Mortgage Rates Slow Down in UK Housing Market in October 2016

UK housing market showed rather a slower tendency towards the number of mortgages sought out by home movers in October 2016. It’s 20% less than that of in October 2015, as explained by the Council of Mortgage Lenders.

Tax changes has led to the fall down of the buyer market whereas the remortgage activity is strengthened by lending market and it is showing huge growth rate as it has achieved its 8-year high figures (since January 2009) in October 2016.

After the Brexit vote, home owners have been dealing with Back of England’s rate cut to 0.25 percent. Home owners’ confidence has been shaken by the EU referendum in June 2016.

Borrowers have to pay a certain amount from their household income to cater the service repayments. According to Council of Mortgage Lenders, this amount has fallen at 17.6 percent for both first-time buyers and home movers.

According to Paul Smee, Director General of Council of Mortgage Lenders, the buy-to-let lending slowed as borrowers are getting the benefits of mortgage re-pricing due to the recent tax cut changes, thus making the remortgage market strong.

According to Royal Institution of Chartered Surveyors, in October 2016, approximately 28,900 loan payments were issues to home movers, which is 20 percent less than that of last year and 8 percent less than that of in September 2016. £5.9 billion were borrowed by home movers, which is 18 percent less than that of a year ago and 9 percent less than that of in September 2016.

In other words, number of buyers increased in October 2016 where as the number of properties available actually fell down.

Remortgage activity showed 11 percent increment in September 2016, which is around £6.1 billion. Number of loans also showed growth as 34,700 loans were granted in October 2016 (up by 10 percent from September 2016 and up by 5 percent from October 2015.

Bank of England is currently monitoring the buy-to-let market and its statistical figures claim that it’s slowed down due to the 3 percent stamp duty surcharge on second properties. This surcharge was introduced in April 2016.

Although lending showed growth by 7 percent on monthly basis making it £3 billion yet it’s still 21 percent lower when it comes to annual lending growth. Buyers were seemed to be more interested in remortgages than that of house purchases. They are getting benefits of low rates in order to get relatively more secured and less monthly repayments in the coming years.

Real Estate Property Price Fall by 2% in November 2016

November 2016 witnessed a fall in real estate property prices by 2%, according to property portal Rightmove. To be accurate, property prices experienced a decrement of 2.1 percent as compared to that of October 2016. It was fairly expected and is in accurate associated with the average over the last 6 years.

Impact of Brexit

According to real estate market experts, Brexit has a great impact upon the UK real estate market as prices rose pretty quickly and it’s now out of reach for some buyers. However, Brexit may or may not have long lasting impact upon the UK real estate economy.

Price Rise in Real Estate Market

According to Rightmove analysis team, as far as the housing marketing condition is concerned, it cannot be said pretty with assurance that it would recover soon or not. Analytics are predicting a 2 percent house price growth in 2017 in the UK but these predictions also state that inner London housing prices would fall by 5 percent as well. On a similar note, real estate property prices for outer London are expected to rise by 3 percent in the coming months.

Housing property prices for Greater London fell by 4.3 percent in December 2016 and is now 0.1 less than that of the same month in the last year. In December 2016, average price of a house in Greater London is £616,160. Similarly, Northern London housing market experienced a heavy price fall of 15.3% in December 2016 and the average price here is 17.7 percent less than what was exactly a year ago. In December 2016, average price of a house in Greater London is just touching £1m.

Wales and England experienced a price fall of 2.1 percent in the housing asking price in December 2016. However, it is important to note that market prices for these real estate markets rose up to 3.4 percent in 2016 overall.
Inner London housing prices are also expected to stay weak throughout the year. However, a 3 percent housing price rise in expected in 2017 for London housing prices.

The year 2016 overall got a property market growth of 3.4 percent and it is expected that 2017 will witness a property price growth up to 2 percent due to the weakened market pace. However, property prices would still increase.

October 2016 experienced a price inflation, which followed a slight decrement in housing prices in November 2016.
Although the property market experienced a relatively slow growth rate yet it would still be considered the consecutive 7th year of property price increase.

The Millennial: Things You Need to Know As a First Time Home Buyer

For the longest time, millennials were perceived as a ‘renting generation’, and the state of the economy didn’t help their case either. Not anymore though, as millennials, who are now in their late 20s and early 30s are finally entering the buyers’ market, and the local government is certainly encouraging this.
While many of us would definitely love to buy our very first home, it is difficult to manage finances given the current onset of the economy. However, as the local government is willing to issue £30,000 for people who are saving for a home, we can safely say that now is the best time to become a homeowner. That being there are a few things you need to know before you jump the buying bandwagon.

The Deposit
Before getting in touch with a homeowner or realtor, you need to have some savings that will go in the deposit/ downpayment for the property. While most people would prefer a mortgage, banks today don’t actually allow you borrow the full amount required to buy a home.
Instead, banks encourage borrowing for people who save between 5% and 20% of the total cost of property. In other words, if you are interested in buying a £150,000 home, then make sure you save at least £7,500. Likewise, more savings will allow you to have more favourable mortgage terms.

The Mortgage Terms
Since mortgages work the same way as loans, you will have to make monthly payments at an agreed rate, which depends on the financial institution you are borrowing from, and the downpayment/ deposit you made. As a practice, when you’re entering the buying market and have some savings, consider the financial impact of choosing different mortgage terms. This can help you set up a realistic budget that allows you to assess whether you can afford a home at this point in time or not.
Since borrowing regulations are stricter nowadays, you will be required to provide proof of income that ensures you can afford the monthly repayments. That being said, it is still advisable to consider different options, even when an institution claims that you can afford the mortgage terms. Since there could be situations exclusive to you that may affect your finances, it is always better to seek mortgage terms that give you convenience during the repayment tenure.

Additional Costs
There’s a reason why people say buying a home is a life changing decision, especially when your familial responsibilities increase overtime. For instance, changes in lifestyle like having a baby, paying for major healthcare treatments, or costs of renovations may significantly affect your financial status, which may have a domino effect on the mortgage repayments. This is one of the reasons why banks today encourage buyers to take ‘stress tests’ which assess their ability to repay mortgages against potential circumstances.

As a millennial, the opportunity to enter the buying market is certainly too good to let slip. However, if your financial obligations are more than your current income, then you must wait before entering the buyers’ market!

Mortgage Approvals in UK Hit 14-Month High in May

Stronger household finances and seller’s market lead the UK mortgage in 2015.

Just two months back in May, mortgage approvals in the UK hit the 14-month high. This was followed up by what was the biggest jump in mortgage approvals in over six years in April, as the Bank of England (BoE) reports.

2015 is turning out to be a great year for the UK real estate. The figures released by BoE indicate that we have the strong growth in consumer lending to thank for. Mortgage approvals for home purchases in April were 68,076, followed by almost 73,000 in May alone. The size of loan approvals has also increased. Only two years ago, the typical loan was of £159,000, compared to the nearly £170,000 of today.

Signs of Sustainability

The confidence in the housing market is certainly high and has shows of sustainability after the general elections. Richard Woolhouse, the Chief Economist at British Bankers’ Association (BBA) shares his view on the housing market’s performance in May:

“The increase in mortgage approvals this month is consistent with the trend we’ve seen since the start of the year”

Housing market experts and analysts are claiming that the number of mortgage approvals will continue to grow throughout the year. Recent surveys conducted by the IHS Global Insight also suggest that an increasing number of people now want to buy a home.

However, it’s not all cherry as the shortage of properties in listings is catching up with the market, and as such, there the median home prices are increasingly significantly. For a homeowner, the market could never be more favourable. For a first time buyer, homes are getting more expensive than ever, coinciding with increased lending.

Lending Grows

It’s not just that more people are now borrowing, but also that more number of people are borrowing more money. According to the BBA, the amount of money borrowed through credit cards, personal loans, and overdrafts grew by 5% year-over-year in May. This indicates the highest growth rate in borrowing since autumn 2010.

The sharp increase in unsecured borrowing can be contributed to the increase in personal loans handed since the past year. As of June, the amount that the population owes on loans is nearly £36 billion, and a staggering £41 billion on credit cards. Before the financial breakdown that transpired during and after 2007, the amount owed from personal loans was £66 billion and £30 billion on credit cards.

Two More Rounds

2015 may certainly be the year the housing market recovered in full swing and showed signs of sustainability. As we have two more quarters remaining to run down, there is great anticipation in the housing marking heating up again. Despite that the construction and development activity in the UK is failing to pick its pace, the housing market looks sustainability for the most part, driven primarily by strong household finances.