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Help To Buy Could Boost UK Property Market

Help To Buy Could Boost UK Property Market

The Help To Buy mortgage indemnity scheme proposed by Chancellor of the Exchequer, George Osborne, in the budget announcement made last week is expected to raise both property transaction levels and property prices.

The Help To Buy mortgage indemnity scheme which kicks in next January is designed to generate £3.5 Billion (GBP) of new lending, could be administered by ‘bad banks’ Northern Rock Asset Management and Bradford & Bingley, now in the umbrella of UK Asset Resolution.

Lenders would have to pay to participate in the scheme, but the price has not yet been set.

Estate agents expect Help to Buy to enable people to buy both existing properties and new build homes with 95% mortgages.

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Millions Regret Not Buying Property In 2012

Millions Regret Not Buying Property In 2012

A significant number of UK adults regret not buying property last year, new research by First Direct has shown.

Around 1.5 million people have responded to a banking and mortgage survey stating that they regret the fact they did not buy property in 2012.

The study revealed 3.6% of adults in the UK feel this way, which represents more than 1.5 million individuals.

Among the 25 to 34-year-olds, this proportion rose to 8%- the equivalent of almost 600,000 people.

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Is Funding For Lending Working For First Time Buyers?

Is Funding For Lending Working For First Time Buyers?

FIRST-TIME buyer numbers are up by almost a quarter year-on-year, lenders said yesterday, amid signs that government efforts to encourage mortgage lending are finally percolating down to people with smaller deposits.

A total of 21,700 loans worth £2.7 Billion (GBP) were made available to first-time buyers in November 2012, one of the highest monthly totals in the last three years, the Council of Mortgage Lenders (CML) said.

These figures mean that first-time buyer numbers were up by 24% compared with a year earlier, and increased by 8% month on month.

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Take That To The Bank

Guest post by Bobby Gill

Ever been frustrated or felt ripped off by your bank?

Yep thought so.

Maybe this letter will make you feel better and give you some ideas next time you contact them… shortly before closing your account and banking with a Co-Operative Bank instead!

Read more of Bobby’s thoughts and musing here – http://bobby-gill.blogspot.co.uk

Dear Sir:

I am writing to thank you for bouncing my cheque with which I endeavoured to pay my plumber last month.

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This wont be available for long… 

Revolutionary new report - Be Your Own Bank

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UK residential mortgage lending made a dramatic recovery in May 2012 after the sharp decline caused by the end of the stamp duty concession at the end of March.

The Council for Mortgage Lenders (CML) claimed that the amount of residential mortgage loans advanced to property buyers increased by 33% from in April 2012 to 48,300 in May 2012 resulting in overall mortgage lending being 25% higher than at the same point in 2011

The CML put the rise in first-time buyer activity down to the market bouncing back from the temporary slump that came with the reintroduction of 1% stamp duty at the end of March 2012.

CML’s Director General, Paul Smee, said: “The slump following the end of the stamp duty concession seems to have been short-lived. Lending is similar to late 2011 levels and showing a healthy improvement on the same time last year.”

Despite some 18,100 first-time buyer mortgage loans worth £2.3 Billion (GBP) increasing by more than 20% compared with May 2011.

Mr Smee urged caution amid the ongoing Eurozone crisis stating “Economic uncertainty could affect both the supply of mortgage lending and consumer confidence and we still anticipate a challenging lending environment for the rest of the year.”

Getting a mortgage to purchase property saves money, according to Barclays, who’s research suggests that people will save almost £200,000 (GBP) over their lifetime by buying property rather than renting.

The bank put the average cost of renting a residential property over 50 years at £623,000 (GBP), compared to just £429,000 (GBP) for buying a property, paying a mortgage and maintaining home – making a difference of £194,000.

The Barclay’s study said that around 50% of expenditure goes on mortgage payments, with around 40% going on capital repayment and interest costs, over 50 years of home ownership.

Barclay’s head of mortgages Andy Gray said that whilst the initial cost of getting on to the property ladder “can be a big barrier” for people, due to high value of deposits now required, there are still clear long-term benefits.

As inflation rises, so does the value of owning a property. While rental prices rise and fall with inflation, once a residential mortgage is paid off, all a homeowner has to pay for is the maintenance of the property and annual insurance to protect it.

While it may be cheaper to rent in the short-term, over the long-term PRS rents will inflate and tenants will be no nearer to owning property, whereas after 25 years, a home buyer will own their home outright and have financial security in their retirement.

If only getting a mortgage was that easy…..

Gross mortgage lending declined to an estimated £10.2 Billion (GBP) in April 2012.

Mortgage lending fell by 19% from £12.6 Billion (GBP) in March 2012 but was 2% higher than the total of £10.0 Billion (GBP) in April 2011, according to the Council of Mortgage Lenders.

CML chief economist Bob Pannell comments:“Mortgage lending activity has been relatively buoyant in recent months, with stronger lending for house purchase underpinning the more upbeat lending picture. The underlying picture is likely to be a bit stronger than the April figure suggests, because some first-time buyers are likely to have brought forward their transactions to March 2012 to take advantage of the stamp duty concession that was coming to an end in March 2012. Eurozone developments remain highly uncertain and have the potential to undermine UK economic prospects and conditions in our housing and mortgage markets. The underlying picture is likely to be one of easing momentum in the housing market, but with potential for a sharper downwards correction on bad Eurozone news.”

Institutional Investment is needed in UK Buy To Let Sector

Institutional Investment is needed in UK Buy To Let Sector

The Council of Mortgage Lenders, (CML), think the coalition Government’s Chancellor of the Exchequer, George Osborne should be doing more to encourage institutional investors to take a stake in Buy To Let property in the upcoming Budget.

The Council of Mortgage Lenders are the trade body for all the UK’s major bank and building society residential mortgage lenders.

The CML claim encouraging pension funds and corporate investors is a neglected policy that could provide the cash for more UK homes that can be made available to rent.

The suggestion is part of a wide-ranging Budget review aimed at influencing the Chancellor to ease the mortgage market. The submission also criticises current housing policies, including:

• Stamp duty holidays for first time buyers, which the CML claims creates a boom and bust market around deadline dates
• Paying housing benefits direct to claimants may damage landlord cash flows and lead to unnecessary mortgage arrears and repossessions
• Making better use of housing stock as, the CML states, most of the homes available over the next 20 years have already been built

The CML has told the Chancellor that given the vulnerabilities and uncertainties, it is important to make sure that all avenues, for strengthening and diversifying funding structures, have been explored.

The CML have also noted that the government continues to explore the obstacles to greater institutional investment in the supply of private rental property, but, strangely, the further scope for promoting domestic institutional investor interest in mortgage assets seems to be a neglected area of policy.

The Budget report also points out that UK banks and building societies rely heavily on raising funds from wholesale markets which are currently challenged by the Eurozone debt problems.

“Funding costs remain higher than a year ago, and the UK remains vulnerable to future eurozone developments. Given that current market conditions are somewhat fragile, it is very important that other government policies do not undermine housing market sentiment more generally. We believe that there are a few areas where policies are not as well aligned as they could be.” says the CML.

The CML’s calls echo the sentiment of many existing UK landlords who have had to search for a variety of additional landlord services such as insurance, tenant referencing and tenant eviction services from private sector specialist suppliers, in order to remain in a profitable situation.

With institutional investment into the UK private rented sector (PRS) specialist products and services for landlords will be enhanced for the corporate market and derivatives would be more affordable and even more readily available.

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