Mortgage market update for February 2018
MACRO NEWS AND DRIVERS
Housing market gets off to buoyant start in 2018 - The housing market has got off to an active start in 2018 with the average asking price of properties coming to market rising by 0.8% (£2,414) to £300,001 in January. Latest figures from the Rightmove House Price Index reveal demand for housing remains strong. It shows, while sellers appear to be displaying ‘cautious optimism’ when it comes to setting asking prices, potential buyers are out in force with the property search website seeing home hunter visits top 141 million last month.
Property prices increase but sale fall - Property prices continued to edge up in January but the number of sales agreed was down 5.5 per cent from a year ago, according to Rightmove. Data from the online property portal showed the average price of properties coming to market increased 0.7 per cent, or £2,067, over the past month.
Base rate rise prompts remortgage jump - The number of active remortgage deals in the market has shot up by more than 40% year-on-year, new data from conveyancer LMS has revealed. The firm’s data confirmed the number of remortgages rocketed from 28,400 in December 2016 to 39,943 in December 2017, a jump of 41%.
Why subprime has returned - The problems created by the subprime mortgage market in 2007 resulted in many lenders pulling out of the market altogether. Homebuilding has still not returned to pre-crisis levels in the UK either, according to government data last year.
REGULATION AND LEGISLATION
FCA replaces mortgage advice manager - The FCA has appointed Julia Tennant as its new mortgage manager, the regulator has confirmed. The role was previously occupied by Lynda Blackwell, who left last year. In her 16 years with the regulator, Blackwell orchestrated reform including the Mortgage Market Review, and was previously mortgage policy manager at the regulator.
HMRC to update guidance amid stamp duty confusion - HM Revenue & Customs has confirmed it is updating its guidance on the higher rates of stamp duty, amid data 15,700 people have had to claim refunds for wrongful charging.
PRODUCT DEVELOPMENTS AND INNOVATION
Skipton revamps mortgage range - Skipton Building Society has revamped its product range with a raft of new launches and rate cuts. The lender has introduced a three-year fixed range of Help-to-Buy mortgages as well as a new two-year interest only residential mortgage with a rate of 1.73 per cent. The interest only product is available up to a loan to value of 70 per cent and has a £995 fee.
Leeds BS launches fee-free mortgages with up to £1k cashback – A new range of fixed rate mortgages has been launched by Leeds Building Society – and they come with two incentives to tempt borrowers to switch. The deals come with no product fees as well as cashback of up to £1,000. The range includes a 1.88% two-year fixed rate mortgage with £500 cashback, available up to 60% loan-to-value. For borrowers with 25% upfront, the rate rises to 1.94% with the same £500 cashback.
Cambridge offers mortgages at five times income - The Cambridge Building Society has introduced more generous lending criteria that will see it advancing up to five times a borrower’s income. However these relaxed income limits will not apply to all homebuyers. To qualify applicants need a minimum income of £60,000, and at least a 20 per cent deposit.
Accord unveils new remortgage options - Accord Mortgages is hoping to improve the home loan market by unveiling new remortgage options and reducing rates for higher loan-to-values (LTV).
Aldermore launches 7-year fixed commercial mortgage product - Specialist bank Aldermore has launched a 7-year fixed commercial mortgage product with rates up to 75% loan-to-value. The product is available for loans between £50,000 and £1m and provides customers with flexible repayment structures. Bespoke terms are offered for loans over £1m
Home ownership among young adults has ‘collapsed’ study finds - Chances of owning home in UK have more than halved in 20 years, Institute for Fiscal Studies says. The chances of a young adult on a middle income owning a home in the UK have more than halved in the past two decades.
First-time buyers opting for longer mortgages
More than half of first-time buyers are opting for longer-term mortgage deals as interest rates look set to rise sooner than expected Research from Accord revealed 51 per cent of first-time buyer applications in January were for five-year fixes, compared to just 20 per cent a year ago. At the same time, two-year fixed deals accounted for just 48 per cent of applications in January, down from 63 per cent in the same month last year.
First-time buyers £27k better off than renters
You could save £900 a year by getting on the housing ladder instead of renting. Buying a home works out £900 cheaper per year than renting and saves first-time buyers £27,000 over a mortgage term, according to Halifax data. In December 2017, the average cost of buying a three-bed home was £679 a month, compared to average monthly rent of £754 for the same type of property.
Retired homeowners’ property wealth breaches £1TRN
Retired homeowners have gained more than £7,900 each in property wealth in the past year, according to analysis from Key Retirement. Total property wealth owned by over-65s who have paid off their mortgages is near a record high of more than £1.1trn after growing £37bn in the past year, Key Retirement’s pensioner property equity index has found.
The quiet whisper of change
So, the changes to support for mortgage interest (SMI) which former chancellor George Osborne very quietly laid out in the summer Budget of 2015 are coming to pass...