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Bank of Scotland sees huge rise in mortgage applications

Online mortgage application enquiries to Bank of Scotland have jumped 75% in the past week, ahead of the Scottish property market emerging from lockdown.

The imminent reopening of the property market means new lending appointments are also up, with an increase of 470% on the previous week.

Bank of Scotland data revealed that the majority of these enquiries and appointments are from first-time buyers.

As movers navigate the post-lockdown housing ladder, many will be looking for help on what this now looks like and what it means for them.

“It has left many people at a loose end”

Graham Blair, Mortgages Director, Bank of Scotland, said: “With the housing market slowing in the last few months, it has left many people at a loose end, whether that involved delaying plans to buy, extending rental agreements, or having to move in with relatives or friends.

“As Scottish estate agents look to reopen their doors, we are seeing an increase in mortgage applications and new lending appointments as more people want to get moving.

“Our branch-based advisers are also there to help people take the next step, but there’s plenty that people can do to get the ball rolling in the meantime.”

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Bank of Scotland advice on coronavirus home buying

First-time buyers

“If you are taking your first step on the property ladder, you should have a look at the First Home Fund which may be an option in helping you purchasing your first home,” the Bank said.

Start the ball rolling

The quickest way to find out how much you can borrow will be by checking online tools and calculators which can help you within minutes.

Keep documents up to date

Before speaking to a mortgage adviser, make sure all your income details, bank statements and pay cheques are up to date and you have them prepared before the first meeting.

The more accurate information you can provide from the offset, the smoother the process will be.

Be realistic

For those selling, there will be lots of speculation over the coming weeks about house prices going down, but we should remember we are in unprecedented times.

With market activity currently almost at a complete standstill, and therefore a more limited number of transactions, it will take time for the true trend to emerge.

Consider looking at a trusted house price website as well as talking to a number of local estate agents who can share local expertise on the area.

What if I have been furloughed?

“From a Bank of Scotland perspective,” it said, “our conditions largely remain the same for those applying for mortgages and we recognise furloughed income.”

Many people have changing circumstances which is why it is important to bring all the latest information with you.

By Conor Marlborough

Source: Scotsman

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Wales and Cornwall are most popular UK holiday home locations

Wales is the top holiday home location in the UK for 2020/21, research from holiday home insurance company Schofields Ltd has revealed.

Some 15.35% of UK holiday homes are located in the UK, followed by Cornwall (12.82%), Scotland (9.30%), Devon (8.39%) and North Yorkshire (8.13%).

Renewed holiday home contracts were also compared to new contracts taken out between January and June 2020, to calculate the top up and coming locations.

County Durham came top of this list, with a 36% increase in the number of contracts, followed by Wiltshire (36%), East Yorkshire (35%), Cumbria (35%), and Suffolk (28%).

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Phil Schofield, head of inbound marketing, said: “Getting away from home safely once restrictions have been lifted is something that’s on everyone’s minds.

“Holiday homes and holiday cottages are top of people’s lists due to their privacy and ease.

“Data suggests that people in the UK take breaks of 2-3 days more frequently than any other length of holiday, so being able to make a short journey with less stress to a holiday cottage or holiday home is really important.

“The top locations for holiday homes in 2020 aren’t a surprise to us, but the up and coming locations are interesting.

“It seems that people are wanting to find destinations that are off the usual beaten track in the UK and won’t be quite so crowded as the hotspots.

“Hopefully our data will help tourists choose destinations for short breaks in the UK where they can easily find holiday cottage accommodation but will have plenty to see and do.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Housing market starts to reopen in Scotland as lockdown eases

From Monday 29 June, restrictions on housing moves will be eased in Scotland as part of the easing of its lockdown measures.

This will allow valuations and viewings to take place, and marks the initial stage in the reopening of the Scottish housing market.

This development in Scotland follows a similar move to ease lockdown on 19 June in Wales, which saw the government allow viewings to take place in vacant properties, and to ease restrictions on house moves where a sale has been agreed, but not yet completed.

In England, it has been more than a month since equivalent changes were made on 13 May.

First Minister Nicola Sturgeon, said: “The sacrifices that have been made – and I know how hard and at times painful they have been – have suppressed the virus.

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“They have also protected the NHS, and have undoubtedly saved a significant number of lives.

“They have also brought us to the position where we can now look ahead with a bit more clarity to our path out of lockdown, and I hope details announced today will provide people and businesses with more certainty in their forward planning.

“But let me be clear that each step on this path depends on us continuing to beat the virus back. That is why we must do everything in our power to avoid steps being reversed.

“The central point in all of this is the virus has not – and it will not – go away of its own accord. It will pose a real and significant threat to us for some time to come.

“Maintaining our progress also means all of us abiding by public health guidance.

“Wearing face coverings in enclosed spaces, avoiding crowded places, washing our hands and cleaning surfaces regularly, maintaining physical distancing, agreeing to immediately self-isolate and get a test if we have symptoms – all of these basic protections matter now more than ever as we all get out and about a bit more.”

A statement from the Welsh First Minister, Mark Drakeford MS, said: “This package marks a significant unlocking of the regulations and, for many aspects of daily life in Wales, we are moving into the amber phase of our traffic light system.

“We have been able to do this because of the actions everyone in Wales has taken to date in complying with the stay-at-home and stay local rules.

“We need everyone to continue to take steps to protect themselves and their loved ones as we find a way to live and work alongside coronavirus.

“This means working from home wherever possible, maintaining social distancing and frequent handwashing.

“For some people it may mean wearing a face covering in certain situations, for others it will mean continuing to shield.

“I want to thank everyone for everything they have done so far. Together we can keep Wales safe.”

Mark Hayward, chief executive at NAEA Propertymark and David Cox, chief executive of ARLA Propertymark, said: “It’s great news for consumers and the industry in Scotland that the property market is reopening on Monday.

“Whilst it is not a return to normal, the new guidelines will allow members of the public to view, purchase, rent and move into new properties…reinvigorating the housing market and boosting the economy.

“Of course, safety is paramount, and we encourage all agents to follow the Propertymark guidelines on property viewings and moves closely to protect themselves and others.”

By Jessica Bird

Source: Mortgage Introducer

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HMRC: Property transactions up 16% month-on-month

Residential property transactions were up 16% on a monthly basis in May as the UK eased its way out of lockdown.

HMRC figures revealed that there were 48,450 residential transactions during the month, but that is still 49.6% lower than in May 2019.

Non -residential property transactions stood at 5,880, 42.2% lower than May 2019 and 14.1% higher than April 2020.

Andrea Olivari, co-founder at digital lender Selina Finance, said: “On the whole, there are gradual signs that the property market is moving, with the latest industry figures revealing an average house price increase of 1.9%.

“So the rise in property transactions is reassuring, particularly given the figures are taken from May and the market wasn’t officially re-opened until mid-way through the month.

“It will be interesting to see if this trend continues throughout June or whether these figures are down to a release of pent up demand from the lockdown period.

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“Whether the increase continues in the long term is dependent on an array of factors, particularly the “new normal” of homeworking post-COVID and how this influences homebuying decisions.”

Anna Clare Harper, author of Strategic Property Investing and co-founder of property fund Anglo Residential, added: “Recent events and practical restrictions such as physical valuations and obtaining finance mean it is hardly a surprise that property transactions have fallen dramatically year-on-year.

“However, what we can see from the HMRC data and from what we are hearing from investors, appetite is responding quickly.

“We are seeing the signs of strong appetite to move forward with investments in the UK residential market in particular.”

By Ryan Fowler

Source: Mortgage Introducer

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Affordable housing progress made but statistics hit by coronavirus

The number of affordable housing approvals and starts in Scotland has increased compared to a year ago while affordable home completions have fallen, new figures have shown.

The housing statistics quarterly update for June 2020 found that in the year to end March 2020, there were a total of 12,886 homes approved through the Scottish Government affordable housing supply programme, which includes off-the-shelf purchases and rehabilitations as well as new builds. This is an increase of 1,756 homes (16%) on the previous year, and an increase of 62% compared with the year to end March 2016.

In the same period, 12,045 affordable homes were started, an increase of 1,173 homes (11%) on the previous year, and an increase of 57% compared with the year to end March 2016.

There were 9,286 homes delivered in the year to end March 2020, a decrease of 282 homes (3%) on the previous year, but an increase of 42% compared with the year to end March 2016.

It should be noted that the amount of affordable housing supply activity recorded in the most recent quarter January to March 2020 will have been impacted on by the introduction of government advice and measures to reduce the spread of the coronavirus (COVID-19) from mid-March onwards, in which non-essential construction activity stopped, and home buyers were advised to delay moving to a new home where possible.

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This has lowered the total amount of activity recorded for this quarter compared to what would otherwise have been the case. Year to date totals to end March 2020 will also have been affected.

Figures for the next quarter April to June 2020, which are due to be reported on in the quarterly housing statistics update in September 2020, are likely to see an even greater impact due to COVID measures continuing throughout April and May, and into June 2020.

The statistics were due to include an update on all-sector new house building starts and completions to end December 2019, with more recent figures on social sector new builds to end March 2020.

However, due to the impacts of COVID-19, some local authorities have been unable to provide new build data to the usual timescales. The government said it is working with local authorities to agree reasonable extensions to submission deadlines, and is aiming to publish this new build housing data as soon as possible.

Commenting on the statistics, the Scottish Federation of Housing Associations (SFHA) repeated its call for housing to be at heart of Scotland’s economic recovery.

Head of policy and innovation, Lorna Wilson, said: “The Scottish Government has made progress into tackling housing need in Scotland since 2016, and it looks likely that it was on track to meet its 50,000 affordable homes target, before the programme was paused due to the coronavirus pandemic. The government must be given credit for this, and it’s vital this progress – and the ambition behind it – is maintained and not lost.

“SFHA recently released research with CIH Scotland and Shelter Scotland which found that we need 53,000 affordable homes to be delivered between 2021–2026. By committing to this new target, the government can reduce housing need, tackle child poverty and kick-start Scotland’s economic recovery from the coronavirus crisis.”

The SFHA also welcomed this week’s report by the Advisory Group on Economic Recovery which also called for the Scottish Government to invest in affordable housing as part of its recommendations.

Housing minister Kevin Stewart said: “I am proud that we have now delivered over 95,000 affordable homes since 2007 with more than 66,000 of these for social rent. We were on track to deliver our target of 50,000 affordable homes by the end of March 2021, but the impact of COVID-19 has caused a necessary pause to activity.

“We will continue to work with partners across the housing sector to deliver the remainder of these homes, as quickly as it is safe to do so and I look forward to construction resuming in a new safe way.”

Source: Scottish Construction Now

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UK house price growth to remain positive over the next quarter – Zoopla

The latest Zoopla House Price Index has been published, with the bulk of new pricing evidence coming from sales agreed before the lockdown.

Data on pricing for new sales agreed in the last four weeks is starting to feed through and points to a resumption in the upward pressure on house prices seen at the start of the year.

As an example, average asking prices for properties marked as sold on Zoopla, which were rising at 7% in the first three months of the year, have returned to registering a similar growth rate over the first two weeks of June.

Near-term outlook for house prices

Most of these new sales agreed are likely to complete between August and October 2020, which Zoopla expects will show sustained UK house price growth of between +2% to +3% over the next quarter, once they feed into the index.

While some have forecast annual house price falls over calendar year 2020, the portal expects any price falls in the house price indices only to crystallise in the final months of the year.

Economic impacts of COVID-19 to hit home in H2 2020

After an initial rebound, demand is expected to weaken over the summer months as the economic impact of COVID starts to materialise, with figures reported last week by the ONS indicating an acceleration in unemployment.

Caution amongst lenders and more limited availability of 90% loan to value (LTV) mortgages will reduce demand, particularly amongst first-time buyers who, over recent years, have been the engine of the housing market.

In 2019, a fifth of all homebuyers purchased a home with a deposit of 10% or less, so a decrease in the availability of 90%+ LTV mortgages could preclude this cohort of would-be buyers from entering the market, effectively reducing demand.

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Government and central bank support will continue to play an important role in how the economy fares with a knock-on impact for the strength of consumer sentiment.

Retail sales, for example, rebounded more than many expected in May.

While almost a fifth of mortgage holders have taken payment holidays, borrowers are able to take these up until the end of October 2020, meaning support is extended for the rest of the mortgaged sector up until April 2021.

Further support and innovation to support the economy and the housing market cannot be ruled out in these unprecedented times, which will limit the downside, albeit not completely.

Strongest sales rebound in northern cities

New sales agreed, subject to contract, have grown the most in England where the market is open for business.

The rebound in sales has been strongest in northern England, led by Leeds, Sheffield and Manchester where sales are up to 20% higher than in February 2020.

In cities where sales are not keeping pace with pre-COVID levels, including Glasgow, Newcastle and Cambridge, this is down to a lower supply of homes for sale.

Level of homes for sale (inventory) in these cities is significantly lower than last year.

While the new flow of homes for sale is back to pre-COVID levels, the number of homes for sale per estate agency branch is 15% lower than a year ago.

This is a result of the market closure at what is a busy time of year.

Stock levels in Cambridge, for example, are up to 40% lower year-on-year.

Zoopla says that the lack of supply supports their view of house price growth holding steady in the short term.

House price growth

UK house price growth is up 2.4% on the year, and has increased from 1.6% at the start of 2020.

The 20 city index registered slower growth over May, slowing to +2.1% from 2.4% in April as less pricing evidence dragged the growth rate lower.

The city with the highest rate of house price growth over the past 12 months is Nottingham (4.3%), followed by Manchester (3.9%).

Meanwhile, Oxford (-0.6%) and Aberdeen (-2%) have recorded modest price falls.

Regional momentum

Activity levels are expected to rebound in Scotland, Wales and Northern Ireland as these markets reopen and pent up demand is released.

These countries account for less than a fifth of UK housing sales but more activity will support headline measures of demand and market activity in the immediate term.

The Welsh market opened on Monday but demand for homes has been building since the English market reopened, gaining momentum over the last two weeks.

Demand for housing in Wales has now rebounded close to what has been recorded in England.

Sales agreed, however, remain 65% lower than pre-COVID levels in Wales as the physical viewing of property has not been permitted.

Zoopla expects sales volumes to increase over the rest of June and into July, mirroring the rebound in England.

Scotland’s market, which reopens later in June, has seen a similar trend with demand recently returning to pre-COVID levels, but with sales volumes lagging well behind.

Commenting on the findings Richard Donnell, Director of Research & Insight, said:

“The rebound in housing market activity has taken many in the industry by surprise.

“It is welcome news given the projections for falling economic growth and rising unemployment.

“Estate agents and developers are responding and using the upsurge in demand to rebuild their sales pipelines and open up their developments.

“We see returning pent up demand and new buyers entering the market creating upward pressure on prices in the face of a lower supply of homes for sale which has been exacerbated by the lockdown.

“House price growth is set to hold up in the near term and we expect the downward pressure on prices to come in the final months of the year as demand weakens.

“While the average asking price for homes marked as sold on Zoopla are 7% higher than a year ago this is down to an increase in sales in higher value markets where activity has remained subdued in recent years.

“We do not expect the rate of growth in the Zoopla House Price Index to reach this level, rather it is expected to hold steady at 2%.

“The Welsh housing market opened this week and levels of demand have already returned close to the levels seen in England in anticipation of the market reopening. Scotland, where the market reopens on 29 June has also seen demand rise back to pre-COVID levels but sales remain more than two thirds lower and are expected to rebound in the coming weeks.”

Source: Property Industry Eye

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UK economy set to return to growth in third quarter after coronavirus chaos

The UK economy’s coronavirus-induced downturn eased in June as key health indicators hit a four-month high, according to a closely-followed survey.

The UK’s economic output hit a measure of 47.6 on IHS Markit’s flash purchasing managers’ index (PMI), a four-month high.

Anything below 50 represents a contraction. But it was a stark improvement from May’s score of 30 after April’s lockdown saw the UK economy sink to an all-time low score of 13.8.

IHS Markit’s chief business economist, Chris Williamson, said it was a sign the UK looks set to return to growth between June and September.

“June’s PMI data add to signs that the economy looks likely return to growth in the third quarter, especially given the further planned easing of the lockdown from 4 July,” he said.

“June saw a record rise in the PMI for a second successive month,
confirming that the economy is moving closer to stabilising after the worst of the immediate economic impact from the Covid-19 pandemic was felt back in April.”

The pound was broadly flat against the dollar this morning to stand at $1.2462.

It follows earlier PMI showing the eurozone economy also hit a four-month high, led by France’s recovery.

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Manufacturers lead UK recovery

The manufacturing sector led the UK’s June recovery to post growth of 50.8. But the UK services industry slipped again, though not nearly as badly as it did in May. The industry posted a score of 47, compared with May’s 29.

The UK’s private sector also said confidence hit a four-month high in June as firms raised their expectations for the year ahead.

Easing of lockdown restrictions amid the coronavirus pandemic helped UK economic activity improve after its April collapse.

Uncertainties loom for UK economy

But industry figures told IHS Markit underlying demand remained “very subdued”, with cutbacks in spending holding back business activity.

And Williamson warned the UK economy’s longer term prospects are plagued by uncertainty.

“Demand clearly remains weak, as indicated by a further steep decline in backlogs of orders and an ongoing fall in new orders,” he said. “Many Covid-19 restrictions and social distancing measures will also need to stay in place until an effective treatment or vaccine is available, curbing demand in a variety of service sectors in particular.

“Uncertainty over recovery prospects and job prospects also mean demand for many goods, especially non-essential big-ticket items, is likely to remain weak for many months.”

Doubt over whether the UK can strike a trade deal with the EU before the Brexit transition period ends in December 2020 is also a worry for firms.

That led IHS Markit to forecast the UK economy to contract by 11.9 per cent this year before expanding by 4.9 per cent in 2021.

‘Solid start’ to UK economy’s recovery

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the June data suggests a solid rebound in GDP. But he warned gains will be harder to come by as the UK economy struggles to return to normal.

“A range of daily data are consistent with output rising significantly in June, after a sluggish start to the recovery in May,” he said.

“Nonetheless, the pick-up in activity partly reflects firms working through backlogs of work that accumulated during the peak of the pandemic. In addition, firms still are cutting headcounts rapidly.

“With restrictions to suppress Covid-19 likely to impose a hard ceiling on activity in certain sectors of the economy until a vaccine is found, and low levels of consumers’ confidence pointing to elevated saving, a full recovery in GDP in the second half of this year remains unlikely.”

Pantheon Macro stuck to its base case that GDP will stand five per cent below its pre-lockdown peak in the fourth quarter.

Thomas Pugh, Capital Economic’s UK economist, added that the pace of the UK economy’s recovery was pleasing.

“The economy seems to be recovering a little quicker from its nadir in April than we had first expected,” he said. “This trend should continue in July as bars, restaurants and cinemas will probably be able to open from 4 July and a reduction in the official social distancing measure from 2m to 1m would allow those firms that are open to serve significantly more customers. “

By Joe Curtis

Source: City AM

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Buy-to-let yields improve in the North East

Buy-to-let yields in the North East have increased by 0.12% to 5.09% in the first quarter of 2020, research from peer-to-peer investment platform Sourced Capital has found.

At the other end of the spectrum they’ve fallen by -0.22% in London to 4.10%.

Stephen Moss, managing director of Sourced Capital, said: “Turning a profit in the buy-to-let sector remains a tough ask with a number of government changes denting profitability and yields remaining largely flat.

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“With COVID-19 presenting additional hurdles such as rental arrears and longer void periods, many are now turning to alternative options such as the peer to peer sector for a safer, more hands-off investment.

“However, that’s not to say that a buy-to-let property won’t make a great investment should you place your money in the right pockets of the market. Buy-to-let returns are based on fine margins and so an annual increase of 0.7% isn’t as insignificant as it may seem.”

Across England they’ve typically fallen by -0.1% year-on-year.

Looking more locally, Corby has seen an uplift of 0.7% on an annual basis. Charnwood, Newcastle and Exeter have also seen positive growth with a jump of 0.5%.

Harlow in Essex and the Orkney Islands have enjoyed a 0.4% increase, along with Ealing which enjoyed the largest increase of all London boroughs.

BY RYAN BEMBRIDGE

Source: Property Wire

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Bailey: Bank of England will reverse QE before raising rates

Bank of England governor Andrew Bailey believes the Bank of England must begin reversing quantitative easing before hiking interest rates from record lows.

Bailey said today that a reveral of QE should come before lifting rates from their historic lows of 0.1 per cent, signalling an upending of long-standing Bank of England policy.

Bailey said the time for such action was not now, but that the high level of central bank asset purchases “shouldn’t always be taken for granted”.

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“When the time comes to withdraw monetary stimulus, in my opinion it may be better to consider adjusting the level of reserves first without waiting to raise interest rates on a sustained basis,” Bailey wrote in an article for Bloomberg.

Last week the Bank of England announced a further £100bn of stimulus to take its bond-buying target from £645bn to £745bn for 2020. However, it said the rate of QE would decrease for the rest of the year.

The Bank’s monetary policy committee slashed interest rates to 0.1 per cent back in March to combat coronavirus.

Bailey’s comments today signal a shift away from his predecessor Mark Carney’s strategy.

Carney had said the Bank would raise rates before trying to sell bonds back to the market.

But Bailey said today he did not want high Bank of England purchases of government bonds to become a long-standing scenario.

“Elevated balance sheets could limit the room for manoeuvre in future emergencies,” he said.

The Bank of England has purchased huge amounts of government bonds since the start of the coronavirus crisis.

By Joe Curtis

Source: City AM

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Welsh housing market reopens

Welsh housing market reopens – The housing market in Wales will partially reopen from today, as home moves can go ahead providing the residential property has been vacant for at least 72 hours.

People can move whereby a sale has been agreed but not yet completed, while the marketing and viewing of unoccupied residential properties can once again take place.

Property valuations and inspections are allowed provided they are done in line with social distancing measures.

Mark Drakeford, first minister of Wales, said: “The threat of coronavirus hasn’t gone away but thanks to the efforts we have all made over the last few months, the number of people contracting coronavirus each day in Wales is falling, so too is the risk of meeting somebody with virus.

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“Given the progress we have made, we are able to take some additional cautious steps to further unlock our society and economy. This includes more retailers being able re-open their businesses, as long as they take measures to minimise the risk to their staff and to the customers who visit their stores.

“Our focus continues to be on the health risks of the outbreak, but we can now begin to cautiously focus much more squarely on the wider economic and societal impact the virus is having.

“We have provided a huge amount of support to businesses and jobs as they hibernated during the pandemic – now we start to take these careful steps to restart our economy.”

Mark Hayward, chief executive, NAEA Propertymark and David Cox, chief executive, ARLA Propertymark, said: “We welcome today’s announcement reopening the housing market in Wales.

“However, the guidance issued will have a greater impact on the sales market as there still are some significant restrictions in place meaning the market will not be able to fully open.”

BY RYAN BEMBRIDGE

Source: Property Wire