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Volume of mortgage searches rises 15.14% in the space of a week

The volume of searches, across purchase, remortgage and buy-to-let (BTL), rose by 15.15% in the week ending 25 April, compared to the previous week, according to research by mortgage technology provider Twenty7Tec.

It also rose by 13.94% compared with two weeks previous, but showed an overall drop of 34.36% over a four-week period.

The total volume of documents prepared during the week ending 25 April was up 19.07% and 12.91% compared to one and two weeks ago, respectively.

Compared to a month before, this is still a drop of 42.14%.

The total value of loans rose by 20.07% on a weekly basis, rose by 14.21% compared to two weeks before, and dropped by 44.14% over a four-week period.

During the week, purchase mortgages represented 31.92% of the market, up from recent lows of 24.5% but down compared to the usual figure of 55% to 60%.

Remortgages represented 68.08% of the market last week.

Search volumes for purchases rose by 26.18% compared to the week before, and 34.7% compared to four weeks previous.

The volume of purchase mortgage searches is still only at half of its pre-coronavirus levels.

BTL searches have a long-term average of 19.78% of searches, with standard residential mortgages representing 61.25% of all searches in the past year.

Currently, BTL’s share is 24.49% of all searches, whereas standard residential is 60.62%.

James Tucker, CEO of Twenty7Tec, said:

James Tucker, CEO of mortgage technology provider Twenty7Tec says: “Thankfully, there are some good news stories in this week’s figures.

“Whilst the volumes are considerably lower than the high times of late February, it is possible that we are now starting to see the ‘end of the beginning’.

“Weekly search volumes for all types of mortgages, the total number of [European Standardised Information Sheet (ESIS)] documents prepared, and the values of mortgages requested, are up compared to the same period a week ago; and, again, to the same period two weeks ago.

“The total volume of mortgage searches also seems unaffected by the announcement that lockdown will need to be in place for a further three weeks at least.

“Buy-to-let mortgage searches continue to represent an ever-larger proportion of the market – they currently constitute 24.37% of all searches, well above their long-term average of 19.78%.

“We saw a slight uptick in weekly remortgage searches also. These are up 1.03% on the prior week.

“However, the volume of remortgage searches is still down a quarter compared to four weeks ago.

“The pipeline of housing available for purchase will likely have been helped by the news from some major housebuilders that many of their sites will re-open this week.

“When I speak to brokers, it’s clear how hard they are working for their clients and trying to keep the market flowing as much as possible.

“We can but hope these green shoots of good news which have, seemingly, begun to sprout over the past two weeks will give brokers something to build on.”

By Jessica Bird

Source: Mortgage Introducer

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More than 85% of BTL lenders are allowing landlords to remortgage

Mortgage for Business says there are still 42 lenders in the buy-to-let remortgage market, a fall of seven (14%) since the Covid-19 epidemic took hold.

Steve Olejnik, managing director of Mortgages for Business, said: “While HSBC has recently announced it is no longer able to accept applications for buy-to-let mortgages, other lenders are out there.

“We’ve seen lenders like Together Money and Vida Homeloans temporarily pull out of the market – but more than 85% of the lenders that landlords rely on are still trying to do their bit – as are we.

“Four of the lenders that initially withdrew their BTL mortgages – Santander, Clydesdale, Precise Mortgages and Kent Reliance – are now lending again.

“There is no need for landlords to panic. Yes, landlords looking to remortgage have fewer options. But they still have plenty.”

Saffron Building Society withdrew from the market before the outbreak in March – for non-Covid-19 reasons – and has indicated its intention to return ‘later in the year’.

Lenders that stopped lending to landlords since the outbreak, and remain withdrawn from the BTL market, include HSBC, Foundation Home Loans, Together Money, Vida Home Loans, Platform Home Loans, State Bank of India and Furness Building Society.

Olejnik commented: “Lots of lenders have cut down the sorts of landlords that they will lend to. They’re pulling product ranges, tightening lending criteria and increasing margins.

“But different lenders are derisking against different kinds of landlord borrowers. So, while some lenders are no longer lending to first time landlords, there are still lenders who are.

“A huge number of 80% LTV five-year fixed rate BTL products have been pulled from the market – about 90% of them. But not all.”

Number of lenders in BTL remortgage market

Type of BTL RemortgageMarch 2020April 2020Change
First-time landlords4735-26%
Portfolio landlords4033-18%
Ltd company landlords3024-20%
Student lettings3021-30%
HMOs2715-44%
BTL tracker loans2816-43%
85% LTV BTL loans30-100%
Active BTL lenders4942-14%

Valuations

Olejnik added: “With valuers banned from visiting homes, landlords are finding remortgaging harder than it was. But there are lenders offering mortgages using automated valuations, rather than physical valuations, and a lot of our landlord clients are taking advantage of this.

“The landlord community is benefitting from Shawbrook and Paragon, in particular, who are using virtual valuations for loans against standard properties up to 75% of loan to value. They’re being very helpful.

“Even lenders who require a physical valuation at a higher LTV are generally processing landlords’ remortgage applications as normal – but moving the valuation part of the application to the very end. A significant percentage of our landlord clients are happy to do this. They’re content to sit back and wait out the lockdown and get a physical valuation done.”

Product numbers

While the number of lenders operating in the market has fallen only marginally, there has been a significant fall in buy-to-let mortgage deals since the start of March 2020– with the number of BTL products dropping by almost 50%.

Olejnik concluded: “The number of products has dropped but the only section of the market that’s genuinely gummed up is 85% LTV lending – and that’s pretty niche. There were only three lenders doing business at that end of the market when the Boris Bounce was in full swing.”

By Joanne Atkin

Source: Mortgage Finance Gazette

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Philip Hammond calls for UK economy to reopen

The former Chancellor Philip Hammond has called the government to ease the lockdown measures and reopen the UK economy.

Hammond told the BBC’s Radio 4’s Today programme, “The reality is that we have to start reopening the economy.

“But we have to do it living with Covid.

“We can’t wait until a vaccine is developed, produced in sufficient quantity and rolled out across the population.

“The economy won’t survive that long.”

Peel Hunt has just released the results of its COVID-19 survey of investors, corporate managers and other UK finance professions (banking/legal/accounting), revealing the City’s views on what shape the recovery will take, how investor habits and priorities will change post lockdown, and the outlook for corporates in a post-COVID market.

Source: London Loves Business

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Do you need mortgage protection insurance?

Your mortgage is likely to be one of the biggest expenses you need to have every month. Even if you were not able to work because of a disease or redundancy, those repayments still must be made, or you may face the risk of losing your home. You can choose from two primary possibilities to protect yourself: you can turn to general income protection insurance (meaning the payments you would get could be spent on anything) or use protection insurance, designed particularly to cover the mortgage payments. People tend to choose the second option often because it is explicitly designed to solve this problem. MPPI, which stands for mortgage payment protection insurance, makes it possible for you to keep on paying off your mortgage, even if you stopped getting a stable income.

Types of MPPI

There are three main types of mortgage payment protection insurance. The difference between them is the range of situations where you will get financial help:

  • Accident and sickness only,
  • Unemployment only,
  • Accident, illness, and unemployment.

The cost of mortgage payment protection insurance

The price of MPPI is not always the same – it may differ accordingly to your age and the level of your mortgage repayments. Apart from that, the number of life circumstances that enable you to get financial help also affects the cost. Therefore, accident and sickness-only or unemployment-only policies are less expensive than the variant that covers both of them.

What is more, your job or the type of employment contract you have can be significant as well. Most insurers classify professions in different risk categories. For instance, it may look like this:

Class 1 – Professionals, administrative staff, managers, secretaries, IT specialists, etc.

Class 2 – Skilled manual workers, shop assistants, florists, etc.

Class 3 – Semi-skilled workers, care workers, teachers, plumbers, etc.

Class 4 – Heavy manual workers, builders, mechanics, etc.

What is more, most insurance companies cater to self-employed people as well. Still, you should always read the small print carefully in order to make sure you are not excluded because of, for instance, being on a fixed-term or casual contract.

Where to get mortgage payment protection insurance

Firstly, you can be provided with MPPI by a mortgage lender, as most of them offer it along with your mortgage application. It is a convenient solution because, in this way, you will cover your premium as an element of your regular mortgage payment. Nonetheless, it is advisable to always shop around for a policy. You need to keep in mind that buying policy via your lender means that you will be under their group policy. For this reason, further switching to your mortgage can be restricted.

The second option is to cooperate with a mortgage broker to arrange the best insurance for you. They are experienced in comparing numerous policies from many different companies to make sure that you will be provided with the best possible option. What is more, before you make your final decision, they will comprehensively explain to you what the differences in each possibility are.

Another solution that you can choose is to use an existing life insurance policy for mortgage protection. It is possible as long as the amount you are insured for is equal or higher than the value of your mortgage. Moreover, it needs to run for the same term. However, you need to remember that it means you are assigning the policy to your lender. As a result, if you die during the term, the life insurance benefits will be given to your lender to pay off the mortgage. If there are any policy benefits left over after that, your dependants will receive them. However, if the whole sum needs to be used to cover the mortgage, your dependants will get no money.

Topping up your mortgage

If it happens that you want to top up your mortgage, you always have to check if your policy is appropriate for its new value. It is possible for you to find a new policy that will cover the whole amount of your mortgage. Apart from that, you can get other insurance that will be associated just with the added amount.

Both of these options should be compared carefully. Sometimes it can be more beneficial to keep your primary mortgage payment protection insurance and then provide yourself with a second one for the top-up value. You should find out what is the cost of resigning from your primary policy and getting a plan for the full value of your new mortgage instead.

When you are getting a new policy, you may be surprised that the premium is higher than the last time you checked. The reason for this is that you are getting older, and age is one of the main factors that affect the premium. But the good news is that if you quit smoking, or if the rates have lowered since the last time you tried to get the cover, it may be possible for you to pay less.

All in all, to make your financial situation better protected, you really should invest in mortgage payment protection insurance. At the same time, it is advisable not to rush in choosing it and familiarise yourself with all the options, or ask a professional broker to help you to make the right decision.

BY JOHN SAUNDERS

Source: London Loves Business

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How badly will coronavirus hit UK house prices in 2020?

UK house prices could fall by as much as 10 per cent this year due to the impact of coronavirus, experts predict.

UK house prices had started to recover from uncertainty caused by Brexit at the end of 2019.

And the so-called Boris bounce from the Tories’ election victory in December set the market up for a strong start to 2020.

But then coronavirus came along, sending the UK into lockdown – meaning buyers couldn’t visit houses, a fairly crucial step when moving house.

The dramatic economic hit has also made people more wary of making big purchases right now.

While the impact of the coronavirus outbreak on UK house prices is not yet fully understood, analysts believe they will dip in the second and third quarters of 2020.

The latest Rightmove research published this week showed the average price of property coming to market this month dipped 0.2 per cent to £311,950. By contrast, in April last year UK house prices increased 2.1 per cent.

The property platform said there is not a “functioning [housing] market” due to the coronavirus lockdown and that new sales were “almost impossible”.

Meanwhile, figures published this week by the Land Registry and the Office for National Statistics showed inflation fell back to 1.1 per cent in February after climbing to an eight-month high of 1.5 per cent in January.

What will happen to house prices in 2020?

Analyst predictions on the impact of coronavirus on UK house prices vary due to the uncertainty surrounding the lockdown exit plan and the wider economic impact.

Zoopla: Impossible to predict scale of blow

“History tells us that house prices tend to fall when the economy shrinks as a result of falling output,” says Richard Donnell, research director at property platform Zoopla.

“[This] has a knock on impact for unemployment or higher borrowing costs – all things that can result in more ‘forced sellers’.”

“Thus the scale of the impact on house prices depends upon the scale of the economic impact from Covid-19.”

Savills: House price fall of up to 10 per cent

Estate agent Savills estimated that average UK house prices will fall between five per cent and 10 per cent in the short-term while the low transaction market caused by the coronavirus lockdown continues.

EY: House prices could fall five per cent

Howard Archer, chief economist at EY Item Club, forecast that UK house prices could drop between three per cent to five per cent in the second and third quarters of 2020.

Knight Frank: Prices to sink three per cent

Meanwhile, Knight Frank predicted that average UK house prices will dip three per cent this year, and property values in London will fall two per cent.

Chesterton’s: House price drop of two per cent

London estate agent Chesterton’s also estimated that house prices in the capital will fall two per cent in 2020 due to coronavirus.

When will UK house prices bounce back from coronavirus?

Despite the gloomy outlook for house prices this year, most analysts believe the housing market could make a strong recovery by 2021.

CBRE said that pent up demand in the period after the coronavirus crisis is likely to cause a “spike in activity” in the housing market.

Knight Frank: London house prices to jump six per cent in 2021

Knight Frank forecast that London house prices will jump six per cent in 2021, while Chestertons said it expected to see growth of three to four per cent in central London next year.

Savills: London house prices to lead recovery

Despite forecasting a steep decline in UK house prices this year, Savills was more optimistic about the years ahead. The estate agent’s analysts say mid-term price growth will be an average of 15 per cent over the next five years, with prime central London leading the recovery.

EY: House price recovery of two per cent in 2021

However, EY Item Club’s Archer was more cautious, saying UK house prices could grow by two per cent next year.

“Given the impact on the economy from coronavirus, the likely substantial rise in unemployment and the impact on many people’s incomes, the housing market looks unlikely to return to the levels seen at the start of 2020 for some time,” he said.

By Jessica Clark

Source: City AM

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85% of buy-to-let lenders still lending

Some 42 of the 49 buy-to-let lenders operating at the beginning of March are still lending despite the impact of coronavirus, analysis from Mortgages for Business shows.

Together Money and Vida Homeloans have both pulled out of the market, while HSBC is no longer accepting buy-to-let applications.

However Santander, Clydesdale, Precise Mortgages and Kent Reliance have now restarted lending, after initially taking a step back.

Shawbrook and Paragon meanwhile are using virtual valuations against standard properties up to 75% loan-to-value.

Steve Olejnik, managing director of Mortgages for Business said: “Lenders have cut down the sorts of landlords that they will lend to.

“They’re pulling product ranges, tighten lending criteria, and increasing margins. But different lenders are derisking against different kinds of landlord borrowers. So, while some lenders are no longer lending to first time landlords, there are still lenders who are.

“My advice to landlords looking to remortgage is act sooner, rather than later. You may have to answer a few more questions when you’re applying for a remortgage that you would have had to last month – but a broker will still be able to find you a deal.”

Saffron Building Society withdrew from the market before the outbreak in March, though the lender has indicated that it will return to the market later in the year.

Lenders that have stopped lending to landlords since include: HSBC; Foundation Home Loans; Together Money; Vida Home Loans; Platform Home Loans; State Bank of India; and Furness Building Society.

BY RYAN BEMBRIDGE

Source: Property Wire

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UK economy suffers unprecedented slump amid coronavirus lockdown

The UK economy suffered an unprecedented blow in April as the coronavirus lockdown choked off demand, according to a closely watched gauge which slumped to its lowest level since records began.

The IHS Markit/Cips composite purchasing managers’ index (PMI) crashed to a reading of 12.9 in April. This was the worst score since the survey began more than 20 years ago.

April’s reading was even worse than analysts’ dire predictions and well below March’s record low of 36. A score of below 50 indicates contraction. The worst score seen during the financial crisis was 38.1.

The data was “eye-watering,” said Ruth Gregory, senior UK economist at Capital Economics. She said the lockdown “has pushed the economy into a recession of unprecedented speed and depth”.

The unprecedented collapse in the PMI highlights the devastation coronavirus is wreaking on the UK economy. It is one of the most up-to-date economic indicators.

Lockdown measures, which were last week extended until early May, have caused businesses to close and demand to evaporate as people stay at home and lose their jobs.

Chris Williamson, chief business economist at data firm IHS Markit, said the PMI reading was consistent with UK GDP falling at a rate of seven per cent per quarter.

Such an economic contraction has not been seen since World War II. Yet many groups, such as the UK’s budget watchdog, predict a steeper fall in GDP.

Coronavirus batters UK services sector

Britain’s enormous services sector bore the brunt of the pain. The coronavirus lockdown sent the sector to its worst month since records began in 1996.

“Business closures and social distancing measures have caused business activity to collapse at a rate vastly exceeding that seen even during the global financial crisis,” said Williamson.

More than 80 per cent of UK services providers reported lower business activity in April. Duncan Brock, group director at Cips, the Chartered Institute of Procurement & Supply, said this “compared with 38 per cent during the worst single month of the global financial crisis”.

Around half of all firms’ purchasing managers reported lower numbers of staff in April.

However, numerous respondents said this was due to their firm using the government’s job retention scheme that pays 80 per cent of a worker’s wages if they temporarily stop working, or “furloughed”.

The government has rolled out a number of very large support schemes for the UK economy that seek to limit the damage from coronavirus.

Dire figures will spark debate among policymakers

Yet April’s PMI data will raise questions about whether support is getting to businesses quickly enough. There have been a number of complaints about the coronavirus business interruption loan scheme (CBILS) for example.

Williamson said the dire performance of the UK economy in April will also spark debate about the length of the lockdown.

The cabinet is reportedly split about when to start lifting stay-at-home orders and letting people go back to work.

“Hawks” such as chancellor Rishi Sunak and cabinet secretary Michael Gove arguing that the economy needs to be returned to normal quickly.

On the other side are the “doves”. These include Prime Minister Boris Johnson and health secretary Matt Hancock, who fear the damage a second wave of infections could do.

By Harry Robertson

Source: City AM

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UK Housing Market – Past, Present and Future

Pre-lockdown

There were a number of years where the housing market suffered due to the uncertainty around Brexit and more recently the general election. At the end of 2019 the Conservative Party called a General Election that was billed as “one of the most unpredictable elections in decades”. They required a minimum of 326 parliamentary seats in order to have a majority. To the nations surprise they gained a large majority by securing 365 seats. This then paved the way for the Brexit deal, when it received Royal Assent from the Queen on 23rd January 2020. By February people were rejoicing in the “Boris Bounce” and the property market came out of the stagnation of the previous years and saw an increase in transactions and prices.

Lockdown

The “Boris Bounce” was to be short lived as the UK went into lockdown on the 23rd March and the imposition of social distancing. This again brought stagnation to the property market, with Surveyors unable to value properties, Estate Agents shutting their doors and people unable to move house. The immediate effect of this was that the mortgage market immediately plummeted. The banks retreated to the safety of more stringent lending criteria and reducing the Loan to Value (LTVs) ratios.

The Future

In recent days we have seen many of the major lenders raising the LTVs as they try to gain market share.

Many are using Automated, Desktop and Drive by Valuations and hopefully this will be maintained post lockdown and save both time and money.

The Bank Base Rate has been reduced to an all-time low of just 0.1% with many of the lenders reducing their interest rates accordingly.

The brief suspension of the housing market is unlikely to have much of an impact on house prices because of the entrenched imbalance of the supply and demand in the UK.

The Government will be keen to get the housing market moving again as it has such a major impact on multiple aspects of the economy.

Action – With many of the UK’s mortgages currently on lenders high standard variable rates now would be the time to commence mortgage applications, in order to secure the all-time low interest rates. Even if these mortgages are unable to complete, due to requiring a physical valuation, we can often secure the rate and if rates drop even further then the application can be cancelled and a new application submitted for the lower rate. It’s a “Win/Win.

By Malcolm Jones

Source: Property118

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Scottish housing market poised for ‘two waves of bounceback’

Scotland’s housing market is poised for two waves of bounceback with the expectation of a return to pre-coronavirus levels, a leading industry figure has predicted.

The sector has been rocked by stay-at-home and physical distancing measures for agents, surveyors and prospective buyers, combined with a backlog in applications via the Land Register of Scotland service.

However, Paul Denton, the chief executive of the Scottish Building Society, which was established in 1848, said he was starting to see some signs that buyers were looking to life beyond the Covid-19 peak.

“We are still open for business, with our primary focus the health and welfare of our staff and our customers, ensuring we support them financially and emotionally through this time of crisis,” he said.

“We are starting to see signs that buyers are now thinking about life after the Covid-19 peak, with a rise in enquiries on purchase mortgages. And, indeed, our staff are busy processing remortgages, even for those on a mortgage holiday.”

Denton, who represents Scotland on UK Finance’s mortgages board, added: “I think there will be two waves of bounceback. The first, when Registers of Scotland fully reopens and starts clearing the backlog of applications from solicitors. And the second when social isolation measures ease and consumer confidence starts to grow.

“It is clear that the drop in sales volume is driven by social isolation and not a lack of demand from customers.”

New figures show that the average price of a property in Scotland in February was £150,524 – a year-on-year increase of 2.5 per cent, according to statistics from the UK House Price Index. The UK average house price was £230,332 – up 1.1 per cent.

The largest decrease was recorded in the City of Aberdeen, where the average price fell by 3.6 per cent to £143,990. The highest-priced area was the City of Edinburgh, where the average price of a house is £270,864.

Denton added: “These statistics pre-date Covid-19 but reinforce the trend of Scottish house prices rising faster than the rest of the UK as demand outstrips supply. However, there are marked geographical differences too, with the challenges in the oil and gas sector impacting the Aberdeen market.

“Scotland weathered the storm during the 2008 financial crisis. We know this is on a different scale, but the underlying market is resilient and that latent customer demand will see the market bounce back to something near the levels we saw at the beginning of the year.”

By Scott Reid

Source: Edinburgh News

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Older homeowners could downsize to townhouses and apartments

Older homeowners are looking to downsize to townhouse and apartments to cut costs after the pandemic, according to Philip Jackson, director of Maguire Jackson.

Jackson said: “We have seen continuing evidence of downsizing from those typical older owners in larger houses.

“The upkeep of both the gardens, especially with some garden help services being unavailable, and the realisation of the amount of work needed plus ongoing redecoration required has highlighted the time and costs of upkeep for some.

“As a result, many are looking at newer town houses and good city apartments, ideally those overlooking the canal or open space.”

However Kieran Ryan, managing director of Rickman Properties in London, warned that downsizing can turn into an expensive exercise.

He said: “Downsizing has its own problems and people sometimes forget that it can be expensive as often their furniture rarely fits into a smaller home and they have to buy all new.

“Downsizing has its own reasons and I don’t think this will take off.

He added: “We don’t think downsizing will be a big issue because of the pandemic.

“We are all hoping that this is a ‘once in a lifetime’ issue.”

BY RYAN BEMBRIDGE

Source: Property Wire