As we return to a semblance of normality following the election, the markets now have a degree of certainty at least for the next 5 years. There is no doubt that the UK housing and mortgage market remains buoyant. Interest rates set by the central bank remain historically low and the inflationary pressures which could have resulted in a near term hike, seem abated following reports of inflation at zero percent.
Lenders are rightly fighting for business and our customers remain the beneficiaries. We have never in our history seen rates as low as those we are securing and its a strong competitive environment. As the UK continues with its 'property obsession' and deeming housing not just a home, but as an investment, we have recently courted controversy with other brokers and BTL lenders. We continue to call for the same protection and regulation of th BTL market, that residential mortgages now enjoy. We are clear that regulation by the FCA across the industry has improved transparency, honesty and service and we see no reason why BTL investors should not obtain the same safeguards. Other financial services investments secure protection and we see no reason why BTL should differ. We reman in a small minority as its easier for intermediaries and lenders to undertake non-regulated sales, but we hope the FCA will take this once in a lifetime opportunity to regulate the full market.
Here's our round up of this month's news....
72 % of surveyors expect house price increases in next year
House prices were driven up again in April as data showed the third consecutive monthly decline in property supply with new instructions falling at their fastest rate since May 2009, according to the latest RICS UK Residential Market Survey. While 33% more surveyors saw prices rise in April, the highest reading since last summer, new instructions slipped which was the eighth consecutive drop in the last nine months. Alongside this, for the first time since August 2014, respondents reported an increase in prices in every area of the UK due to the shift in tone in the London market, where 28% more respondents saw prices rise (compared with 6% more in March who saw house prices fall). Near term member expectations for prices and sales continue to point to relatively modest gains, but 72% of members expect prices to rise over the course of the next twelve months.
Demands in Rental Sector Boosting Prices
Meanwhile, in the lettings sector, there is no slowing in the growth of tenant demand, which is helping to underpin higher expectations for rents. Although anecdotal evidence suggests that these trends may have in part been a result of uncertainty ahead of the election, they are also reflective of deeper underlying problems. The downward trend in owner-occupation rates across the country is a visible sign that affordability constraints bite ever deeper, as does the squeeze on household budgets from higher rents.
Mortgage approvals saw pre-election jump, say banks
There was a "significant pre-election jump" in the number of mortgage applications being approved, according to the High Street banks. The number of approvals rose 7% in April from March to 42,166, said the British Bankers' Association (BBA). That is the fastest rise since September 2013, and the highest number for 10 months. The BBA said one reason may have been the abolition of Stamp Duty on house purchases in Scotland. It was replaced by the Land and Buildings Transaction Tax on 1 April. Some reports had suggested the housing market slowed down before the election, as richer buyers worried about Labour's proposed Mansion Tax on homes worth more than £2m. But the BBA figures indicate that was not the case. "There was a significant pre-election jump in mortgage approvals which we would expect to continue in the coming months," said Richard Woolhouse, chief economist at the BBA.
Private rented sector to account for 20% of housing stock by 2020
A new report on the buy-to-let sector by Kent Reliance claims nearly 150,000 new households were added to the PRS in the year to March, meaning the PRS now accounts for 18% of all housing stock. The report says that in the past 12 months, the PRS accounted for 77.4% of all new households created. Over the past year the value of PRS property rose 11%, or £97.8bn, to £990.7bn. London accounts for most of this, at £406.5bn, followed by the South East at £147.6bn. Wales accounted for the least, at just £23.9bn. The whole sector is predicted to be worth over £1tn within the month and £1.45tn by 2020.
BTL landlords gear up to invest
Buy-to-let landlords are looking to expand their property portfolios at an accelerating pace over the remainder of 2015. Two-thirds plan to invest in the next six months, a sharp increase on six months ago when the figure stood at 55%. Landlords have plenty of capital to invest, with just 12% having overall borrowing above 75% LTV. Fixed-rate loans are less popular as 26% now opt for variable rate deals, according to the latest property investor survey from specialist buy-to-let mortgage broker Mortgages for Business. As of April, 65% of UK landlords said they planned to buy at least one further property in the next six months.
Parents turning to children for mortgage help
Older borrowers refused a mortgage by 'ageist' lenders are increasingly turning to the 'bank of son and daughter' for help, it is claimed. Growing numbers of over-50s are having to ask their children to be guarantors after failing tough new lending rules when they try to remortgage. Parents are being forced to use their children's salaries as a guarantee to the bank when they try to remortgage to secure more competitive interest rates. Experts said parents were being forced to 'demean themselves' because banks were refusing to lend into retirement, fearful that borrowers' pension income would be insufficient. A survey by the National Association of Estate Agents found a third of agents had witnessed clients suffering from age discrimination at the hands of lenders.
Cashless payments overtake the use of notes and coins
Cashless payments have overtaken the use of notes and coins for the first time, according to the industry body. The payments council said the use of cash by consumers, businesses and financial organisations fell to 48% of payments last year. The remaining 52% was made up of electronic transactions, ranging from high-value transfers to debit card payments, as well as cheques. Cash volumes are expected to fall by 30% over the next 10 years. The Payments Council, which oversees the system of transactions, said that moves towards debit cards, contactless and mobile payments would drive the move away from cash.
UK inflation rate turns negative
The main measure of UK inflation turned negative in April for the first time on record, with the rate falling to -0.1%. It is the first time Consumer Price Index (CPI) inflation has turned negative since 1960, based on comparable historic estimates, the Office for National Statistics said. The biggest contribution to the fall came from a drop in air and sea fares.
Bank of England governor Mark Carney said he expected inflation to remain very low over the next few months. But Mr Carney added that "over the course of the year, as we get towards the end, inflation should start to pick up towards our 2% target". The latest inflation figures show that transport costs were 2.8% lower in April than the same time a year ago, while food was 3.0% cheaper.
Cost of rent 'up 4.6% in a year'
The cost of renting a home rose by 4.6% in the year to the end of April, the fastest rise since November 2010 a survey has suggested. The average rent stands at £774 in England and Wales, according to the survey for property services LSL. It said that rental costs had risen by 0.8% in April compared with March. Adrian Gill, LSL Director, said: "Momentum is fuelled by a fundamental shortage of housing and given oxygen by renewed wage growth."
Lending slows, but prospects positive: CML
The Council of Mortgage Lenders' April estimate for total gross lending is £16bn, down 1 per cent on the previous month and 4 per cent lower than the £16.7bn of lending last April. The industry body noted that lending appears to be in throes of an incipient recovery, with a favourable economic backdrop and an end to electoral uncertainty helping to underpin a gentle housing market upturn. Coming months are likely to see additional fiscal restraint, ongoing monetary policies that support economic growth and plethora of new housing initiatives, according to the CML, with house purchase demand expected to pick up modesty over the coming months.
Arrears and repossessions continue to fall, says CML
Latest figures from the Council of Mortgage Lenders show a fall in the first quarter of this year in the number and the proportion of mortgages in arrears or ending in repossession. A decline was experienced in all arrears bands, and across both owner-occupier and buy-to-let lending. The total proportion of all mortgages with arrears equivalent to more than 2.5% of the mortgage balance was 1.03% at the end of the first quarter. This was down from 1.05% in the fourth quarter of 2014, and well down on the 1.24% recorded at the same time last year. In numerical terms, there were 113,900 loans in arrears. Of these, just 24,400 were in the most severe arrears band (more than 10% of balance), equating to 0.22% of all mortgages. This is the smallest number and proportion of mortgages in the most serious arrears band since the end of 2008.