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Mortgage Market Review Regulations Will Slow Property Transactions

Mortgage Market Review Regulations Will Slow Property Transactions

New Mortgage Rules Will Slow Down
UK Property Transactions

65,500 property purchases were approved by mortgage lenders in March 2014, showing the second successive monthly drop in the number of property transactions as mainstream mortgage lenders implement stricter rules which will be rolled out fully at the end of April 2014.

The figures for March were 7% lower than the 70,309 mortgage approvals recorded in February 2014.

The recent falls in the number of mortgage approvals are a stark contrast to the 11 months of continuous improvements which saw average monthly lending levels increase from 52,537 to 76,753 between February 2013 and January 2014.

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Mortgage Lending Up £1.7 Billion (GBP)

Mortgage Lending Up £1.7 Billion (GBP)

UK Mortgage Lending Up £1.7 Billion (GBP)

The latest mortgage lending figures released by the Bank of England show that lending secured on residential property increased by £1.7 Billion (GBP) in December 2013, compared to the average monthly increase of £1.1Billion (GBP) observed during the previous six months of the year.

The increase is generally being credited to the success of the Government’s Help-To-Buy scheme, with London leading the way on residential property price rises, but what is the real situation affecting the UK?

Director of e.surv chartered surveyors, Richard Sexton, explained: “Mortgage lending in the UK is improving at lightning-speed. Lending has hit a six year high, as banks continue to offer cheap loans and interest rates, and repayments remain low. Mortgage lenders have dramatically increased lending to borrowers with smaller deposits, which has encouraged more first-time buyers to the market. And the government’s Help-To-Buy scheme has given consumers a huge confidence boost, which has increased lending volumes further. But the heart of the market remains in London and the South East. In other areas of the country the recovery is far slower. House prices may be increasing quickly, particularly in the capital, but it’s important not to withdraw Help-To-Buy too soon. In London, buyers need the scheme to get on the ladder. In many other areas, wage growth has been comatose since the economic crash, would-be property buyers simply don’t have enough income to save for a deposit. Building more houses would be a far more prudent approach to capping price rises than trimming down the Help-To-Buy scheme prematurely.”

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Property repossessions In the North of England are higher than national average

Property repossessions In the North of England are higher than national average. Property
May Be Cheaper But It Is More Likely To Be Repossessed

4 Of Top 10 Property Repossession Areas
Are In North West of England

A new study by e.surv chartered surveyors has revealed the top 10 hotspots for property repossessions in the UK, and the results show that property owners in the North are less able to keep up with mortgage repayments than property owners in the South.

e.surv’s researchers analysed Ministry of Justice figures for court-ordered repossessions for the 12 months up to 30th June 2013, plus the company’s own data, and found the largest North-South divide since the onset of the financial crisis, with 3.2 repossessions per 1,000 households in the North of England, compared with 2.4 per 1,000 in the South of England.

Four of the UK’s top five “repossession hotspots” are in North-West of England according to the data with Chester, Blackpool, Oldham and Wigan among top five property repossession hotspots.

These areas are among those with the highest proportion of property owners who are struggling to keep up with mortgage repayments.

The data revealed that even despite all the media coverage about surging property prices in and around the capital, two areas within Greater London – Romford (3rd highest number of property repossessions per thousand households) and Croydon came in joint 7th on the repossession hotspot top ten.

Chester is the top UK city for property repossessions by a substantial margin, THREE times the national average!

The rest of the North-West of England does not fair much better with 8 out of 10 towns having above the national UK average number of property repossessions per thousand households.

This news presents an excellent opportunity for new, amateur and seasoned property investors to grab some property bargains as mortgage lenders and banks will be looking to offload these repossessed properties quickly so that they can get their money back, they are not looking to profit!

Lancaster, Liverpool and Carlisle in the North of England showed a lower than the average number of property repossessions, according to the data. However, despite being below the national average, Carlisle had seen a 37% increase in the rate of property repossessions in the 12 months to June 2013.

Other UK regions that also showed huge increases in the volume of property repossessions over 12 months, but remained below the national average are:

  • Taunton in Somerset – 34% increase in property repossessions up to 30th June 2013
  • Brighton – 30% increase in property repossessions up to 30th June 2013
  • Reading – 27% increase in property repossessions up to 30th June 2013

e.surv Director, Richard Sexton, said: “Residential property prices may be high in the capital, and employment prospects may be stronger, but in such densely populated areas, there remain property owners who are struggling with mortgage payments. Many borrowers have seen their finances slowly eroded by high inflation and increasing living costs. This has been particularly potent in London, where less affluent borrowers, by that I mean those who could only just afford to buy, have been badly affected. On a national level repossession numbers are falling as mortgages become cheaper, wages are slowly picking up and the employment market has more vitality. For the UK as a whole, repossessions fell 17% during the 12 month period, with 66,544 repossession orders granted in 2012-13, as opposed to 77,856 in 2011-12. As a region, the north has traditionally depended on public sector jobs, but a squeeze in public sector funding has led to loss of jobs for many, and very slow pay increases for others. Pay increases that are consistently below the rate of inflation have further tightened household budgets, and caused many to fall behind on mortgage repayments. There is still a long way to go before the northern property market returns to its pre-recession health, and all the while the north is still playing catch-up, and falling further and further behind the south.”

Top 10 Property Repossession Areas

 

UK Town / Region

Property Repossessions Per Thousand Households

Total Number Of Property Repossessions In 12 Months To 30th June 2013

1

Chester – North West

8.4

961

2

Blackpool – North West

4.5

570

3

Romford – Greater London

4.4

936

4

Oldham – North West

4.3

829

5

Wigan – North West

4.2

541

=5

Luton – Bedfordshire

4.2

565

7

Bradford – Yorkshire

4.1

1002

=7

Doncaster – Yorkshire

4.1

1356

=7

Croydon – Greater London

4.1

644

10

Northampton – Northamptonshire

3.8

966

 

 

 

 

 

 

 

 

Source: e.surv 

So what are you waiting for?

There will never be a better time to purchase repossessed properties, there are a great number of deals to be had from the areas listed in the table above.

Think of the table as a treasure map, with 10 UK locations offering repossession property deals direct from the banks and mortgage lenders.

2nd Consecutive monthly fall in residential property mortgage approvals

2nd Consecutive fall in residential property mortgage approvals

Mortgage approvals for UK residential property

purchases dropped in February

The Bank of England (BoE) has confirmed that residential mortgage lending fell for a second successive month in February 2013 reinforcing previously released data from the Council of Mortgage Lenders (CML) and the British Bankers Association (BBA).

The Bank of England figures show that 51,653 residential property mortgages were approved in February, the lowest number since September 2012.

The overall figure was down on the Bank’s revised figure of 54,187 mortgage approvals expected for January, and the amount of mortgage approvals for the purchase of residential properties were less than was originally predicted for February.

Economists had forecast a fall in mortgage approvals, down to 53,700, according to a panel of estimates by Bloomberg. However, the Bank of England have said that remortgage lending in February had increased by 3.8% to 26,771.

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 Mortgage Approvals Fall As Demand From

Residential PropertyBuyers Fades

UK Mortgage Approvals Fall

UK Mortgage Approvals Fall

UK mortgage approvals in February 2013 have fallen to the lowest level seen for seven months according to E.surv chartered surveyors.

E.surv, reckon that only the government Funding for Lending (FLS) scheme is preventing a much steeper fall in residential property mortgage lending for purchasing, even though uptake from potential property buyers has been lower than expected.

Overall UK mortgage approvals fell by 11% in February to just 49,019,  down from 54,719 approvals recorded in January 2013, making it the lowest mortgage approval level since July 2012, according to E.surv data.

The fall in mortgage approvals comes despite a wider and cheaper range of residential mortgage products on offer, which suggests that the drop in mortgage lending was due to weakening borrower demand and not a decline in the availability of residential mortgages.

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Landlord Mortgages Are Hard To Get say RLA

Landlord Mortgages Are Hard To Get say RLA

According to a recent survey by the Residential Landlords Association (RLA), almost half of their landlord members have encountered difficulty when trying to obtain a buy-to-let or landlord mortgage.

141 RLA members were asked how easy they had found it to access a buy-to-let mortgage,

  • 21% said they were unable to obtain a buy-to-let mortgage
  • 24% said they found it very difficult
  • 22% had to shop around
  • 14% found it easy to get a mortgage
  • 17% said they found it fairly straightforward

The RLA said that the first major challenge for the new housing minister Mark Prisk will be to persuade banks to unlock the financial support needed by private landlords to grow the residential lettings sector at a time when more homes are needed.

RLA chairman Alan Ward said: “We welcome the Government’s renewed commitment and interest in the opportunities that the private rented sector can play in meeting the country’s housing needs. However, this will not happen without financing from the banks. It is time that the blame game for the difficulties in accessing finance between Government and the banks came to the end for the sake of those desperate for a roof over their heads.”

The release of the RLA data coincides with news that the UK mortgage market has endured its third worst August for almost two decades.

The news comes from e.surv, which are part of the LSL property group, who have made the gloomy forecast based on its own activity and reckons to be correct to within a near margin of official statistics which will be issued later in the month.

The firm is predicting that house purchase loans in August fell 8% from August 2011, down from 53,040 approvals to 48,913 – making last month the third worst August for almost 20 years.

Whilst last month’s figure was up from July’s 47,312, e-surv said this shouldn’t be taken as a sign of improving market conditions, saying that July was weak by historic standards with purchase approvals 5% lower than July 2011.

The firm said tightening credit conditions and the effects of the double-dip recession were moving the UK mortgage market back towards 2010 levels and the annual contraction in landlord mortgages is the result of a sharp fall in lending to borrowers with deposits of less than 15%.

The average LTV on a property purchase loan has now fallen below 60% for the last three months, reversing a seven-month period where it was at least 60%.
 
Richard Sexton, business development director of e.surv, said: “Much of the progress the mortgage market has made since summer 2011 has been unravelled by the double-dip recession. Lending volumes – particularly to first-time buyers – are slipping back towards the dismal levels we last saw in 2010 and early 2011. This is largely thanks to a fall in the number of high loan-to-value mortgages banks are willing to grant.  Credit conditions for banks have become painfully tight, and they’ve responded by toughening criteria on mortgages aimed at borrowers with small deposits. The distraction of the Olympics, the awful weather and holiday season could also all be reasonably cited as potential contributory factors.”
 
e.surv said August was the third consecutive month where lending has fallen on an annual basis, and the biggest year-on-year fall for 15 months since 1993, when the Bank of England’s records begin, only 2008 and 2010 have seen lower lending levels during August.

e.surv’s analysis found that more landlords have stepped in to fill the vacuum left by first-time buyers at the bottom of the market. Despite overall purchase approvals falling 8% year-on-year, approvals on property worth less than £125,000 fell by only 4% as landlord mortgages were used to purchase property that was out of reach of first-time buyers.
 
Sexton said: “With rents pushed up to record levels, landlords are piling in to cheap property. Tight mortgage lending conditions are a virtuous circle for landlords and a vicious one for first-time buyers. The fewer first-time buyers there are, the cheaper property becomes for landlords, and the more expensive rents get. We expect landlords to continue to represent a disproportionate share of the buying market in the medium term. Would-be buyers will hope the Government’s Funding for Lending scheme can help improve the flow of credit in the near future.”
 
There was some positive news in August. On a month-on-month basis, house purchase loans rose 3% from 47,312 in July.

But this shouldn’t be taken as sign that market conditions are set to improve. July was weak by historic standards – purchase approvals were 5% lower than July 2011 – and high LTV lending levels were the same as in August.

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