Here is February's round up of the month's news...
House prices up 10% as mortgage rates fall further
We can report that yet more figures have been released this month to indicate that house price growth is moderating, with official figures from the ONS showing that house prices rose by 10% in the year to November 2014. It may sound high, but it's down from the annual growth rate of 10.4% seen in October and is well below the recent peak of 12.1% in September, suggesting that fears of a housing bubble may be eroding.
House prices may be rising, but the cost of being able to finance a house purchase is actually falling. Figures from Moneyfacts show that mortgage rates are continuing to fall and have hit fresh lows, with the average 2 year fixed rate standing at 3.19% and the average 2 year tracker at 2.16% - both the lowest average ever recorded.
Providers aren't only reducing rates, but they're also reducing fees, meaning the true cost of a mortgage is also edging down. The average fee now stands at £707, a drop of £22 . Significantly, it's fallen by over £100 in the last year - in January 2014 the average fee charged was £833, marking an annual reduction of £126.
Interest rates will double by end of 2015, Treasury survey says
In a blow to home owners, a Treasury survey of Britain's leading economists found that, on average, they expect rates to double to 1% by the end of the year. Higher rates could provide respite to millions of pensioners who have seen the value of their savings shrinking because of inflation and rock-bottom returns. However, it will leave many families paying significantly more on mortgages and debt repayments. The Bank of England this month kept interest rates on hold at 0.5%. Rates have remained at a record low since March 2009. The Bank now expects inflation, as measured by the consumer prices index, to fall below 1% next year, from October's rate of 1.3%. Most economists believe interest rates will start to rise in the second half of next year. Bank of England policymakers are increasingly divided over the best time to start raising interest rates without putting the recovery at risk. The Treasury has released a report containing economic forecasts by City experts from banks such as Santander and Citigroup. On average, they predicted that rates would rise to 1% by the end of 2015. However, organisations including UBS, Credit Suisse and Barclays Capital predicted they could reach 1.5% by the end of the year. A Treasury report in April found a number of economists predicted a rate increase to 1.75%.
Home hunters hit record numbers in December as stamp duty changes boosted property market
The usually quiet month of December saw the number of house hunters peak, suggesting changes in the stamp duty have helped boost the property market, a new study says. The National Association of Estate Agents said its members had on average 360 potential home buyers registered with them per branch last month, the highest December figure since 2004. It follows recent data by property website Rightmove, which reported a new record of page views in January, pointing to a renewed activity in the property market in 2015 after tougher mortgage rules helped cooling it down in the second half of last year.
BTL voids fall in final quarter
Landlords reported the lowest void periods for almost three years in the final quarter of 2014. The new figures underline the long-term robustness of the buy to let market. The average void period in the quarter was 2.6 weeks, down from 2.8 weeks compared to the same quarter in 2013. Void periods haven't risen beyond 3.5 weeks for the past 13 years, according to the latest quarterly landlord survey from Paragon Mortgages. The lowest-ever recorded void period was 2.5 weeks in Q4 2002, according to the specialist buy to let lender's Private Rented Sector Trends survey, which tracks landlord confidence and views. The highest was 3.5 weeks in the second quarter of 2010, shortly after the financial crisis.
Shelter: First time buyers need to save for more than a decade
A new report from Shelter has found that buying a home is a "fantasy" for many renters. "A Home of Their Own" found that the shortage of homes in England now means young couples with children, on typical incomes, face 12 years of saving before they can afford to buy their first home. This affects a whole range of areas in every region of the country (18.6 years in Brighton and Hove, 17.8 years in Cornwall, Walsall 13.8 years, North Tyneside 12.6 years).
To assess the extent to which young people are excluded from home-ownership, Shelter commissioned Liverpool Economics to produce estimates of the time it would take first time buyers to save a 20% deposit in each county and unitary authority in England. These estimates take into account current and projected house prices, incomes, essential costs (food, transport, utilities) and rent by household type across the country. The analysis assesses the length of time households currently in their 20s can expect to save for a deposit for their first home.
Poor wage growth behind housing slowdown, says Halifax
The Halifax is blaming poor growth in wages for a continuing slowdown in house prices. The lender said that prices in 2014 rose by 7.8% - well down from the peak in July, when prices went up by 10.2% compared with a year earlier. In the three months to December, the cost of a home went up by just 0.3% - marking five months of declining quarterly inflation. It said that slow growth in real-terms wages was one of the main reasons. Martin Ellis, the Halifax's chief economist, highlighted "earnings growth that has been consistently below consumer price inflation until very recently". Average weekly earnings overtook inflation in September 2014, for the first time in five years. Figures published in December showed average weekly earnings - excluding bonuses - rising by 1.6% a year. Inflation, as measured by the Consumer Prices Index (CPI), is currently running at just 1%.
First-time home buyers in Britain must save for 'more than a decade'
Aspiring first-time buyers in some parts of the country will have to save up for more than a decade to raise a big enough deposit to afford a home, with single people and those who have started a family facing the longest path to home ownership, according to research from the housing charity Shelter.
Rising house prices, low-earnings growth and the high cost of living mean that a childless couple in their 20s living in England would need to save up for more than six-and-a-half years to build up the 20% deposit typically put down by those stepping on to the housing ladder. Even though wages are generally higher in London and the south-east, so too are rents and other living costs, meaning that in these parts of the country it takes even longer to build a deposit. In London, Shelter said it would take a couple with a household income of £53,384 13.5 years to build a deposit. It would also take longer than 10 years for an average-earning couple in Brighton, Windsor and Maidenhead, Oxfordshire, Surrey and Devon. Those who have started a family before trying to buy face a longer struggle if one earner goes back to work part-time. Across England, Shelter said it would take a couple with one child 12 years to build a 20% deposit, and in more than 70% of unitary authorities it would take them more than a decade. Those living in London needed almost 26 years' of saving before they had accrued enough.
Single people faced an even bigger struggle, typically needing to save up for more than 13 years across England as a whole, and just over 29 years in London.
Gross lending remains steady in December
The Council of Mortgage Lenders estimates that gross mortgage lending reached £16.5 billion in December. This remained unchanged month-on-month compared to November but down 1% compared to December 2013. This means the gross lending estimate for the fourth quarter of 2014 is £51.6 billion, down 8% on quarter three but up 1% on the fourth quarter of 2013. Overall, for 2014 the gross lending estimate is £205.6 billion, up 17% on 2013's £176 billion gross lending figure. Commenting on market conditions, CML chief economist Bob Pannell observes: "Housing market activity has been cooling and house price growth slowing in recent months, but 2014 was still the strongest year for mortgage lending since 2008. First-time buyers were a key driver, helped by government initiatives such as Help to Buy. As a result, the number of first-time buyers topped the 300,000 mark. While a far cry from the half million that we might regard as 'normal', this was the highest number of first-time buyers since 2007. Although lending remained muted in December, the previous monthly pace of decline in approvals appeared to moderate. So, alongside the big picture of a softer market we are beginning to detect signs that underlying market conditions may be stabilising."
Barratt sales spike defies industry fears on cooling homes market
Barratt has reported a 17% spike in forward sales going into 2015, touting resilient housing demand and apparently defying heightened industry fears about a cooling UK market. Britain's biggest home builder, which joined the FTSE 100 last month, said in a trading update that it completed 6,971 new homes in the six months to December 31, up 12.5% on the same period the previous year. Total forward sales had risen 17.1%, to £1.68bn. Barratt said demand 'has remained robust' across all of its regions, and that it plans to open 90 new sites in the next six months, generating the highest average number of developments since 2008.
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