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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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Mortgage repayments have fallen by more than two-fifths in Scotland when taken as a proportion of income

 

Scotland is best place to get a mortgage

Scotland is best place to get a mortgage

Mortgage payments have fallen from a peak of 38% in last quarter of 2007 to just 22% in the final quarter of 2012, according to research conducted by Bank of Scotland.

Lower residential property prices and reduced mortgage rates have been the main driving force behind the significant improvement in affordability.

The average monthly take-home wage in Scotland is £1,954 (GBP) while the average monthly mortgage payment is just £424 (GBP).

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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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Mortgages for private property purchases and Buy To Let landlords and business credit are becoming more widely available, thanks in part to the Government’s financial initiative, the Funding for Lending Scheme.

Mortgages More Widely Available in 2013

Mortgages More Widely Available in 2013

An indicator that moves to ease lending restrictions and free up credit appear to be working.

The £80 Billion (GBP) Government scheme, launched in August 2012 was intended to boost the flow of credit to private households and businesses.

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Get Into Buy To Let While You Still Can

Buy to let provides long term security

Property investors should still be benefiting from lower mortgage repayment rates, as many will have now reverted back to their lender’s Standard Variable Rate (SVR) and the record low Bank of England (BoE) base rate remaining at 0.5% has certainly done property investors a huge favour.

This is of massive benefit to property investors as a lot of buy-to-let mortgage deals do not have typical SVR’s but they do revert to a rate that tracks the Bank of England base rate.

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Quick Property Sales Fraud Risk

The FSA has warned homeowners in financial difficulties who are looking to sell their home fast to beware of committing fraud.

FSA Warns of BMV Property Fraud

FSA Warns of BMV Property Fraud

The financial regulator says it has evidence that some below market value (BMV) or distressed property sales may involve fraud, where the buyer (a company or an individual), asks the selling homeowner to state that the property has been sold for its full open market value, rather than the agreed purchase price.

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Interest-Only Mortgages Are Becoming Too Niche For More Mainstream Lenders

Mortgage Lenders Think Interest Only Mortgages Are Too Risky

More Mortgage Lenders Think Interest Only Mortgages Are Too Risky

Mainstream mortgage lender, Nationwide has announced it will soon stop offering interest-only mortgages to borrowers because that part of the market is a “niche area”.

The high street bank will stop offering interest only mortgages from 18th October, although customers who are currently on an interest-only deal with Nationwide will remain unaffected, at least until the end of their fixed rate term.

Other UK lenders have also tightened up their lending criteria on similar mortgage types amid concerns about financial stability and people not being able to pay the money back, meaning borrowers could also struggle to find similar mortgage deals elsewhere.

Interest-only mortgages allow people to only pay off the capital when the mortgage term ends, enabling them to maximise their initial borrowing capacity. Mortgage brokers have greater access to available products and can advise individual investors further.

Like many other lenders, Nationwide had already limited its interest-only mortgage lending to up to 50% of the property’s value, and it now joins the list of those to pull out of the interest-only market.

In May this year, the Co-operative Bank withdrew its entire range of products, stating house price weakness and uncertainty about the economic climate had resulted in the rapid decline in demand for interest-only loans.

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.

For access to a full list of mortgage brokers – Click Here

UK mortgage lending saw an increase in activity during July 2012.

UK Mortgage Lending Increases in July

UK Mortgage Lending Increases in July

The Council of Mortgage Lenders (CML) have stated that gross mortgage lending in July increased by 8% to £12.7 Billion (GBP), from £11.7 Billion (GBP) in June 2012 and is 2% higher than the total of £12.5 Billion (GBP) in July 2011. The figures include private residential property purchases and Buy-To-Let mortgages for rental property.

Caroline Purdey, CML market and data analyst, commented: “Gross mortgage lending showed an 8% increase from last month, continuing the see-saw pattern seen throughout this year, albeit against a broadly flat market. Interpretation of recent trends continues to be challenged by one-off effects. We look forward to the September figures when the distorting effects of the Diamond Jubilee and the Olympics should largely have worked their way through.”

Mortgage lending levels appear to be slowly recovering, and there are a multitude of products on offer to borrowers, albeit with lower Loan To Value (LTV) rates and higher deposits required, however any real recovery in lending is still a long way off.

MyPropertyPowerTeam.co.uk offer property investors and landlords useful information for choosing the right mortgage broker for you. Please see below for an excerpt and follow the link at the bottom of the post to read more

 

Which Type Of BROKER Is Right For You?
Mortgage
BROKERS help you through the minefield of mortgages whether you need a buy to let product, have bad credit, need a self certification mortgage, are a first time buyer or simply need mortgage advice. Their job is to basically find the best mortgage deal and mortgage rate for their clients needs, complete all paperwork and manage the application through to completion of the deal.

 

The mortgage maze can be a difficult one to navigate and seeking unbiased mortgage advice is often the easiest way to understand the options available.

There is more than one way of classifying BROKERS. The Financial Services Authority (FSA) list various classes of BROKER dependant upon independence and fee structure. These definitions are currently under review as part of the FSA’s Retail Distribution Review (RDR) and will be updated if there are any changes.

  • Mortgage IFAs (independent financial advisers) who have access to the whole of mortgages on the market (as well as other areas of financial advice) and give you the choice of paying by fee if you prefer
  • Independent Mortgage Advisers who offer products from the whole of the market as well as giving you the choice of paying by fee
  • Mortgage Brokers who offer products from the whole mortgage market but are paid via a commission

It is probably more important from an Investors point of view to choose their BROKER based on the amount of suitable products offered.

Read more information

Directory Listings for Mortgage Service Providers

2012 Buy-To-Let Mortgage Numbers Increase By A Third

2012 Buy-To-Let Mortgage Numbers Increase By A Third

There are fresh fears that First-Time Buyers (FTBs) and next time buyers are being forced out of the UK residential property market by Buy-To-Let landlords.

The Council of Mortgage Lenders (CML) said that 32,300 Buy-To-Let mortgage loans were made over the first quarter of 2012, a 32% increase on the first three months of 2011.

Meanwhile, according to chartered surveyors E.serv, the number of residential property mortgages lent to first-time buyers in April 2012 fell to their lowest level for 9 months. The company said that loans made to first-time buyers in April numbered just 11,307, a drop of 5% from March 2012 and the lowest since July 2011.

Mainstream mortgage lenders are increasingly reluctant to accept applications from First-Time Buyers due to low Loan-To-Value (LTV) rates and the size of deposit required. Instead there is a preference to lend to Buy-To-Let landlords, who are less likely to default on mortgage payments because they are able to utilise specialist Rent Guarantee insurance products to keep cashflow constant.

Richard Sexton, business development director at E.serv, said “Mortgage companies have begun to scale back lending to first-time buyers. Buy-to-let landlords are taking the places of first-time buyers as there is an absence of them in the market place because they can’t get loans. The UK housing market would be in a far worst place than it is now if it were not for the return of buy-to-let landlords”.

Chief Executive of Dragonfly Property Finance, Jonathan Samuels, said “There has been a seriously sharp spike in mortgage loan applications for buy-to-let properties in the first four months of 2012. A shortage of rental stock and strong demand from the growing number of tenants forced to rent will keep driving the sector forward. There’s a lot of portfolio building, as investors continue to add properties to give them increased exposure. People are seeing Buy-To-Let as a pretty stable place to be because residential property prices are falling and mortgage lenders still see lending to owner-occupiers as risky. Investors feel that there’s a lot left in the buy-to-let market and are putting their money where their mouth is”.

However there are warnings that buy-to-let landlords will need to know what they’re doing when it comes to best rental practices and should take appropriate measures to protect their rental income, such as thoroughly referencing tenants and ensuring Rent Guarantee insurance is in place. Landlords should also be prepared for Bank of England interest rates to rise anytime within the next 12 months as the UK struggles to escape the grip of recession.

The CML said that although lending to buy-to-let landlords has grown sharply in the last year, it is still at only 30% of 2007 levels.

With average loan-to-values on buy-to-let mortgages at 75% and average minimal rental cover at 125% it is unlikely that Buy-To-Let mortgage lending will recover to the same levels seen in 2007, as 25% deposits will prevent many amateur landlords from buying rental property.

UK Government Housing Minister, Grant Shapps, said: “We do not have to make a choice between first time buyers and buy to let. We need both. And while a third of all mortgages went to first time buyers last year, only 12% went to buy-to-let landlords. But I’m determined to pull out all the stops for those who want to get on the property ladder, which is why in March the Prime Minister and I launched the NewBuy Guarantee scheme which is expected to enable up to 100,000 aspiring homeowners to buy newly built properties with just a fraction of the deposit they would normally need.”

There Will Never Be A Better Time To Invest In Property

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