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Mortgage approvals jump to four-year high in December

Mortgage approvals surged in December to a four-year high, data published on Monday showed.

According to UK Finance, the banking lobby group, house purchase mortgage approvals by the main high street lenders rose to 46,815 in December from 44,058 in November, the highest number since August 2015. Analysts had been expecting the figures to remain largely flat, at around 44,000.

Gross mortgage lending across the residential market was £22.2bn in December, bringing the total for 2019 to £265.8bn, 1.1% lower than 2018’s figure. A total of 982,286 mortgages were approved, a 7.4% increase on the previous year.

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Howard Archer, chief economic advisor to the EY ITEM Club, said mortgage approvals would have been “significantly lifted by increased confidence and reduced uncertainties” following December’s general election.

He continued: “Prior to November, mortgage approvals for house purchases had fallen back for three successive months to be at a seven-month in October, indicating that activity was being pressurised by heightened uncertainties over the domestic political situation and Brexit.

“Housing market activity, and possibly to a lesser extent prices, could be given a modest lift in 2020 if the government introduces specific measures aimed at boosting the sector in the Budget. Furthermore, mortgage interest rates are at historically low levels; indeed there is clearly a real possibility that the Bank of England could cut interest rates in 2020.

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“However, the economy still looks set for a pretty challenging 2020, so the upside for house prices is likely to be limited. Furthermore, Brexit concerns could very well pick up again as 2020 progresses, due to concerns over what will happen at the at the end of the year if the UK and European Union have failed to reach agreement on their long-term relationship.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The jump in mortgage approvals in December likely solely reflects the stimulus provided by the sharp fall in mortgage rates in the second half of last year; the additional boost to approvals from the result of the general election is still to come. All the evidence so far points to a further rise in demand after the election. The new buyer enquiries balance of the RICS Residential Market Survey leaped in December to its highest level since January 2019.”

UK Finance also said that credit card spending rose 7.3% year-on-year to £11.8bn in December, with repayments continuing to offset spending, meaning the overall level of borrowing through cards grew at a slower rate of 2.4% annually.

Personal borrowing through loans was 14% higher year-on-year, while overdraft borrowing eased 0.8%.

Previously the British Bankers Association, UK Finance represents more than 250 firms.

By Abigail Townsend

Source: ShareCast

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Housing market experiences busier than usual December

A major estate agency experienced a busy December, despite activity dropping off from November.

NAEA Propertymark found there were eight sales per branch in December, the highest since 2006.

Meanwhile there were an average of 348 prospective buyers per branch, the most since December 2016.

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NAEA PropertyWire attributed the busy December to the stamp duty holiday.

Despite the market being stronger than normal, the number of buyers registered per branch actually fell by 41% from 580 in November.

Meanwhile the number of sales agreed fell from 13 in November.

Mark Hayward, chief policy advisor, Propertymark, said: “The number of potential buyers in the market fell significantly in December after Novembers’ record high.

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“While we would ordinarily expect to see a lull over the festive period, these numbers show that the tightening of lockdown restrictions, coupled with the reality that many individuals would no longer meet the stamp duty deadline, has exacerbated this.

“As we approach the stamp duty, LTT and LBTT cliff edges on the 31 March, we are increasingly concerned about the pressure this is placing on the property industry with more than two-thirds (69%) of estate agents expecting to see an increase in failed sales due to buyers realising their sales will not complete ahead of the deadline. It’s important that action is taken now to prevent this and support the property sector.”

BY RYAN BEMBRIDGE

Source: Property Wire

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ONS: Average UK house prices reach record high

Average UK house prices rose by 7.6% in the year to November to reach a record high of £250,000, according to the ONS House Price Index.

The data shows that this increase is the highest annual growth rate the UK has seen since June 2016.

In addition, this is up from the year to October, which noted a 5.9% rise.

Average house prices increased over the year in England to £267,000 (7.6%), Wales to £180,000 (7.0%), Scotland to £166,000 (8.6%) and Northern Ireland to £143,000 (2.4%).

The average house price in London surpassed £500,000 for the first time in November 2020.

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Furthermore, the North East is the final English region to surpass its pre-economic downturn average house price peak of July 2007, to now stand at £140,000.

Kevin Roberts, director of Legal & General Mortgage Club, said: “The latest ONS house price index figures will be welcomed by existing homeowners.

“The resilience of the housing market continues to shine through as people remain encouraged to move house with or without the benefit from the stamp duty relief, no doubt also encouraged by the rollout of the a COVID-19 vaccine.

“There remain challenges, however, and the government’s decision to extend the furlough scheme until the end of March, will be welcomed by many homeowners exploring their options.

“At Legal & General Mortgage Club, we saw searches for furlough friendly mortgages increase by 230% in November 2020, when compared to the previous month.”

“Buyers wanting to access the best and most suitable mortgage products should absolutely consider speaking with an independent mortgage adviser, particularly as we draw closer to the government’s stamp duty holiday deadline, which is creating very high demand.”

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Paul Stockwell, chief commercial officer of Gatehouse Bank, added: “House prices defied expectations by increasing throughout 2020 and leading to a record high in November, with the stamp duty discount driving strong demand from buyers — but there are signs from other indices that price growth has now begun to slow.

“The UK housing market is still open for business during this lockdown, but demand is likely to have started to taper off as buyers begin to concede they will not be able to complete a transaction in time to make the stamp duty deadline.

“The March 31 cut-off is looming, and although professionals across the industry are working in earnest to get applications over the line in time, fears are mounting about how many agreements could fall through.

“With property portal Rightmove predicting as many as 100,000 buyers could face an unwelcome tax bill when their sale fails to complete on time, all eyes are turning to Chancellor Rishi Sunak and whether he may extend or add a taper mechanism to the scheme or risk deals falling apart.”

Guy Gittins, managing director of Chestertons, said: “The second lockdown no doubt encouraged some people to put their property search on hold, but we didn’t notice a big difference and activity levels were still a lot higher than we anticipated for this time of year.

“Part of this was driven by the incentive of the stamp duty saving, but we believe the main driver was that people just wanted to move as quickly as possible while conditions were favourable.”

By Jake Carter

Source: Mortgage Introducer

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BTL mortgage availability Almost half One in 10 North West Stamp Duty holiday Buy-to-let 5-year fixed BTL mortgages buy to let investment areas UK property investment locations buy-to-let lenders BTL properties buy-to-let landlords Number of UK buy-to-let landlords buy-to-let limited companies
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BTL mortgage availability at pandemic high

The availability of buy-to-let mortgages has remained relatively high during the pandemic, giving landlords cause for optimism, according to Moneyfacts.

Figures from the data provider showed there were 1,976 buy-to-let products available in mid-January, fewer than before the pandemic began but more than the 1,455 available in May.

The provider also suggested lender confidence as the number of deals available in the 80 per cent LTV tier has risen by 26 since December.

Average rates have also increased, with two- and five-year fixed rates standing at 2.92 per cent and 3.29 per cent respectively for all LTV brackets, the highest levels recorded by the provider since November 2019.

But Eleanor Williams, finance expert at Moneyfacts, warned the market has been “volatile” since the start of this year.

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She said: “Lenders have been adjusting their offerings and consequently availability continues to fluctuate – there are now 27 fewer mortgage products on offer than there were just a couple of weeks ago, and so those considering exploring a new BTL mortgage could do well to secure the knowledge and advice of a qualified adviser, to ensure they keep abreast of any relevant changes.”

Buy-to-let mortgage market analysis

PRODUCT NUMBERSJan-20Mar-20May-20Dec-20Jan-2115.1.21
BTL product count – fixed and variable rates2,5832,8971,4551,8182,0031,976
All 80% LTV BTL products – fixed and variable rates2973681974100100
AVERAGE RATESJan-20Mar-20May-20Dec-20Jan-2115.1.21
BTL two-year fixed – all LTVs2.82%2.77%2.51%2.89%2.89%2.92%
BTL five-year fixed – all LTVs3.19%3.24%2.94%3.25%3.27%3.29%
Data shown is as at first working day of month, unless otherwise stated. Source: Moneyfacts.co.uk

The Intermediary Mortgage Lenders Association has meanwhile highlighted the opportunity for remortgage business from landlords who took out five-year deals before the stamp duty surcharge was introduced in 2016.

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The trade association predicted the five-year anniversary of the surcharge would enable demand in the mortgage market to stay strong this year despite the end of the stamp duty holiday.

A survey by Paragon Bank also found that half of buy-to-let brokers said they would focus on five-year remortgage business when the stamp duty holiday ends.

But Kevin Dunn, director at Furnley House, commented that he expected demand to fall.

Mr Dunn said: “Whilst demand has remained strong in this area over the last six months, I expect demand in buy-to-let mortgages to decrease once the stamp duty holiday ends at the end of March, however not quite in the same way it fell off a cliff when the stamp duty surcharge was announced at the beginning of 2016.”

By Chloe Cheung

Source: FT Adviser

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London property prices hold up for investors

London flat and maisonettes have risen by 9.0% on last year to £442,304, according to Herddle analysis of government data.

The average price of all types of London properties has risen by 9.7% over the last despite the pandemic and the economic impact of Brexit.

This compares to inflation of just 0.8%.

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Corey Cumins, chief executive of Herddle, said: “Investors and landlords who held their nerve AND held onto their flats have been rewarded with some remarkable performance. Prices of flats and maisonettes have risen by 9.0% and that’s way ahead of inflation.

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“Looking ahead, it’s reasonable to expect more economic volatility – as both Brexit and new strains of COVID bite into companies, wages and jobs.

“We could see some house price volatility but that’s never a reason to sell assets – and we expect to see investors and landlords continue holding their nerve.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Scottish home sales record 119% rebound

The volume of Scottish home sales surged at the end of 2020, analysis of ONS data from property firm Apropos by DJ Alexander has found.

Between September and November there were 35,610 property transactions, up from 16,220 between June and August.

The 119% increase was much greater than the volume of transactions across the rest of the UK. The UK figure was 48% up; in England it rose 44%; in Wales it increased 66%; while in Northern Ireland it was up 77%.

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David Alexander, joint chief executive officer of apropos by DJ Alexander, said: “These figures highlight just how successful the stamp duty holiday has been across the whole of the UK with each nation recording substantial increases in the volume of sales coupled with rising prices.”

“However, it is clear that Scotland has been enjoying a greater boom in house sales than the rest of the UK with more than double the volume in the latest three months compared with the previous three-month period.

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“Given that the relaxation of the threshold for land and buildings transaction tax (LBTT) in July is clearly the source of this housing boom it would seem questionable to let this suddenly end on the 31st March.”

Alexander added: “With the Scottish budget happening next week it would be the ideal opportunity for the Scottish Government to signal its intent on preserving the growth in the property market by announcing a continuation of the stamp duty holiday beyond March to ensure there is no sudden decline in activity.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Stamp duty holiday extension to be debated in parliament

The government will be forced to debate the stamp duty holiday, after more than 115,000 people signed a petition calling for an extension.

Rightmove has estimated that, as it stands, more than 100,000 people will miss out on the stamp duty holiday, seeing as the market is movingly more slowly than usual.

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The stamp duty holiday means that people don’t have to pay stamp duty on the first £500,000 of a property purchase, saving up to £15,000.

Any petition signed by more than 100,000 is obliged to be debated in parliament.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

The government has previous said that it has no plans to extend the holiday.

It responded on the 10th December: “The SDLT holiday was designed to be a temporary relief to stimulate market activity and support jobs that rely on the property market. The government does not plan to extend this temporary relief.”

BY RYAN BEMBRIDGE

Source: Property Wire

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London’s Islington leads the way on house price growth

Prices in London’s Islington surged by 13.4% to £727,922 in 2020, making it fastest growing area in the UK, Thirlmere Deacon analysis of Halifax data has found.

A number of other areas in Greater London also recorded strong rises, like Croydon (10.9% to £397,538), Hounslow (9.1% to £523,659) and Romford (7.6% to £391,000).

Outside London the biggest mover was Leeds, which had the country’s second-fastest rise, a whopping 11.3% to an average price of £247,116.

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Stuart Williams, founder and chief executive of Thirlmere Deacon, said: “Over the past 24 months, the UK property market has endured changing economic and political climates and remains to be incredibly resilient.

2019 brought political uncertainty and Brexit lingered over the UK, after the decisive election result in December 2019 the property market began 2020, with relative optimism and the ‘Boris Bounce’ triggered activity.

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“As the pandemic took hold and the UK entered lockdown, the property market was effectively put on pause though a limited number of transactions completed and off plan purchases were agreed during this time.

“Upon reopening in mid-May the UK property market saw pent up demand unleashed which has driven price growth upwards – every region in the country recorded an increase in house prices in 2020.”

BY RYAN BEMBRIDGE

Source: Property Wire

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House prices have doubled over the past decade

Average house prices have increased by 51% over the past 10 years, according to e.surv’s Chartered Surveyors House Price Index.

On a monthly basis, house prices across England and Wales increased by 1.4% between November and December 2020.

Throughout 2020, house prices rose by 7.8% despite the added complications of COVID-19.

This is the highest annual increase since 2016, however the majority of growth took place in the last six months of the year as pent-up demand was released by more relaxed coronavirus restrictions.

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As a result, the average house price in England and Wales was £326,762 at the end of December.

Richard Sexton, director at e.surv, said: “During 2020, large numbers of people across the UK were confined to their houses for long periods of time, as we battled the pandemic.

“Over the year many people were forced to adapt their homes to function as offices, schools and nurseries.

“This increased emphasis on where we live and where we spend so much of our lives undoubtedly helped focus many people’s minds on the property market.

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“This increased focus was reflected in the types of property that were most sought after in 2020.

“Larger, typically more expensive, properties with more outdoor space became even more highly prized, which in turn increased the price of the average transaction.

“It’s important to remember that the pandemic which produced such an unusual year is very much still with us.

“Everyone involved in the property market must continue to operate in a responsible manner, making use of technology where possible to support the industry while putting safety first.”

By Jake Carter

Source: Mortgage Introducer

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BTL mortgage availability Almost half One in 10 North West Stamp Duty holiday Buy-to-let 5-year fixed BTL mortgages buy to let investment areas UK property investment locations buy-to-let lenders BTL properties buy-to-let landlords Number of UK buy-to-let landlords buy-to-let limited companies
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23% more buy-to-let limited companies established in 2019

Landlords set up 41,700 buy-to-let limited companies in 2020, an increase of 23% on 2019, research from Hamptons has found.

Using a limited company enables landlords to save on tax after the reduction in mortgage tax relief.

Aneisha Beveridge, head of research at Hamptons, said: “Despite growth of the private rented sector slowing in recent years, an increasing proportion of buy-to-let purchases are now being held in limited companies.

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“We estimate that around half of all rental properties bought today are being put into a company, up from close to one-in-five during 2016.

“While most of this growth has been driven by larger landlords, smaller landlords, particularly those who are higher rate taxpayers, have also reaped the tax saving benefits from incorporating.”

More companies were set up to hold buy-to-let properties between the beginning of 2016 and the end of 2020 than in the preceding 50 years combined.

At the end of 2020 there were a total of 228,743 buy-to-let companies up and running, an all-time record.

Southern-based landlords have been most likely to incorporate. Given the high cost of property, generally landlords based in the South are more likely to be mortgaged which means that in cash terms their mortgage interest bill is likely to be higher.

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Therefore the benefits of incorporating a buy-to-let portfolio into a company are likely to be bigger.

More than a third (34%) of all companies set up to hold buy-to-let properties in 2020 were in London. Together, London and the South East accounted for almost half (47%) of all incorporations.

Beveridge added: “As the company buy-to-let market has matured, more mortgage lenders have entered the space.

“Back in 2016 there were just a handful of lenders who offered company buy-to-let mortgages, often at a greater premium than today.

“But with more high street names entering the limited company space in recent years, competition has driven down interest rates to within a percentage point of similar products designed for landlords purchasing in their own name.

“December marked the first time since the onset of the pandemic that prospective tenant numbers surpassed 2019 levels.

“At the same time, the number of rental homes on the market fell by double-digit percentages in every English region outside London.

“This has driven rental growth up significantly over the last three months to a point where rents are rising faster than house price growth in almost every region.”

BY RYAN BEMBRIDGE

Source: Property Wire

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