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Rise In Remortgaging Brought About By Record Low Base Interest Rate

The Bank of England’s record low base interest rate has propelled a rise in remortgages.

The mortgage processor Legal Marketing Services has released data showing a rise in remortgage transactions. The number of remortgages taking place is the highest since July 2009 and the year-on-year gross amount remortgaged has risen 40% since August 2015.

The Base Rate

On the 4th of August this year, the Bank of England announced a cut to its base interest rate from 0.5% to 0.25%.

The Effect

Remortgages in August saw an increase of 45% annually and 8% since July. Homeowners used the cheaper environment for borrowing to refinance their loans.

Andy Knee, chief executive of L.M.S explains that this cut has had the effect of boosting mortgages but that fears remain over the wider economic future.

Loan Amounts Getting Smaller

Although more numerous, remortgages reduced their loan to value ratio, a key measure of a bank’s confidence from 58% to 54%. In August, the average amount loaned to each customer fell 6% to £162,263.

Mr Knee states that “homeowners appear to be in a more cautious mood than last month: borrowing less in the wake of a couple of turbulent months, both politically and economically”.

The Outlook

This year, customers have been remortgaging more frequently. The average length of customers previous mortgages has decreased by 8 months. Those who had waited for better conditions to remortgage saw the benefit in the interest rates available to them but Mr Knee argues that current conditions favour taking action.

Mr Knee believes that “with today’s favourable conditions it is no surprise to see eight months shaved off the average time that people wait to remortgage and there is plenty of incentive for more people to consider acting before the year is out.”

For Independent Mortgage advice please contact us at Hoskin Mortgages for more information.

Clare Allen.

Hoskin Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority number 613005. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

Workers Struggle To Afford To Live In London

London workers pay up to 60% more on housing in order to live in the city they work than those living 1 hours travel away.

Research by Lloyds Bank has found that for Londoners, living in the most central areas of the city adds 60% or a total of £447,015 to average property prices. This is compared to the average property prices in established commuter areas, where good transport links allow access to central London through 1 hours travel.

Wellingborough, Southend, Sittingbourne and Rugby, all around 1 hours travel away from the heart of London have an average house price of £294,903, compared to the £741,919 necessary to buy the average property in central London.

Cost Of Commuting Far Cheaper Than Buying In London

The cost of commuting an hour each way is a sizeable £4,989 annually but when compared to the £447,015 difference in house prices, it would take a massive 89 years to even out.

For those living 40 minutes of travel away from central London, namely Hatfield, Billericay, Orpington and Reading, average house prices are £389,000. It would take almost 100 years of £3,534 annual train fares to make up the £353,000 difference.

Other Reasons People Commute

Director of mortgage products at Lloyds Bank, Andrew Mason says that people also consider other issues when deciding where to live. In their findings, “quality of life is also a major factor: family circumstances, better schools, physical environment and homes that offer better value for money also come into the equation.”

Mr Mason states that “commuters are often prepared to pay a premium to commute when they could be better off in purely financial terms living closer to their place of work.” This is the case in cities such as Birmingham and Manchester.

For Independent Mortgage advice please contact us at Hoskin Mortgages for more information.

Clare Allen.

Hoskin Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority number 613005. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

Santander’s High Loan-To-Value Mortgages A Sign Of Confidence In Lending Market

The bank is creating a series of high loan-to-value (L.T.V.) mortgages aimed at servicing customers with good credit ratings.

Santander are looking to entice customers wanting competitive interest rates over a set time period, offering £250 in the form of cashback available to selected accounts. Santander’s managing director of mortgages, Miguel Sard Says the offers look to appeal to those wanting “to move up and lock in to a competitive fixed rate, including first time buyers and those seeking to remortgage.”

The bank realises that “some customers keen to take the second step on the property ladder can find it difficult” and hope the high L.T.V. mortgages can make taking the next step on the property ladder more feasible.

The fact that the bank is willing to accept the higher risk that comes with high L.T.V. loans is evidence of a returning sense of confidence among lenders. It is notable however that this is not a return to the over 100% L.T.V. mortgages available before the crisis in the credit market.

The Products

Santander will offer as much as a 90% L.T.V. mortgage fixed for five years at a 3.14% rate which will require the payment of a £995 product fee. Further offers include an 85% L.T.V. mortgage fixed for five years at a 2.79% rate with no product fee and an 80% L.T.V. mortgage fixed for two years at a 1.64% rate with a £995 product fee.

The £250 cashback will be available to selected accounts in the intermediary market and consist of a 90% L.T.V. mortgage fixed for two years at a 2.34% rate with a £995 product fee and a 75% L.T.V. mortgage fixed for two years at a 1.39% rate with a £995 product fee.

The entire range of mortgages will be available for both purchase and remortgaging purposes.

For Independent Mortgage advice please contact us at Hoskin Mortgages for more information.

Clare Allen.

Hoskin Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority number 613005. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

15% Fewer Rental Properties Put On The Market In August

Number of properties newly listed for renting falls throughout the country.

The crowdfunding platform Property Partner have compared the number of rental properties being put on the market between the 1st and the 28th of August to the number that entered during the same time frame in July. The results showed a drop of 15% between the months.

Dan Gandesha, C.E.O. of Property Partner points out part of this fall is due to normal seasonal changes in activity as the busier summer period comes to an end. Mr Gandesha adds that July saw unusually high activity with “the highest numbers of buy-to-lets being advertised since the stamp duty hike in April whereas last month experienced some dramatic falls in most parts of the U.K..”

Tough Environment For Traditional Landlords

Mr Gandesha sees an environment in which “traditional landlords have had it hard of late. Alongside the stamp duty surcharge, the banks have imposed tougher lending criteria, and cuts to mortgage interest tax relief will begin to take effect next year.”

Difficulties faced by landlords could translate to tenants having to pay more as Mr Gandesha explains, “profits have been hit and this could force many landlords to sell up. If September fails to pick up and there’s a shortage of available rental properties, rents could be pushed up. Hopefully for tenants, this won’t be the case.”

Breakdown By Region

Falls were seen across the country with new buy-to-lets in Canterbury, in the South East down 30%. Wakefield in the North of England and Loughborough in Central England also made the list of the most affected. Overall, the North East that saw the greatest drop with Hartlepool leading the trend.

Further down the list of those affected, Manchester saw a fall of 18.4%. London 16.4% and Birmingham 16%.

For Independent Mortgage advice please contact us at Hoskin Mortgages for more information.

Clare Allen.

Hoskin Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority number 613005. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

New Era of 1% Interest Rate Mortgages Could Be On The Way

A lowering of the Bank of England’s base interest rate could stoke competition amongst mortgage providers, leading to interest rates of 1% or even lower.

Customers may soon be able to take advantage of even lower interest rates on fixed-rate mortgages as competition, encouraged by the Bank of England leads them into record territory.

In an attempt to boost the housing market following the vote for the U.K. to leave the E.U., the Bank of England’s base interest rate was cut to just 0.25% in August. Economists predict a further cut, perhaps to as low as 0.1% to come in November.

Competition Amongst Lenders

H.S.B.C. has positioned itself as a leading figure in the movement towards 1% mortgage interest rates. The bank is already offering a mortgage rate of 0.99% over a period of 2 years, however, to access this, customers must pay a deposit of at least 35%.

Analysts at Bernstein, a research company based in the City predict further rate cuts amongst the competitors in the mortgage market, arguing that for these companies, attracting new customers will be relatively cheap.

Standard, 2-year fixed-rate mortgages are forecast to go as low as 1.1% with the sub 1% interest rates available to customers with good credit ratings. Bernstein state that “if your credit rating is fine, you are probably going to get a cheaper mortgage from either a bank with excess deposits (H.S.B.C., Royal Bank of Scotland) or ones desperate to grow their book — that’s sub 100 basis points (1%).”

Boost To The Housing Market

David Hollingworth, from the mortgage brokers London and Country sees further cutting of the Bank of England’s base rate as something that can fuel greater market activity. According to the latest figures from the property website, Rightmove, house prices are currently up 4% on the last 12-months.

For Independent Mortgage advice please contact us at Hoskin Mortgages for more information.

Clare Allen.

Hoskin Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority number 613005. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

New Push To Grow The Interest-Only Mortgage Market

Leeds Building Society looks to widen the market for interest-only mortgages.

The chief commercial officer of Leeds Building Society, Richard Fearon believes that mortgages that do not include repaying the capital value of a property have “become the domain of the wealthy”. He adds his company wish to serve “the mass affluent too, the self-employed, and those wanting more flexibility.”

Market Yet To Recover Fully After 2008 Credit Crisis

The credit crunch of 2008 led to greater restrictions in many areas of credit provision. This squeezing of the market was combined with greater regulator scrutiny, cited by many organisations as a contributing factor behind them leaving the market. The activity of the regulators of the City gave rise to stricter rules presented in the 2014 Mortgage Market Review.

Mr Fearon states that throughout this time L.B.S. “never left the interest-only market” and he now expects that “we will see other lenders get interested in coming back to the market over time.”

As of the end of 2015, Council for Mortgage Lenders data shows that Britain had £238bn of interest-only stock, of which £208bn was purely interest-only.

The New Products

L.B.S. is increasing the percentage they are willing to loan based off a property’s value from 50% to 60% across all interest-only mortgages. Part-and-part mortgages can also get 60% loan-to-value mortgages with a further 15% available through their capital repayment component.

Affordability tests will be the same as capital repayment mortgages and stress-tested in conditions of up to a 7% interest rate.

Predictions

Market research carried out by the Financial Conduct Authority and GfK found that by the year 2020, around 600,000 interest-only mortgages will mature. Almost half of all interest-only mortgages are predicted to have a shortfall and a third of shortfalls in 2020 are expected to be greater than £50,000.

For Independent Mortgage advice please contact us at Hoskin Mortgages for more information.

Clare Allen.

Hoskin Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority number 613005. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

‘Brexit’ Fails To Halt Property Price Rises

The building society Nationwide reports property prises in August rising by 5.6% on an annual basis, up from 5.2% in July.

According to Rob Weaver, director of investments at property crowdfunding platform Property Partner, “it’s looking like the predicted collapse of the property market post-‘Brexit’ may not happen.”

Mr Weaver states that “the property market has stood up to a strong headwind of political and economic uncertainty, and prices haven’t collapsed as many said they would after the U.K. voted to leave the E.U..”

To explain this, he points to “the interest rate cut earlier in the month” which gave the market “a confidence boost and eased any post-‘Brexit’ jitters.”

Falling Demand Matched By Falling Supply

The apparent health seen in the house prices may in part be down to the amount of houses on the market being near a 30 year low.

Longer term, the impact remains unclear, consumer confidence did see a significant fall and the Bank of England predicts the economy will grow very little in the coming year.

Overall, Nationwide’s House Price Index showed falling activity with the number of mortgages approved hitting an 18 month low in July. Nationwide’s chief economist, Robert Gardner did lay the blame for this at the “uncertainty surrounding the EU referendum and the introduction of additional stamp duty on second homes.”

Price Rises Aided By Government Scheme

Along with the interest rate cut, Nationwide credit the government’s new term funding scheme with maintaining growth guaranting that the Bank of England will provide low-cost funding to lenders. Mr Weaver also points towards a future “multi-billion pound package to support housebuilding and stimulate the economy”.

It appears that any immediate negative impact ‘Brexit’ may have been mitigated, in fact, as Mr Weaver concludes, “people gravitate to bricks and mortar in times of economic or political uncertainty.”

For Independent Mortgage advice please contact us at Hoskin Mortgages for more information.

Clare Allen.

Hoskin Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority number 613005. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

Experts Suggest England’s House Price Boom To End

Both analysts and estate agents see an end to current house price rises coming.

Estate agents warn they “believe the nation has now neared the limit in terms of price rises”, according to Paul Smith, chief executive at Haart.

Mike Prew, equity analyst at investment bank Jefferies, predicts “this slowdown could morph into a period of sustained house price deflation”. He added, “the balance of surveyors expecting higher house prices 12 months ahead has also collapsed, suggesting more than just short-term factors.”

What Are Their Opinions Based On?

Mr Prew points to data from the Royal Institution of Chartered Surveyors showing that in April, inquiries into buying properties fell at the second-highest rate since 2008, a statistic that indicates a price fall around a year later.

As Richard Donnell, director of research at Hometrack, an analysis firm explains, “when sales volumes fall back, it is agents that start to re-price the market to get volumes back, in a process that takes 6 to 12 months”, “they let vendors know that they need to be more realistic if they want to sell, taking on new instructions at lower prices.” Buyers notice this and as buying agent Henry Pryor asks, “how do you persuade people to buy something today that they think will be cheaper tomorrow?”

When Will It Happen?

To Lucian Cook, director of residential research at estate agency Savills, “we are clearly hitting some affordability ceilings in London.” However, “it is difficult to see what the catalyst would be for a significant correction in the housing market”.

Many analysts are holding back from publishing house price forecasts until after the referendum.

How Severe Will It Be?

Savills predicts only a mild correction to their position late last year that “mainstream” U.K. markets would rise 5% this year and 17% by 2020.

For Independent Mortgage advice please contact us at Hoskin Mortgages for more information.

Clare Allen.

Hoskin Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority number 613005. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

Uncertainty Ahead If The U.K. Votes To Leave The E.U.

On Thursday 23rd June, the U.K. will vote in a referendum to decide whether or not to remain in the European Union.

A pro-leave outcome would send shock-waves through the U.K. and internationally.

Political Change

David Cameron and George Osborne have tied themselves to the ‘remain’ campaign, should the public vote against them, their authorities will be severely weakened. Cameron could step aside immediately, in the midst of economic turmoil or stay and honour the decision of the people. The result will mean a shifting of power towards the ‘leave’ campaigners, notably Michael Gove and Boris Johnson.

Rival Pictures Of ‘Brexit’ Painted By Campaigners

Osborne claims the timescale for exiting is strict and that he will immediately activate article 50 of the Lisbon treaty, setting in motion a negotiation to be completed within two years. Vote Leave campaign director, Dominic Cumming says this is “mad and like putting a gun into your mouth and pulling the trigger”.

Pressure from the E.U. makes triggering article 50 highly likely by the autumn. One of its creators, former Liberal Democrat M.E.P. Andrew Duff claims “the clause puts most of the cards in the hands of those that stay in.”

The E.U.’s Reaction

An E.U. official stated that “it will be imperative to prevent the Brexit contagion gripping other countries”. This could see the major powers within the E.U. push to make sure seceders are seen to be the losers in negotiations. Leave campaigners believe however that over the summer the E.U. will come to consider the value the U.K. brings to the union.

So What Will Happen?

Huge issues such as the U.K.’s membership of the single market and the free movement of E.U. citizens will become bargaining chips between large institutions with the outcomes dependent on individuals fighting with their own agendas.

For Independent Mortgage advice please contact us at Hoskin Mortgages for more information.

Clare Allen.

Hoskin Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority number 613005. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.