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Repossessions Continue, But Not as Quickly as Feared

[ Posted February 28th, 2010 ]

Recently released figures have shown that, despite the fact that more UK homeowners faced more home repossessions in 2009 than in any year since 2005, the figures were still lower than had been previously feared. In total around 46,000 homes were repossessed, which represents a rise of 6,000 on figures seen in 2008. The figure was still lower than the recent forecast of 48,000 as well as being far less than the figure forecast at the start of 2009 which was 75,000. The figures were released by the Council of Mortgage Lenders.

With regards to mortgage repayment problems some 188,000 mortgages finished 2009 in arrears equivalent to around 2.5% of their outstanding balance – a figure that is lower than had been feared by the Council of Mortgage Lenders, who had suspected the figure would reach 195,000. It was also some 3% lower than the figure at the end of the third quarter.

The Council stated that those borrowers that were in only moderate difficulties with repayments have been greatly aided by the continuing low interest rates that have enabled them to navigate the tough market conditions, particularly those who have been able to lock-in a good fixed rate mortgage to provide some good stability over the past few months as well as the coming year. In contrast, borrowers facing bigger problems with their mortgage repayments have merely been able to use the current market conditions to bring some stability to their situations without being able to fully recover. Perhaps the leading factor enabling home owners to avoid repossession is lender forbearance.

As it looks forward the Council of Mortgage Lenders predicts that 2010 will see around 205,000 cases of arrears as well as 53,000 homes being repossessed. Some analysts feel, however, that certain economic conditions and indicators make these predictions seem somewhat pessimistic – in particular factors such as the continuing historically low interest rates, government assistance schemes and the fact that unemployment has not been as big a problem as had been feared. Due to this combination of factors many borrowers are able to navigate these turbulent times, though at the same time despite these factors economic and political forecasts remain largely uncertain with many experts predicting that interest rates are likely to rise sooner rather than later. Many feel that this will result in 2010 being a very challenging year for mortgage holders, particularly for those who have been reliant upon bad credit mortgages in the past, who will most likely face a further squeeze on their finances.

London’s Commercial Property Market Set Fair for 2010

[ Posted February 25th, 2010 ]

The office market of central London could soon be looking at record-breaking double-digit growth in the rental market in the commercial property sector throughout the coming year according to analysts. The principal reason for such optimism is the return of occupier growth led by expansion, which is the result of the recent upturn seen in both the financial markets and global trade.  Property consultants, Frank Knight, also believe that low levels of speculative development will most likely result in a dramatic fall in levels of availability during the coming two years thank in no small part to the number of favourable mortgage rates currently on the market to help stimulate the sector.

Property market analysts also speculate that a growing number of institutional property funds are likely to be buoyed by the prospect of investing in the coming year, and many also feel that a recovery in property prices will most likely be sustainable due to the fact that market activity has been in line with that seen in past cycles. It has also been forecast that prime rents in the City of London are set to see an increase of 19% in the coming year, rising to just under £53 per square foot from the 2009 level of £44. The price rise is principally a result of the shortage of top-quality office space as well as more buoyant demand from tenants. Over the coming five year period it is speculated that rents per square foot will go up to £67 towards 2014, which represents a five-year rise of 52%.

Analysts believe that as a result of far lower levels of new developments in London over the previous two years they feel that supply will be significantly squeezed over the coming two years, with some predicting a supply crunch for 2011 – particularly if foreign banks offering overseas mortgages for investment in England remain strong in the future. Rents in the London West End market are expected to record a record growth figure of 11.5% for 2010, rising to just under £73 per square foot, which is up from last year’s figure of £65, also a result of a limited number of new development schemes. It is felt that there is likely to be much higher demand for office space from specialist find managers in the coming year as a result of recent improvements in the financial markets, and this also would contribute to eh expected supply crunch, as the amount of speculative space current under construction for 2010 stands at a meagre 106,000 square feet.

January Rise Sees Property Prices Surge

[ Posted February 23rd, 2010 ]

According to the latest figures from UK property firm, Rightmove, asking pricess for residential properties rose by an unprecedented 3.2%, with many industry experts forecasting that the mini-boom will not continue. House prices in the UK now stand 6.1% up on the same period for last year, after January saw the largest monthly rise since April 2007. Asking prices in London rise 5% to reach the record figure of £427,987, which represents a higher mark than was recorded at the apex of 2007’s property boom following a total 10.3% increase during the past year.

Analysts, however, strongly believe that such rapid increases are unsustainable due to the scarcity of home purchase finance availability post credit crunch, and there are fears that estate agents have been merely acquiescing to the demands of sellers instead of allowing properties to enter the market at reasonable prices. Some feel that current market conditions are reminiscent of the 1970s and 1980s when  mortgage rationing was rife rather than reflecting the more recent periods of freely-available mortgages for those with even bad credit or looking to get a fair-valued re-mortgages.

There is also the growing feeling that further prices increases on the current scale cannot be supported by underlying economic principles, and the creeping suspicion is that agent s have gone along with sellers estimates of their property values merely in order to procure business.  Indeed, the price leap of more than 3% is synonymous with the pre-credit crunch boom time, with sellers prices their properties high and agents agreeing in order to patch over scare business in difficult times. The number of home entering the sales market has also begin to rise, with Rightmove listing 90,000 new properties in January, a figure up almost 20% on the same period in 2009. It must be stated, however, that the figures released at that time were somewhat obfuscated by the fact that properties could not be marketed until the seller of the property was in possession of a Home Information Pack.

Despite the current improvements seen new property listings on the market are still 37% below the levels seen for the month of January between 2005 and 2008. There also remains a real supply shortage in certain areas with levels of stock some 43% lower in East Anglia now than in the period between 2005 and 2008.

UK Buy-to-Let Market Sees Growth in 2009

[ Posted February 19th, 2010 ]

According to new figures released by the Council of Mortgage Lenders new lending for buy-to-lets rose for the second quarter in a row during the final three months of last year in the UK. The figures show that 25,800 new loans were granted in the fourth quarter, the figure being a rise of almost 2,000 on the third quarter figures. It was, however, a drop on 2008’s fourth quarter figures of 38,000. The Council stated that growth volumes have stayed comparatively low, and that the growth seen throughout 2009 was from an extremely low starting point after a gradual fall seen in seven consecutive quarters. The total number of loans saw a drop of 58% on 2008 figures, and last year witnessed the lowest total annual volume since 2001.

Buy-to-let lending increased across the board during the final three months of last year, but they were still advanced at roughly twice the frequency of loans for re-mortgage. The market conditions – particularly ongoing historically low interest rate levels leading to excellent mortgage rates – have greatly served those borrowers looking to buy-to-let, principally due to the fact that most of these mortgages are interest only. Such agreements particularly favour borrowers in arrears as they are able to recover from short-term problems or voided rental payments from tenants. There were fewer buy-to-let properties re-possessed in the final quarter of 2009, with the figure falling by a quarter from the previous quarter. The figure, however saw a rise from the fourth quarter of 2008.

Analysts are optimistic about the new figures and suggest that they signify the continuing improvement in the buy-to-let market, despite the fact that the improvements are somewhat slow, and that the market remains significantly down on past levels. There is also a certain amount of concern that any future market regulation might curtail any continuing buy-to-let activity from providing the market with not only good quality housing but also a scope of choice for those either unable to afford outright home ownership or not able to meet the criteria necessary to qualify for social housing schemes, particularly for those who have been having bad credit problems in the past due to the recession.

Rush to Beat Stamp Duty Painted False Picture

[ Posted February 14th, 2010 ]

Newly released figures from the Council of Mortgage Lenders have shown that the number of first-time buyers reached a two-year peak in December 2009, sparked principally by the rush among new home-buyers to purchase before the end of the stamp duty holiday at the end of the month. The end of December saw stamp duty apply once more for houses valued between £125,000 and £175,000. However, with the average advance standing at £107,496, standing £5,300 higher than in November, the subsequent rise in the cost of acquired properties was far in excess of the minimum tax saving of £1,750.

For first-time buyers, the average deposit stayed at stable levels-at 25% from November to December 2009. This figure indicates that house-buyers either purchased more expensive properties or else they merely paid more for the same house. The new statistics appear to support what many mortgage brokers and lenders had been reporting – namely that the number of first-time buyers increased significantly towards the end of 2009 as they strove to get in ahead of the holiday deadline in addition to capitalize upon the historically low mortgage rates. The fact that this sudden increased demand was not supported by an increase in the number of properties for sale meant that there were more buyers looking for properties meaning that the value of first-time houses rose. Those buyers coming into the market after the end of the stamp duty holiday would have faced an extra 1% on the purchase price added to overall transaction costs.

Whilst the average mortgage advance lent to first-time buyers climbed by £10,000 throughout 2009, the deposits put down on houses stayed constant at 25%. As a result, buyers were required to save an additional £3,215 in December in order to purchase a property as compared to the beginning of 2009. Industry analysts suggest that the sudden rush and concomitant figures merely painted a false picture of the market and wider economy, and that affordability measures based on them are far from accurate as the majority of mortgages contain a repayment element instead of merely repaying the interest – particularly for those bad credit mortgages that may have been offered.

First Time Buyers Look to Shared Experience

[ Posted February 12th, 2010 ]

For some house buyers, the term affordable housing can make many think of dark, dingy and cramped flats. The truth, however, is rather more palatable than this gloomy view, as some first-time buyers are no doubt discovering. The majority of the homes in affordable schemes are built by private developers that, in order to meet planning agreements with local councils, set aside a certain number of their new builds to affordable housing schemes.

These affordability agreements result in the majority of these homes being situated in new developments often finished to the same specifications as luxury private flats within the same site. An example of this kind of project is St George’s Wharf, located in Vauxhall, Central London. The complex is currently in its final stages. It features bright and shining glass and steel apartment blocks on the South Bank of the Thames and has a central courtyard as well as dedicated shopping promenades. The project boasts 1,410 flats, 389 of them being marked as affordable homes. Eighty-one of these properties will be set aside to the Notting Hill Housing Association with the council agreeing that shared ownership is now available in some excellent locations, perfect for those middle-class buyers earning good salaries without being in the absolute top earnings bracket. T

here are also schemes outside of London, with the Thames Valley Housing Association working in the expensive Home Counties which has seen the recent rapid recovery in property prices hitting hopeful buyers further still. The Association has several affordable schemes in Oxfordshire and Berkshire, offering affordable and very smart housing in its part-ownership schemes. An example scheme with Southwark Council makes affordable flats available in Bermondsey, and the difference between the affordable properties and full prices ones is minimal: For instance, affordable flats will have carpets instead of wooden flooring and lack the high-gloss finish on the kitchen cupboards. Also, the affordable properties in shard-ownership schemes tend to be located on lower floors and have less glamorous views and will also lack the smart concierges of the full price schemes. These extras, however, will also incur large surcharges and have no real discernible affect on an inhabitant’s quality of life. The prices difference can also be as great as £75,000, showing how just how much of a difference shared-ownership can make – making this an especially attractive option even for those looking to purchase a home through a bad credit mortgage or for those simply looking to buy a good home at the record low mortgage rates available today.

Lack of Liquidity Scheme May See Mortgage Rates Rise Dramatically

[ Posted February 10th, 2010 ]

A recent announcement from Mervyn King, the governor of the Bank of England, stating that the Bank is not looking to extend the Special Liquidity Scheme that has been the cornerstone for many borrowers being able to receive necessary funding into 2010 has caused an uproar in the mortgage industry. Many borrowers and lenders alike believe that following through with this plan would mean an end to the historically low mortgage rates as seen in January as well as put undue strain on the real estate market that is only now just starting to fully recover after the stark middle period of the financial crisis.

It is not only first time buyers who are concerned about this problem, either, as even those looking for potentially taking on a re-mortgage later in the year to help consolidate their debt are concerned that this announcement to change plans could mean that they will be unable to successfully lock-in any rates that would actually help them get ahead in the post-recession market starting towards the end of the year when increased lender concern would mean less chance to successfully obtain affordable funding.

There are growing concerns as well that the £300bn funding gap that currently exists between equity and loaned amounts would only become solidified should the government funding and equity programs that many lenders and borrows rely upon be dissolved. This could in turn reduce available funding for homes even further as well as drive up house prices in highly competitive areas where only those rich buyers with a lot of spare cash on hand will be able to purchase property – and will be competing with each other regularly over what is left to do so. For the rest of the houses this lack of ability to purchase may actually serve to lower the existing house price on the market considerably and could be seen as a good thing in some areas where a reduction in the overall actual demand for homes could give communities some breathing room to catch up with development plans and allow the current supply/demand imbalance to level out, however that is a best case scenario only and most other predictions only go down from there.

Britain’s Cold Snap Puts Skids on House Market in January

[ Posted February 9th, 2010 ]

The UK and its relationship with weather is well-documented for being somewhat eccentric: Reading press releases from the train companies blaming the wrong kind of snow or leaves on the line for their delayed or cancelled services have caused as much hilarity as chagrin.

Recently, though, Britain’s recent cold snap has been blamed for the UK real estate market’s sluggish performance during January. Despite the fact that house prices rose during January, the number of new instructions and buyer interest both dipped as the extreme weather impacted upon the house buying marker, according to a new monthly survey published by the Royal Institution of  Chartered Surveyors. January saw 32% more chartered surveyors recording a rise in house prices overall, a figure that is up on December’s 30% mark.

Overall, however, surveyors recorded a fall in buyer enquiries for the first time in almost a year and a half, with the number of new instructions falling for the first time in over half a year, according to the report. The report concludes that the recent extreme weather had an obvious negative impact upon business within the residential property market, which also saw newly-agreed sales numbers dropping for the first time in ten months. In general, however, it appears that surveyors remain upbeat that the recent negative figures are simply as a result of the recent bad weather seen in the early part of January, and that this will not be a continuing trend. Indeed, the ratio of surveyors that anticipate a rise in house prices rose from 12% to 24%, and those anticipating sales to increase over the coming three months also rose from 7% to 24% during January. January also saw a minimal drop in transaction levels with the number of sales per firm dropping 1%, from 19% to 18%, though this may also be in part to some new changes in the latest mortgage offerings available as well as the climate issues..

The opening month of the year also saw the sales-to-stock ratio, perhaps the prime market indicator of future price trends, fall the the second month in a row. Despite the fact that most analysts seen to feel that January’s cold snap was a temporary aberration with regards to the falling supply and demand in the residential housing market, they also believe that the market may well lose momentum later in the year if market supply continues to increase – bad news for those seeking a high-paying re-mortgage though this does bode well for many first-time buyers looking to get into a home.

National Park Status Set to Raise Property Prices by 10 Percent

[ Posted February 8th, 2010 ]

Some market analysts claim that the creation of a new National Park-which many predict could become the most visited National Park in Britain-could give a real shot in the arm to UK property prices. It is thought that the properties in close proximity to and within the South Downs National Park may be set to climb by as much as 10%, especially with real estate agents utilising the national park status in order to raise the area’s desirability. This could also spell an influx of more second-home owners to the area, resulting in fewer local people having the ability to afford properties in the area, according to speakers at a recent conference organised by Smiths Gore Chartered Surveyors in conjunction with Adams & Remers Solicitors. 

The new South Downs National Park has been 60 years in the planning and developing, and it will stand out from England’s other 10 National Parks due to the fact that around 80% of the land will be under management, whilst 60% will be arable. The Park will also incorporate over 320,000 kilometres of footpaths, and will accommodate over 120,000 people who will live inside the Park’s boundary. Another 8 million people will be located within just one hour of the Park’s boundaries, according to insiders.

Smiths Gore believe that this will lead to greater opportunities for large and small landowners, due mainly to the expected upsurge in tourism to the area. This is expected to lead to an increase in the values of cottage rentals in the area, along with a rise in house prices of up to-or even beyond- 10%, due to the ‘desirability’ tag that will be afforded to properties in the wake of national park status. Possible challenges ahead are said to include the affordability of housing in the immediate area as well as an increase in weekend and holiday home ownership, especially through the use of buy to let mortgages that can take advantage of the currently low mortgage rates and potentially lock in a beneficial fixed-rate mortgage, which are likely to affect the supply of housing in an area that is already fairly expensive with regards to purchasing property.

Some feel more optimistic however, as the nature of the park itself, along with the large number of people already living and working in and around it, coupled with much more stringent DEFRA budgets afforded to National Park Authorities may well see local authorities retaining many responsibilities-including those related to planning. This would prevent what some call the likelihood of ‘The national park being a dumping ground for the type of development that would otherwise be precluded.’

Blue-chip UK Property Owner Eyes De-merger

[ Posted February 7th, 2010 ]

The UK’s largest owner of shopping centres, Liberty International, is currently examining ways in which it can best rebound from the most rapacious property crash in a number of decades, and in so doing is considering separating its portfolio of properties into two different listed companies.

The company, which lists Convent Garden, one of London’s prestigious tourism hotspots among its assets, is said to be examining splitting its £6.1 billion portfolio into two separate entities: a shopping centre business, and a dedicated London property business. Upon the news becoming a topic of open discussion, the company’s shares rose sharply by 1.6%, reaching a mark of £4.59 per share. According to a statement released by Liberty, the transaction is still subject to several third-party approvals, and these are currently under request. The Liberty board will be able to further assess the merits of the scheme once such outstanding matters have been settled, and they have refused to discussed further how the plan might be carried out or what details may be involved.

Liberty is widely thought to own some of the UK’s most fire-proof property assets-especially during the recession period, although their balance sheet is regarded as somewhat weak by some analysts-especially in the blue-chip property sector, which has been particularly hard-hit  by the new recessionary conditions that have been affecting commercial property in particular as mortgages for commercial properties have become somewhat more difficult to come by. It is, in fact, the only member of the UK Real Estate Investment Trust that has sold any assets in order to raise new capital as well as protecting exsting funds. The plan mooted by Liberty is reminiscent of a three-way de-merger that was proposed by the UK’s largest land securities firm in 2008, although the plan was later disregarded. Critics of such schemes state that companies are unable to capture outperformance due to the fact that resources tend to be divided between assets that require very different management. Supporters of the scheme, however, argue that such multi-asset companies tend to give domestic and overseas investors the very best kind of protection when the real estate market faces any kind of sharp downturn. Investors and shareholders are likely to be encouraged, but will watch carefully to see if their faith is matched economically. 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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