News
May 10th, 2011
The Trends in Lending report originating in the Bank of England is indicating more solemn days ahead for mortgage lenders. Anything but a surge is predicted for the summer months. Less than strong figures for the market during the first quarter has set up this pessimistic view.
Gross mortgage lending as well as total mortgage approvals were down in March compared with the month prior. Remortgage approvals also fell during the same time frame. The numbers were marginal, but enough to cause further concern that the market is starting the year headed in the wrong direction.
The Bank of England commented on lenders expectations, saying: “In recent discussions, some lenders reported expectations of subdued lending for house purchase in coming months.”
The director of Coreco, Andrew Montlake, sees the figures in a different light when considering the view of the home hunters, saying: “In March we saw a pick-up in enquiry levels from people looking to purchase property, but many are hampered by the shortage of housing and the inaccessibility of finance.”
In addition to the attitude of many house hunters, he added there has been less demand for remortgage products due to less fear of an immediate rate hike.
The head of lending at Mortgage Advice Bureau, Brian Murphy, is somewhat confused by the remortgage approval figure falling in March due to the apprehension of a rate hike during the same month.
He said: “April is likely to see a drop in mortgage approvals compared with March as the second half of the month was a write-off given the number of bank holidays. At best, the market in April was subdued.”
The feeling of most economists throughout the UK is the base rate will more than likely not change for several months, leaving mortgage lenders in a state of holding pattern as to know what to prepare for next.
Tags: andrew montlake, bank, Bank of England, brian murphy, coreco, england, financial, government, gross mortgage lending, home hunters, market, mortgage advice bureau, mortgage-approvals, mortgage-lending, Mortgages, rate, rate hike, remortgages, subdued lending, trends in lending
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May 9th, 2011
Recently homeowners have been rushing to secure fixed rate remortgages to secure their monthly budgets against an increase in their mortgage payments due to an interest increase. Inflation was growing above double of the set goal of 2.0 per cent and economic recovery was said to be getting closer to being able to handle an interest rate rise from the Bank. Yet, the Bank of England’s Monetary Policy Committee left the rate unchanged at 0.5 per cent month after month.
The warning was well heeded, despite the rate being unchanged. For many homeowners would find their mortgages unaffordable should there be a rate change of a point or more according to experts. It is estimated there are over 3 million homeowners that could benefit from a remortgage but have failed to secure one. Lucky for them the rate has sat unchanged.
Inflation showed signs of lowering due to the impact from public spending cuts and higher VAT, and the GDP from the first quarter reported in at a marginal gain of 0.5 per cent. This kept the MPC from raising the rate and economists believe through the year the rate will remain the same. Even those that forecast a rise are expecting it not to occur before late Summer or even in Winter. With an ease in the warning as well as how high the interest rate might rise in 2012 only to 2.0 per cent, homeowners are looking at more than fixed rates. Trackers, offering much better rates, are now becoming a possibility for some homeowners remortgaging.
Ray Boulger, of mortgage adviser group John Charcol said: “The silver lining for mortgage borrowers is that it defers even further an increase in bank rate and indeed there now looks like a very serious possibility bank rate could still be 0.5 per cent at the end of the year.
“With the outlook for interest rates over at least the next few months transformed by the inflation figures, the advice for anyone wanting a fixed rate is to wait for rates to fall. In our opinion for borrowers not needing the security of a fixed rate, tracker and discount rate mortgages continue to offer better value.”
Tags: bank, Bank of England, bank rate, base-rate, england, financial, fixed rate remortgages, gdp, good deals, government, housing-market, inflation, interest rate rise, interest-rates, john charcol, monetary policy committee, mortgage-payments, Mortgages, mpc, ray boulger, remortgage, remortgaging, trackers, uk homeowners, vat
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May 7th, 2011
This past week the Bank of England’s Monetary Policy Committee (MPC) met for their monthly meeting to determine whether or not the standard interest rate would see a rise. Once again they left the base interest rate at 0.5 per cent. Yet, it could be only a few months away before the rate is increased. Current forecasts call for either August or November to be the actual month for an increase or course there are many factors at play that could make it sooner or later than forecasted.
The low level of economic growth led economists to revise their forecast from a rate change in May to later on in the year. Now that the forecast has been postponed to a later month, consumers are being readied that the rate change will then be much higher than what would have been experienced if there had been a rate change earlier in the year. Those that have voted unsuccessfully for increases in the beginning of the year have been for 0.25 per cent increases to 0.5 per cent. One economist has called for an increase in November to bring the rate to 2.0 per cent.
The warnings for an increase in the end of 2010 and beginning 2011 led homeowners to seek out remortgages at a higher rate. Yet, there are millions that though they could benefit from a remortgage have yet to do so. Perhaps the forecasts that homeowners on variable rates will be facing a Bank base rate of 2.0 per cent within the next 20 months versus an earlier forecasted 0.75 per cent will push them to consider a remortgage more seriously.
Howard Archer of IHS Global Insight said: “Even if interest rates do rise in the near term, the probability remains that they will move up relatively gradually and stay very low compared to past norms. We see interest rates only rising to 2.00% by the end of 2012.”
Tags: bank, Bank of England, base-rate, england, government, Howard Archer, IHS global insight, interest-rate, interest-rates, monetary policy committee, money, mortgage-, mortgage-lending, Mortgages, mpc, rate-change-, remortgages, variable rates
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May 7th, 2011
Housing data for April will be coming out in the days ahead and it will be interesting to see the results, especially when compared with the data from March. It is expected that the numbers will be low and not conclusive as to what is really happening in the housing market. Instead the data will reflect a month of many Bank holidays and the Royal Wedding. These unusual events all in one month, on back to back weekends, will have been distractions for most potential home buyers as well as homeowners postponing remortgages.
Homeowners had been rushing to remortgage to beat the possible interest rate hike that had been forecasted for May. The forecast was revised to the month of August to be the most likely month for the first rate hike due to the GDP from the first quarter revealing very little economic growth at 0.5 per cent. Despite inflation coming in at 4.0 per cent which is double the goal rate, the lack of economic growth calls for the Bank of England’s Monetary Policy Committee to hold off on a rate increase for now. In their May meeting last week they left the standard base rate at 0.5 per cent for another month.
When comparing data from month to month on house sales and mortgage lending there have been steady increases throughout the beginning of 2011. These increases over the data from the end of 2010 are certainly welcomed but they fall far short of what is considered normal in the housing market. There is much improvement still to be made. While April will probably result in a decline in levels, there is a pickup expected in May as homeowners again push demand up on remortgages to avoid a future interest increase and home buyers are expected to return as well.
Tags: bank holiday, Bank of England, base-rate, england, financial, fixed-rate, gdp, gross domestic product, homeowners, house-prices, housing, housing-market, interest rate hike, interest-rates, market, monetary policy committee, mortgage-lending, Mortgages, rate hike, remortgages, uk homeowners
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May 4th, 2011
There has been a higher demand for remortgage lending, but the fact remains that economists believe the level is below what should be seen. There are a majority of homeowners that could benefit from a remortgage but have failed to do so despite good remortgage deals to be found. This may be to a tightening of lending, but it could also be due to homeowners being unaware of the financial benefit a remortgage could give them. They are just unaware of how an increase in the interest rate could impact their monthly mortgage payment.
Forecasts are calling for the Bank of England’s Monetary Policy Committee (MPC) to increase the rate as soon as August. To most this would seem well off in the future to not cause a concern at this time, but there is one point to make that one former MPC member has long voiced aloud. Former MPC member Andrew Sentance has called that the longer the wait until a rate increase, the larger that first increase will have to be to be the correct rate.
Other economists have acknowledged that though the economy may not be ready for an interest rate increase now, that the time is approaching and there will be an expected increase that will be substantial for that first one. It is a necessary evil of the condition of the economy right now. The rate may go a little while longer at 0.5 per cent, but the time will come for an increase and it will be much larger than if it were raised now.
For an idea of how much of an increase could occur months down the road, one has only to realize that when Andrew Sentance voted at his last MPC meeting in April he wanted the rate to double from 0.5 per cent to 1.0 per cent. Those homeowners that have moved off their mortgage deals with their lenders might want to consider what a doubling or more in the Bank’s standard rate could do to their monthly mortgage payments. Unfortunately, when the interest rate does rise, the remortgage deals available now will disappear. Homeowners are being encouraged by lending specialists to consider how an interest rate increase will impact them and if a remortgage would be beneficial to seek one soon.
Tags: andrew sentance, bank, Bank of England, england, financial, government, housing-market, interest-rate, monetary policy committee, monthly mortgage, Mortgages, mpc, rate, remortgage, remortgage lending
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May 4th, 2011
There has been an increase in the number of home properties selling at £1 million or above in London. This same trend is now being seen in Scotland as there were 148 properties at that value sold in 2010. These homes were sold at a rate faster in 2010 than in the three years prior. New data released by the Bank of Scotland revealed that the level sold in 2010 was 31 per cent more than the level of £1 million or above valued properties in 2009.
The 148 properties of a value of £1 million or above in 2010 is more than one third the rate of 102 sold in 2009. There has now been a total of 3,200 properties sold in Scotland above the 1 million pound level. On a scale of the most expensive, half of those at the highest level were sold in Edinburgh.
Suren Thiru, Bank of Scotland’s housing economist, said: “The number of properties sold for over £1m has risen substantially over the past year, reflecting the strength of the very top end of the housing market.
“Edinburgh still accounts for the lion’s share of all £1million sales, with the capital accounting for almost half of all such sales.
“Activity in the upper end of the market in Scotland continues to benefit from strong demand from wealthy buyers from outside Scotland and limited supply.”
While the number of properties selling in the high end level of £1million or above in value has increased in 2010, they represent only a small fraction of the total sales. These high end sales accounted for only 0.2 per cent of all sales in Scotland.
Tags: 1 million pound properties, bank, Bank of England, bank of scotland, edinburgh, england, financial, government, housing economist, housing-market, market, Mortgages, scotland, suren thiru
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May 4th, 2011
A recent survey by Rightmove revealed that across the UK consumers believe that house prices are still too high and few believe they will fall and correct by enough to truly reflect their value. One half of the 26,000 people surveyed believe that the prices are over value. One quarter of the survey respondents do not believe that house prices will decline.
Majority of the UK regions have seen house prices fall, whereas London has had increases. It was with properties in London that people felt very strongly that house prices were over value with a response of 60.8 per cent. An amount of 51.7 per cent felt the same about the Southeast area and 52.7 per cent about the Southwest area.
Even 34.6 per cent of those that plan on putting a property for sale responded that they believe prices are over value.
Miles Shipside, Director of Rightmove, said of the survey results, “There is a growing sense that many homes coming on to the UK housing market are priced too high, and this is borne out by the views expressed in this survey.
“We now have a situation where half of the UK public feel house prices are too high, yet three-quarters of the same public are expecting prices to either stay the same or increase over the next 12 months.
“This suggests the prospect of a market stand-off and rising unsold stock levels if sellers don’t wise up to the house price views of their target market.”
Tags: bank, Bank of England, england, financial, house-prices, london, market, miles shipside, mortgage-lending, remortgage, remortgages, rightmove, southeast, uk consumers, uk housing market, uk public, uk regions
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May 4th, 2011
The much anticipated Royal Wedding of Prince William and Miss Catherine Middleton took place on Friday morning. The celebration resulted in yet another Bank Holiday for the UK coming before the one on Monday. This has led many to tie in personal week long holidays with the upcoming nuptials. If not, it was indeed a long weekend well received after a prior short work week due to the Easter holiday. No doubt there have been few homeowners with their mind on securing a remortgage in April or of home seekers closing a sale.
The distraction of the Royal Wedding will likely be blamed for any decline in home sales as well as mortgage lending for April. Economists have already warned that the Bank Holidays coupled with the Royal Wedding will likely lead to figures that will not truly reflect the health of the economy and some specific markets, including lending and housing. Yet there may be an outcome from the Wedding that will help boost those same markets in the months ahead.
The outfall from the Royal Wedding, which was watched the world over in record numbers, will leave many feeling more optimistic. This may prompt a rush of new young families resulting as others are smitten by the wedding and romance fever. These families will in turn seek out starter homes pushing others up the property ladder who will then seek an upgrade property. It will also boost the buy to let market for those who choose not to or cannot purchase.
Spring is usually a busy time for home sells in general, so along with the Wedding bringing more optimism it may in turn aid in house sales. The Wedding will have also brought more exposure to the UK and that will likely boost tourism bringing money into the UK economy which will trickle down to benefit all in the end. It is estimated that the Royal Wedding boosted the economy by £1 billion for the Wedding Day alone. The Royal Couple will become even more intriguing to the world and will likely keep the interest in the UK high for years to come helping to boost many markets of the UK economy.
Tags: bank holiday, catherine middleton, easter, house sales, property-ladder, royal couple, royal wedding, uk economy, wedding
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May 4th, 2011
The latest mortgage approval number posted for the month of March is nothing to get excited about, according to many economists. The housing market still shows signs of being unsettled and not yet close to be recovery mode. Although, some would argue that just a little improvement, should be viewed as a bright spot which could carry some momentum.
The total number of new mortgage approvals reached 31,660 in March, according to the British Bankers’ Association. This is a modest increase over the February figure of 30,178, and according to Howard Archer, chief economist at IHS Global Insight, is no reason to expect bigger things to happen right now in the market. He pointed out approvals were still down almost 10% year on year, and that the March figure is still considerably off the mark of more than 57,000 which is the typical monthly average since the late 90′s.
His remarks regarding the March figure reflect his beliefs about the overall market. He said: “If someone had said in the past that mortgage approvals were around the 31,000 level, we would have said ‘God, that’s awful’. It’s a level that we have associated with falling house prices.”
The chief executive of Marsh and Parsons, Peter Rollings, commented on the latest approval figure, saying: “March’s figures were a step in the right direction, but mortgage lending is still a long way from where it needs to be. No one wants to see a return of the irresponsible lending practices seen pre-crunch, but lenders must do more to help those looking to purchase their first home.
“The average £25,000 deposit required is prohibitive for thousands of would-be buyers across the UK – and is an even more acute problem for London’s first-timers, where the standard deposit needed is double the national average. Such large requirements are impeding a concerted recovery in the nationwide housing market.
“Nevertheless, despite the ongoing squeeze on lending, the market in London remains robust – and demand from buyers is stronger than ever. Over 13 buyers are registering for every property placed on the market in central London, with both international and domestic cash buyers particularly active. However, we won’t see anywhere like this level of demand and activity in other parts of the UK until frustrated first-time buyers can access the level of funding they require.”
The belief that the housing market will continue to see falling home prices through the year is echoed by Archer. He thinks the market will see a drop of an estimated 5% in home value over the course of 2011.
Tags: bank, Bank of England, british bankers association, england, financial, house-prices, housing, housing-market, Howard Archer, IHS global insight, london first timers, marsh and parsons, mortgage-approval, mortgage-approvals, mortgage-lending, peter rollins
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May 4th, 2011
Remortgage approvals fell 7% during the month of March. This figure is taking the blame for the downfall in gross lending for the same month. The British Bankers’ Association data showed gross lending fell slightly in March, from February’s total of 7.9 billion pounds. Gross lending for the month of March totaled 7.7 billion pounds.
A total of almost 72,000 mortgages were approved in March. This is 1% lower than in February and almost 10% lower than March of last year.
Chief economist at Capital Economics, Ed Stansfield, commented on the activity of buyers, saying: “Purchase data suggests buyers remained inactive in the face of the squeeze on incomes, fragile confidence and speculation about higher interest rates.”
The inactivity of buyers is extended to the housing market as well. There is the possibility of those interested in buying a home waiting for the possible base rate change next month. This will have a major impact on the monthly mortgage cost for those in the property market.
John Mawdsley, chief executive at Omni Solutions, believes the mortgage market will begin to loosen once the economy becomes something which is once again believed in. That is within a few months of happening, according to many economic insiders.
Mawdsley commented on the economy in general, saying: “In the same way you can’t expect a car to start without an engine, you can’t expect massive increases in gross lending with a flat economy.”
Chief executive at Crown Mortgage Management, Eric Stoclet, has the belief that an early indicator of house prices is made by house approvals. He thinks possibly by December lenders will become more liberal and loosen the belt a bit.
Tags: bank, Bank of England, base-rate, british bankers association, capital economics, ed stansfield, england, flat economy, gross lending, housing-market, interest-rates, market, Mortgages, omni solutions, Remortgage approvals
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