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Bank of England: Loan values rise by 2.9% annually in Q3

Despite a decreasing share of high loan-to-value (LTV) borrowing, mortgage lending remained strong in Q3 with the outstanding value of residential loans up 2.9% compared to a year earlier.

The Bank of England’s (BoE) latest quarterly mortgage lending data revealed there were £1,527.3 billion of mortgages outstanding at the end of Q3.

Meanwhile the value of new mortgage commitments – which is lending which has been agreed to be advanced in coming months – went up by 6.8% when compared to the same quarter in 2019. It reached £78.9 billion, according to the BoE, which is the highest level since 2007.

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The value of gross mortgage advances during the quarter was down 14.7% on Q3 2019 at £62.5 billion.

What’s more the proportion of mortgages advanced during the quarter with LTVs of 90% or more were 3.5% which is 2.4 percentage points lower than a year ago.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “This is no real surprise with many lenders pulling back from this market, and it is only just starting to recover, which is good news for first-time buyers in particular.”

Commenting on the rest of the data he added: “The Bank of England figures show a strong lending market, as we have seen on the ground, with new commitments for the coming months some 6.8% higher than a year earlier.

“There is plenty of business in the pipeline which is working its way through as buyers try to take advantage of the stamp duty holiday. As long as they use good advisers – a mortgage broker and a switched-on solicitor – this should be possible, despite some scaremongering that they are already too late.”

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A ‘precarious’ market

But Karen Noye, mortgage expert at Quilter, thought today’s data painted a ‘precarious’ picture of the housing market at the moment.

“The market is clearly burning bright thanks to the fuel poured on it as a result of stamp duty cut but whether the fire can keep blazing is yet to be seen,” she said.

“The continued increase in house prices is likely to be unsustainable and if the stamp duty holiday is dropped in March and significant economic headwinds as a result of the pandemic start to bite, we may see a very different picture with borrowing and lending being significantly curtailed.”

Noye thought the fact the value of new commitments had increased by as much as 6.8% was ‘worrying’ and ‘should ring alarm bells’.

“While it would be foolish to draw comparisons between the mortgage market now and the one back when the financial crash hit in 2008, we are dealing with unchartered waters and it is worth proceeding with caution,” she said.

By Kate Saines

Source: Mortgage Finance Gazette

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House hunters race to beat stamp duty deadline

In the Chancellor’s spending review yesterday, it was revealed that the stamp duty holiday would not be extended and will come to an end on 31 March next year. New data from online mortgage broker Trussle shows where in the UK house hunters can still begin a property purchase and make the stamp duty deadline.

These areas include West Midlands, South West and North East.

The median number of days from starting a mortgage application to completing a property purchase is around 115 days.

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This means that the 6 December 2020 marks 115 days before the stamp duty holiday deadline.

As a result of the coronavirus pandemic, there have been significant delays to mortgage applications and the average time from mortgage submission to approval has increased by 50% since this time last year (from 16 days to 24 days).

The data by Trussle also shows that average time from application to completion differs by property type depending on detached, semi-detached, terraced or flat.

Currently they are faster in Scotland and the South East and slower in the East Midlands and East of England.

According to the data, flats take an average of 120 days to complete whilst semi-detached properties take 108 days on average.

Trussle has also identified the top five fastest lenders in the UK based on its data, finding that on average lenders take around 20 days to approve new mortgage submissions.

These lenders were Barclays (10 days), Halifax (14.5 days), BM Solutions (17 days), Coventry Building Society (18 days) and HSBC (19 days).

The time to approve mortgages has increased significantly since the start of the coronavirus pandemic.

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The average was closer to 10 days in 2019 and up until June 2020.

Miles Robinson, head of mortgages at Trussle, said: “The stamp duty holiday deadline is looming, which is understandably causing concern.

“There are delays across the market and we are urging buyers not to delay their mortgage application if they want to take advantage of the stamp duty holiday before the holiday ends on the 31 March next year.

“We hope that this guidance provides helpful timelines for those in different regions across the UK.

“We must also advise that those looking to buy a new home should make sure they budget enough to pay the stamp duty land tax, just in case the purchase does not complete before the deadline.

“If a buyer were to pull out after they’ve already exchanged, sellers may be in a position to sue for consequential loss at this point, and buyers may lose their deposits.

“This is going to cause a lot of stress and uncertainty for customers over the coming months, and we’re urging all buyers to take the necessary preparations.”

By Jessica Nangle

Source: Mortgage Introducer

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Property market expected to start 2021 with a bang

With pent-up demand after lockdown and news of a Covid-19 vaccine, the UK property market should expect a promising start in 2021, property developer GRE Assets has predicted

With offices in the UK, Spain and the Middle East, GRE Assets has an international perspective of the impact the global Covid-19 crisis has had on the UK property market.

Michael El-Kassir, managing director of GRE Assets, explains what the company has experienced in the latter half of 2020 and how he believes this will inform the market as we approach 2021.

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He said: “With the imposed lockdown restrictions meaning people have spent much more time at home this year, we believe this has led to a distinct rise in the number of people seriously considering their next property move. Low interest rates, the existing Help to Buy scheme and stamp duty incentives, have also created a sense of urgency.

“The pandemic has been a wakeup call for prospective buyers and renters, who have reassessed their priorities when looking for their next home. Not only are they spurred on to make the leap from London, they also recognise the importance of having access to green space, whether that is nearby parks, balconies, terraces, and gardens.

“The working world has also seen a vast shift, as employees and companies have adapted to working from home. While people will return to the office as the latest restrictions ease, we strongly believe businesses will continue to work flexibly moving forward, meaning adaptable space and connectivity at home is of high importance for new homeowners.”

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El-Kassir said the South East is the region to watch in 2021.

He added: “With the constraints experienced within the housing market earlier this year, we saw increased demand and lack of supply post lockdown. While UK wide we have seen a rise in house prices and activity, it is the South East that really stands out.

“The region offers the near-perfect package of high-quality, affordable homes in popular regeneration areas with excellent connectivity to London.

“Demand here is currently outstripping supply, which is something we intend to continue to address as we head into 2021.”

BY RYAN BEMBRIDGE

Source: Property Wire

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UK house prices grew at fastest rate since 2015 in November

UK house prices grew at an annual rate of 6.5 per cent in November, the fastest rate since January 2015, as the sector batted off the second national lockdown.

According to Nationwide’s house price index, prices also increased on a month-on-month basis to be up 0.9 per cent compared to last November.

As a result, the average house price in the UK now stands at £229,721, up from £227,826 last month.

Nationwide said that despite the second lockdown, which has seen economic activity shrink in other sectors, the housing market has remained “robust” through November.

Property transactions hit 105,600 in the period, the highest since 2016, while mortgage approvals reached their highest levels since 2007.

Robert Gardner, Nationwide’s chief economist, said: “The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy.

“Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.

“However, housing market activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.”

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Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: ‘These figures feel like the storm before the calm as buyers and sellers rushed to take advantage of the stamp duty holiday before the March deadline, despite continuing Covid restrictions in October, the possibility of a no-deal Brexit and economic growth stalling.

‘That frenzy has been since replaced by a quieter, but just as determined mood to complete sales previously agreed. We don’t see any signs either of significant price adjustments, irrespective of whether there is an extension to the stamp duty holiday, with activity continuing to be supported by a shortage of listings and longer-term low interest rates.’

Housing market set to come under pressure

EY Item Club’s chief economist Howard Archer warned that the elevated levels of activity in the market were unlikely to last.

“The EY Item Club suspects that house prices could be around 5 per cent lower than now by mid-2021″, he said.

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“The housing market is likely to come under mounting near-term pressure amid rising COVID-19 cases and lockdown restrictions, while there is likely to be a significant rise in unemployment even though the furlough scheme has been extended until March. Meanwhile, earnings have been limited and are likely to remain so.

“There is also likely to be a fading of the pent-up demand effect on housing market activity, while pandemic-related restrictions may also have some dampening impact on the housing market and consumer confidence.

“Indeed, consumer confidence declined further in November to be at a six-month low, which may increase the caution of many people in making major spending decisions.

Nationwide’s figures came after banker Halifax revaled that consumer confidence in the housing market had shrunk last month.

Just 14 per cent of people surveyed by Halifax said that they believed their home had become more valuable this month, compared with 17 per cent in September and October.

Despite the slip, the figure remains high above the four per cent recorded during the first national lockdown in May.

By Edward Thicknesse

Source: City AM

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Less than 20% of Britons think house prices will fall next year

An estimated 19% of individuals believe that UK house prices will fall next year according to the latest ING International Survey.

In contrast, 42% think house prices will rise in next 12 months.

The data also outlined that 35% of homebuyers in the UK offered a lower amount for their house than the asking price, compared with 30% in Europe.

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Over half (54%) of Britons spend three months or less looking to buy a home before purchase.

Additionally, the survey noted that 57% of those in the UK think that it has become more difficult to get on the housing ladder since 2015.

The survey results were based off of 13,000 respondents across Europe.

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James Smith, economist at ING Developed Markets, said: “The surprising post-lockdown resilience in the UK housing market has translated into relative optimism among British consumers.

“But this sentiment could be tested as we head into 2021.

“The anticipated end to the stamp duty holiday is set to coincide with a rise in unemployment over the winter, both of which are likely to put renewed pressure on house prices next year.”

By Jake Carter

Source: Mortgage Introducer

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Mortgage approvals at 13-year high

UK lenders approved 97,532 mortgages in October, the most since September 2007, the Bank of England’s Money and Credit data shows.

The housing market has gotten busier, as there were 92,091 given the green light in September, compared to 85,704 in August.

Before the pandemic the were 73,384 mortgages approved in February, before the amount fell as low at 9,335 in May.

Nitesh Patel, strategic economist for Yorkshire Building Society, said: “The housing market continues to defy economic logic, despite challenging economic conditions caused by the global Covid-19 pandemic and uncertainty over the UK’s trading deal with the EU.

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“Pent-up demand from the lockdown has been driven by buyers looking for bigger homes that accommodate home working and more garden space, as well as the Stamp Duty cut may have drawn in opportunistic buyers who were previously discouraged by high transaction costs.

“There is good reason to believe that homeowners with large amounts of equity in their homes are the most active, with first-time buyers making up a smaller proportion of approvals.

“These are temporary factors, particularly the Stamp Duty cut which, as it currently stands, ends on 31 March next year. With the economy set to remain weak and unemployment likely to rise when the job support scheme comes to an end, we should see housing activity start to decline in the second quarter of 2021.”

But Richard Pike, sales and marketing director at Phoebus Software, said: “It is not only the stamp duty saving that is driving the market, there is also the number of people looking to escape city life since the lockdown. And, as the ‘working from home’ culture continues this is likely to endure past the limitations imposed by Covid-19.

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“The problem then will be the age-old one of supply and demand. Despite the government’s promises, we are, according to the ONS last week, way behind our target for new housebuilding in the last year. With the knock-on effect of the pandemic, this is something that isn’t going to be fixed quickly. So, the mass exodus from our cities that has been predicted, could turn into a trickle come the spring.”

Tomer Aboody, director of property lender MT Finance, said: “This is an opportunity for many would-be buyers who in the past couldn’t afford or preferred not to buy, to go and purchase, locking themselves into a longer-term mortgage rate at an affordable level, and with a low enough deposit so that it doesn’t impact their savings too much. This, coupled with the stamp duty break, has fuelled the market and helped push up property prices.

“Unlike 2007, we should be confident in the banking sector, which is highly liquid, as well as confident in the market. We may be living with a pandemic but hopefully this will be under control before long, allowing us to carry on with our lives before too much damage is done to the economy.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Low deposit mortgage deals double as lenders return to market

Mortgage borrowers with a 10% deposit now have almost double the choice of deals compared to September, as lenders have started trickling back into the market, analysis reveals.

There are 80 mortgage products available to borrowers today with a deposit or equity of 10% required, according to Moneyfacts.

At the start of September, there were only 44 deals available on the same basis.

In the past week alone, the number has jumped from 65 to 80, the data revealed.

Atom Bank, TSB and Platform are among the players to have added 90% Loan to Value (LTV) mortgages to the market this week.

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And Nationwide today announced it would expand lending at this level beyond first-time buyers.

The market for high LTV lending (low deposit) collapsed as the pandemic struck earlier this year, leaving many borrowers who could not scrape together bigger deposits with no option but to delay transactions.

In recent months, some lenders returned to 90% LTV lending for short stints of just a couple of days or, in some cases, only hours in an effort to manage volumes.

As more lenders filter back into the space, the pressure appears to be easing.

However, lending at 95% LTV remains very limited with still only eight products currently on the market.

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Eleanor Williams, spokesperson at Moneyfacts, said: “It is really encouraging that we are beginning to see more lenders relaunch products in the 90 per cent LTV bracket, especially for those borrowers with lower levels of deposit or equity who may have felt they had little to no options to move forwards with of late.

“We have seen a few lenders put their toe into the water of high LTV lending with short-term, limited edition products which were only on offer for a day or so, therefore seeing further providers enter this arena could be demonstrating that mortgage providers are managing their operational demands and are keen to cater to these borrowers.

“Those who are keen to take advantage of one of these 90 per cent LTV deals could do well to secure the support and guidance of a qualified, independent adviser who will be aware of the most up to date products available and be on hand to help borrowers navigate the mortgage maze.”

Written by: Lana Clements

Source: Your Money

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Government urged to provide greater support for BTL landlords during this time

More money needs to be made available to support buy-to-let landlords during the existing Covid-19 pandemic, according to safeagent.

The letting agent accreditation scheme for lettings and management agents operating in the private rented sector has expressed fresh concerns that the challenges in the private rented sector are only going to increase as the pandemic continues to put a strain on the economy.

Safeagent is calling on the government to do more to help landlords with tenants who are facing financial hardship and unable to pay the rent, especially in light of the fact that repossession cases on the grounds of rent arrears will not be treated as a priority until tenants have built over a year’s worth of rent debts.

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Added to this is the six months’ notice that landlords now have to give. Where the case is disputed, even before the pandemic, courts were taking an average of almost six months to deal with cases, with the backlog now likely to be longer.

The Financial Conduct Authority (FCA) has issues its updated coronavirus guidance ‘Mortgages and Coronavirus: Payment Deferral Guidance’, stating that firms should allow customers to extend ongoing payment deferrals after 31 March 2021, to cover payments up to and including July 2021, but safeagent argues that a mortgage deferral alone is not the answer for buy-to-let landlords.

Isobel Thomson, safeagent chief executive, said: “It’s positive to see the FCA supporting borrowers impacted by the pandemic with this latest guidance which advises lenders should offer up to six months of mortgage payment deferrals and guarantee it won’t affect a landlord’s credit rating.

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“However, while buy-to-let landlords impacted by tenants’ rent arrears clearly need support, we question if deferral of mortgage payments is the answer, or if it pushes the problem further down the track. While lenders will be adhering to the guidance which provides up to six months deferral, we know it may take badly affected tenants much longer to get back on their feet, meaning landlords could be building up debt and struggling to meet mortgage payments for many months to come.

“We know the good work that agents and landlords are doing to sustain tenancies where tenants are in financial difficulties. But it’s vital that if we are going to keep landlords in the PRS, their financial viability is also maintained, ensuring no unnecessary reductions in the supply of rented housing and helping prevent homelessness.

“We believe there is more to be done. Our recent proposals for a sustainable post COVID PRS suggested that those landlords who build up debt because they are unable to pay entirely or are only partially paying what is due on their mortgage due to a shortfall in their tenant’s Universal Credit, should be eligible for a grant from the Government, similar to the coronavirus small business grant. This would recompense them for the shortfall on their mortgage and any additional interest over the period. This is particularly important for landlords with a small number of buy to let properties, who rely heavily on this income.

“safeagent is also calling on lenders to commit to no exclusions terms in new or existing buy-to-let products that prevent lettings to tenants who are claiming benefits. This is important to ensure tenants on benefits can continue to access the PRS now and in the future.”

By MARC DA SILVA

Source: Property Industry Eye

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