing nor decreasing substantially in the months to come. This prediction is based upon the fact that the low mortgage rates being offered by most lending institutions continue to help individuals keep their mortgage payments under control while at the same time allowing individuals ranging from first-time buyers to even those holding a bad credit mortgage to manage their funds accordingly.

While the economy as a whole is also generally being seen to be on the rebound in recent times and therefore hold the potential for short-term arrears reduction many experts also feel that this is not actually likely to be a sustainable trend as far as the real estate market is concerned and do not anticipate much impact upon arrears in the coming few months. In a longer term perspective, on the other hand, this may actually prove to be a valid recovery period that will allow many individuals to recover due to personal hardships over the past few months or years.

Unfortunately for many this recovery is generally seen by most as dependent upon whether or not the central banks continue to maintain their historically low interest rate, meaning that if inflation were to become too out of hand or other factors affect the economy too much in any number of ways the interest rate could be raised and many people may simply revert to previous conditions.

Current Account Providers More Stable than Long Term Relationships

[ Posted August 21st, 2010 ]

A new study indicates that Britons are more likely to stick with their current account provider for longer than they are with their personal partner. In fact, on a nationwide scale Britons tend to spend an average of roughly 16.5 years with the provider of their current account, compared to a mere 14.1 being spent with their partner according to recent Santander research reports.

In terms of bank loyalty these figures do vary somewhat from region to region, with the South East of the UK coming in with average figures averaging 17.7 years of loyalty to their current account provider per customer. The North West, on the other hand, provides the opposite story of a smaller (but still impressive) 15.3 year average per consumer.

Many people feel that this trend is a result of a long-standing idea amongst consumers that, despite what most logic would argue, it is easier for an individual to file for divorce than to change their current account holder. This is even true in today’s market where many different financial institutions tend to offer highly competitive deals, especially in terms of the property market that is driving many consumers’ decisions due to the continued low mortgage rates offered by many groups for a variety of consumers ranging from first-time buyers to even re-mortgagers and general investors.

For many banks this news comes as somewhat mixed, being happy to retain legacy consumers for long-term profits of their own while at the same time being posed with a new challenge of attempting to convert consumers from other banking establishments to join them. Whether or not they can be particularly successful with the conversion is still up for debate given the highly volatile nature of the market at the current stages, but many people anticipate many banks revising their conversion strategies to become even more competitive in the future in the hopes of encouraging the switch and establish a larger customer base.

Fixed-Rate Mortgage Figures Becoming More Favourable

[ Posted August 20th, 2010 ]

As the markets continue to shift and speculations of an interest rate hike are on the rise many people have shown some concern over selecting tracker mortgages rather than locking-in to a fixed-rate mortgage despite the traditionally higher costs associated with a fixed-rate deal. At the same time, however, the current long run of historically low interest rates by the Bank of England has also kept many people in check away from steering purely towards fixed-rate options as reports indicate that the Bank intends to continue the lower rate for the time being despite the fact that excess inflation may force the bank to edge rates higher in the future.

In lieu of the current market unrest looking at both fixed and tracker deals a number of lending institutions have been revising their lending patters for both residential and commercial mortgages alike, with many highly favourable rates being seen in recent offers. In fact assuming that a 20% down payment may be possible on a home purchase and a short-term mortgage is a viable option some offers have been seen around the country showing an interest rate as low as 2.85% on a fixed-rate deal – something that may not be possible under most other options even offered by tracker mortgages.

Of course the stipulation behind locking-in such as low rate is that a significant enough of a down-payment must be made initially for the purchase. This can be a highly limiting factor for many people as a 20% down payment on many homes in many areas is simply beyond what they could afford at the time. Additionally longer mortgages outside of the 2-year range carry with them higher rates as well due to the higher potential for the central bank’s interest rate to increase over that period of time while shorter term deals may simply be too difficult for many people to handle with their current incomes, therefore consumers are cautioned to weight out all deals fully before committing to one.

Mortgage Lending On the Rise Once More

[ Posted August 19th, 2010 ]

Recent reports from the Council of Mortgage Lenders has indicated that lending numbers are on the rise once again, with the latest figures in July showing an increase to an impressive £13.6 billion over June’s £12.9 billion – a good 5% increase month-on-month. While this is still somewhat shy of last year’s figure of £14 billion in July it is still a positive sign for many, particularly for those who have been concerned somewhat recently about a looming crash just around the corner for the property market as a whole.

The recent rise in lending is seen to keep things on track with the Council’s earlier estimate that roughly £140 billion worth of lending will take place throughout the course of the year, though many people are still somewhat concerned over the slightly decreasing numbers while looking at a year-on-year perspective. The Council, on the other hand, feels that these concerns while valid are nothing to take too closely to heart as a large number of property owners continue to handle their funds adequately thanks in no small part to the continued low mortgage rates made possible by the Bank of England, thus allowing both the residential and commercial mortgage sectors to recover somewhat.

The recent cooling in terms of the substantial gains in some areas has also worked to the advantage of many local residents as overseas investment is dying down somewhat, with many investors looking to other areas for additional investment opportunities rather than staying within UK limits. This has caused many people to move to the South American and Asian markets in particular where large growth trends have been seen in a number of areas and allowed many local UK markets to handle more local matters independently.

House Price Indexes Under Investigation

[ Posted August 18th, 2010 ]

As many prospective home owners and even current landlords know all too well, the potential to have real estate funded is many times based upon the overall price index for a current area and whether or not that index is showing positive or negative trends over time. What many people do not know, however, is that there is not one but in fact several indexes referenced by various lending institutions at any given time, with each index based upon different market criteria ranging from registered house prices to survey results gathered over months and years.

Given the large range of potential criteria for each index a recent investigation has begun looking into the actual index usages by various lending institutions in order to determine just what is and is not taken into consideration in many cases. This has become a particular concern for many home owners and prospective home owners alike in recent months as house prices continue to fluctuate and many first-time buyers look to establish themselves in the market.

Should an investigation prove successful and help establish a more centralized index this could be good news for many individuals involved in the real estate industry, allowing a greater number of individuals to have access to the lowest mortgage rates possible in their area should the price index reflect positively and accurately at that time. This would apply to both tracker mortgages and fixed-rate mortgages as well, meaning that many owners will be better able to lock-in decent rates for an extended period of time to leverage their personal funds to the best of their own ability.

The review of the indexes used nationwide is currently being undergone by the National Statistician and is focusing particularly on those indexes generated by the Communities & Local Government department as well as the Land Registry in order to target the largest index reference points possible at this time.

First-Time Buyers Still Struggling With Market

[ Posted August 17th, 2010 ]

Recent reports indicate that many first-time buyers throughout the country are still struggling with entering into the housing market, facing troubles particularly in terms of financing an initial purchase due to high down-payment requirements. This has been a long-term issue beginning several months ago and is growing in momentum in recent months despite the continued stamp duty holiday made available to first-time owners throughout the UK.

The primary driving factor behind many first-time home owners finding it difficult to enter into the market is that in order to secure a low mortgage rate on a home purchase – either through a fixed-rate mortgage or a tracker mortgage – a significant down payment is necessary from virtually all lenders. While this hasn’t been as much of an issue in previous decades the recent boom experienced in the housing market throughout the country has led many people to simply be unable to afford the initial down payment necessary to finance their home, even in more rural areas where housing costs are traditionally significantly lower than more urban areas.

When combined with the growing acceptability of simply renting rather than owning a home of their own this is adding additional strain to the real estate market in many areas as individuals move more towards long-term rental agreements – generally good news for the buy-to-let industry, however in this area many investors are seeing problems of their own as lending institutions regularly tighten down regulations that are preventing many owners from developing rental markets further.

With any luck if this trend continues additional buy-to-let options will be made available in many areas, however at this time many experts are expressing concerns over long-term sustainability of this trend as individuals shift market focus and developments are stagnated in some locations.

Interest Only Mortgages Quickly Disappearing

[ Posted August 14th, 2010 ]

Interest only mortgages are quickly becoming a thing of the past according to latest reports from lending institutions throughout the UK lately, with more than one million current interest-only mortgage holders potentially facing sharp price increases when their current deal expires. This report comes on the back of the Coventry Building Society becoming the latest in mortgage lending institutions to no longer offer interest only mortgages to first-time buyers due to the higher risks involved in deals as of late despite the continued low mortgage rates supported by the central banks.

Between 2005 and 2009 it is estimated that roughly one million home owners throughout the country actually opted for one of these mortgage options during the housing booms in order to secure additional capital by limiting their own monthly payments, thus allowing them to purchase more costly homes than they may be able to otherwise purchase under fixed-rate mortgage or other financing options. Typically interest only mortgages  were also offered along with various repayment vehicles as well, such as endowment agreements or other anticipated funding sources in the future.

With the recent instability of housing prices in many areas, however, many lending institutions are becoming leery about offering interest only mortgages to many finance seekers, and over the past few months interest only deals have been slowly becoming a thing of the past. This is particularly troublesome for many first-time buyers that may need the lower monthly costs interest only deals offer to allow them to purchase a home in some areas even with the continued stamp duty holiday.

Many economic experts anticipate interest only mortgages becoming rarer and rarer over the coming months as lending institutions continue to adjust their policies to accommodate the shifting real estate market prices in many areas and limit their own potential losses should economic hardships come again.

Emerging economies’ property markets outperforming Euro zone

[ Posted August 11th, 2010 ]

According to the latest figures issued by the Global Property Survey from the Royal Institution of Chartered Surveyors, commercial real estate in emerging economies has performed better than their counterparts in both the UK and the Euro zone during the second quarter of this year despite continued low mortgage rates and favourable fixed rate mortgages offered on the properties.

The very dynamic economies of Eastern Europe, Asia and South America have seen fast rising demand in their property markets, according to the new figures.

Across the world generally, occupier demand is climbing, although exceptions to this are seen in the Euro zone and in the UK where stringent fiscal deficit reduction measures seem to have impacted, reducing the enthusiasm of businesses to snap up new space.

France has, however, gone against the grain of negative Euro zone performance, and has displayed definite signs of an improving sentiment towards real estate. According to the report, this is also in line with the comparably strong performance of France’s domestic economy. Also, investors in the US recorded climbing tenant demand in all three property sectors for the first time in three years.

In terms of rising occupier demand, the way is being led currently by Brazil, with demand rising from 70% to 85%. Markets in China and Peru are currently also performing well.

Conversely, the UK has seen negative demand for the first time in 12 months, with the net balance dropping from +14% to -4%. For the Euro zone, the net balances of Greece, Spain and Germany all dipped into negative territory.

For the first time in a year, transactions dropped in the UK, with solicitors recording a fall in activity from +24% to -5%. A drop and then a rise was seen in both the UAE and Greece.

Activity in China still appears to be strong, even in the wake of policies implemented by the Chinese government to tackle the property boom. All indicators for rental expectations and occupier demand as well as the number of bidders for every property are still all in definite positive territory.

India has also shown strong second quarter real estate performance-even in the wake of interest rate rises.

According to Simon Rubinsohn, Chief Economist at the RICS, the outlook for third quarter looks to favour the emerging ecomomies.

‘The real estate world continues to be split broadly speaking between the emerging and developed economies. Strong growth in many of the former, including the likes of Brazil, Hong Kong and India, is continuing to boost demand for new space from occupiers as well as encouraging investment activity. Meanwhile in many of the latter, fiscal retrenchment allied to bank deleveraging continues to place significant obstacles in the way of a meaningful recovery in the commercial property market,’ Mr Rubinsohn said 945CZEPQRPDT. aims to provide every client with cheap, affordable and best mortgage loans in the UK market, however the actual mortgage rate available will depend on client's financial circumstances and credit history. Although, has made every effort to ensure that the mortgage rates listed are correct, it bears no responsibility in case of an error. 
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