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Property Optimism Falls To Lowest Level For 18 Months

Property Optimism Falls To Lowest Level For 18 Months

Property Optimism Falls To Lowest Level For 18 Months

UK property price optimism among private rental sector landlords and residential property owners has dropped to the lowest recorded level for 18 months after buy to let mortgage lending in January was reported to be decidedly sluggish.

Traditionally, the UK property market generally experiences a slow start that incrementally builds to a summer buying frenzy before reaching another plateau and then a further period of increase followed by a gradual easing at the end of the year.

The latest Halifax House Price Index (HPI) found that UK property prices increased by just 2% in January 2015, reaching a new UK average property price of £193,130 (GBP).

Combined with figures released by the Department of Communities and Local Government, showing a slowdown in the number of new homes being built, and it is clear why landlord and residential property owners optimism has fallen.

60% of landlords and property owners, surveyed for the lender’s latest housing market confidence tracker report, expected the average property price to be significantly higher in 12 month’s time.

This means that house price optimism has fallen by 10 points from 62 to +52, the lowest level of consumer confidence since June 2013, when 52% of private rental sector landlords and residential property owners expected a large rise in property prices.

So what’s different?

  • In June 2013 UK inflation was at 2.9% compared to the current 0.3%
  • Employment was just over 30 Million compared to today’s figure of 30.9 Million
  • Mortgage lending levels were at £15 Billion (GBP) compared to the current £17 Billion (GBP).

Despite the fact that the UK’s Gross Domestic Product (GDP) for 2014 increased by 2.6% and all members of the Bank of England’s (BoE) Monetary Policy Committee (MPC) voted to hold interest rates at 0.5%, the dip in confidence levels over UK property prices reflects public concern over the UK economy in general.

Craig McKinlay, mortgages director at the Halifax said that “More than half of consumers still believe UK property prices will be higher than they are now in a year’s time; however optimism has continued to weaken. Despite this we’re now seeing a return to the seasonal trend for house price activity”.

But he pointed out that of more concern are the figures from the Department of Communities and Local Government showing a slowdown in the number of new homes being built. ‘It’s widely acknowledged that the UK needs an increase in the amount of new housing being built,’ said McKinlay.

‘The Lloyds Banking Group Commission on Housing targeted 2 to 2.5 million new homes built by 2025 new homes to be built before 2025. If we are to address demand the increase in new homes coming onto the market needs to be sustainable,’ he explained.

CML Forecast 16% Mortgage Lending Growth In Next 2 Years

CML Forecast 16% Mortgage Lending Growth In Next 2 Years

Council of Mortgage Lenders Predict Significant
Mortgage Lending Growth

The Council of Mortgage Lenders (CML) have predicted that gross mortgage lending in the UK will increase by 16% over the next two years.

The CML says gross mortgage lending in the UK reached around £207 Billion (GBP) in 2014 and they firmly believe that gross mortgage lending will grow by 7% to £222 Billion (GBP) during 2015.

Following that, the CML also forecast a further 8% increase to £240 Billion (GBP) in 2016, up 16% when compared to gross mortgage lending in 2014.

While the CML are happy to forecast 2 years of mortgage lending growth, it acknowledges that the pace of growth has slowed compared with the 18% recorded from 2013 to 2014, with gross mortgage lending increasing from £176 Billion (GBP) in 2013 to £207 Billion (GBP) in 2014.

In its analysis, the CML said that the stamp duty reforms announced by the Chancellor, George Osborne, in the Autumn budget would help boost overall mortgage lending activity, following the lull encountered in the summer of 2014.

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Increase In Mortgage Lending Reported By CML

Increase In Mortgage Lending Reported By CML

Property Market Remains Healthy As Gross Mortgage Lending Rise Reported By UK Council Of Mortgage Lenders

There are plenty of media reports suggesting that the UK property market may have stalled and some economists have even gone so far as to predict another property price crash may be on the cards.

However new figures published by the CML show that these statements are far from true as there has been a considerable rise in the value of gross mortgage lending recorded in the UK over the last month.

Figures published by the Council of Mortgage Lenders (CML) highlight a significant rise in mortgage lending volume during October 2014, with gross mortgage borrowing increasing by 5% from September this year to £19 Billion (GBP) making the total gross lending value 8% higher than during October 2013.

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Is The Mortgage Market Review Slowing The UK Property Market?

Is The Mortgage Market Review Slowing The UK Property Market?

Is The Mortgage Market Review Slowing The UK Property Market?

The number of new mortgages being approved by lenders dropped to an 11 month low in May 2014 as the new affordability rules brought in by the Mortgage Market Review (MMR) caused borrowers to be put off and delayed hundreds of existing mortgage applications.

The Mortgage Market Review brought in on the 26th April 2014 requires all UK based mortgage lenders to carry out rigorous affordability checks on the financial status of borrowers.

These stringent affordability checks include stress tests designed to determine if a borrower could continue to repay their loan if interest rates rise significantly.

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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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UK Property Prices Up £7,000 In Four WeeksUK Property Prices Hit 2008 Peak Values

UK property prices have jumped up £7,000 (GBP) in a month as UK property market activity picks up.

The huge increase in property values over the last four weeks is confirmation that the UK is enjoying another property boom.

The £1,750 weekly uplift puts the price of a typical residential three-bedroom semi detached property at £252,418 (GBP), according to popular property portal, Rightmove.

The biggest increase in property prices was recorded in London where new vendors have added an extra £50,484 (GBP) to average residential property asking prices this month, however property prices in the nation’s capital are over inflated compared to the rest of the UK.

The rise in UK property prices is being driven by first-time buyers and second step buyers following the introduction of the Government’s Help-To-Buy mortgage scheme.

Fears of a housing bubble have also been eased as the number of new property vendors entering the property market has also increased by 8%, however property shortages have driven up property prices in some UK regions.

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RICS Warns Of Another Property Bubble If Property Prices Increase By More Than 5%

RICS Warns Of Another Property Bubble If Property Prices Increase By More Than 5%

RICS Want To Cap Property Price Increases 

RICS want the Bank of England’s Financial Policy Committee (FPC) to consider limiting annual house price inflation to just 5% in order to prevent another housing bubble.

According to research by the Royal Institute of Chartered Surveyors (RICS), excessive property price growth and high mortgage lending have left the banking sector vulnerable and specific policy on limiting property price growth is required to prevent another property price bubble.

RICS have suggested caps on elements such as:

  • Loan-To-Value (LTV) ratios
  • Loan-To-Income ratios
  • Mortgage durations
  • Ceiling limits on the amount banks are permitted to lend (should prices exceed a given limit)

RICS reckon that by sending such a clear and simple statement to the public, indicating that the Bank of England (BoE) will not tolerate property price rises over 5%, would help restrict excessive price expectations across the country, preventing property prices from over-inflation.

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Buy-To-Let Mortgage Lending Increases By 31%

Buy-To-Let Mortgage Lending Increases By 31%

UK Buy-To-Let Mortgage Lending Hits £5 Billion (GBP)

The resurgence of property investment in the UK means that landlords are extending their rental property portfolios and cashing in on the strong demand for rental property from “generation rent”.

The buy-to-let boom has seen mortgage lending reach another milestone as latest figures released by the Council of Mortgage Lenders (CML) show that mortgage borrowing has hit a five-year high, and the Bank of England’s (BoE) historically low interest rates are predicted to fuel even more growth in the sector.

Buy-to-let mortgage lending has continued to excel expectations as the latest CML data shows £5.1 Billion (GBP) was advanced to landlords in the second quarter of 2013, that’s 21% up on the first quarter of the year and up 31% on 2012 figures.

The new governor of the Bank of England, Mark Carney, has indicated that interest rates are expected to remain low until at least 2016, encouraging further growth in the UK private rental sector (PRS).

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Buy-To-Let Mortgage Lending Up 20% Over The Last Year

Buy-To-Let Mortgage Lending Up 20% Over The Last Year

UK Buy-to-let mortgage lending has increased by 20% year-on-year during 2012 to reach its highest level since the UK property crash of 2008.

The appetite for buy-to-let mortgages has been boosted by strong demand from frustrated first time buyers, who end up as tenants as they are unable to get themselves on the property ladder. This strong tenant demand has in turn pushed up private rented sector rental prices as tenants find that they have become financially trapped.

£16.4 Billion (GBP) worth of buy-to-let mortgages have been taken out over the last year, showing a 19% annual increase, the Council of Mortgage Lenders (CML) said.

Around £4.6 Billion (GBP) worth of buy-to-let mortgages were advanced in the last three months of 2012, representing a 10% increase on the previous quarter.

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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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