Category Archives: Mortgages

Mortgages

Fastest Moving Housing Market for Five Years

According to the latest figures from Zoopla, the lack of supply and increasing demand for homes has resulted in the fastest-moving property market in five years.

The latest Zoopla House Price Index released on June 30 shows that house prices have risen by more than £10,000 over the last 12 months as buyers have re-evaluated their living situation.

This increase is the biggest jump in value since October 2016 and as a result over 1.8m properties have been pushed into a higher stamp duty bracket. Due to this unprecedented demand, the average time it takes to sell a home has halved to just 22 days compared to 42 days in May 2019.

In Scotland, house prices have risen by 3% in Glasgow and 2.9% in Edinburgh. The average annual house price growth was 4.7% in May, this is over double the rise of 2.2% in May last year. House prices are rising the fastest in affordable markets.

In terms of buyer demand, this is currently 55% higher than pre-pandemic levels in 2019.

Demand for property – especially family homes – has been driven by a combination of factors. First, the pandemic resulted in a once-in-a-generation re-evaluation of buyer priorities with a quest for more internal and external space. Second, the stamp duty holiday gave the property market a huge boost. Third, we have seen greater availability of high LTV mortgages for all buyers with the introduction of the Mortgage Guarantee Scheme.

In addition, first-time buyers have flocked to the housing market and as they are purchasing a home without having one to sell, they are not replenishing stock levels.

The supply of homes for sale is not keeping pace with demand and as a result, buyers are experiencing high levels of competition for available homes.

In order to get ahead of the game, make sure everything is in order, including a mortgage agreement in principle. As a whole of market broker we will guide you through the full buying process to ensure our clients are in a position to start viewing properties to buy.

For those thinking of selling, now is the ideal time to sell – but it’s worth remembering that at present, it could take longer to find a home due to the current shortage of listings. Again, we would recommend taking advice from ourselves on the process of selling and buying so we can guide you on the best way to do this.

Talk to us at The Mortgage Hub if you are considering your next move and would like advice on securing the right mortgage for your circumstances.

House Prices Surge in Scotland

Here in Scotland, we have seen house prices surge to record highs – with the latest figures from the Office for National Statistics showing that the average house price rose by nearly 11% in the year to March 2021.

According to the ONS, house prices in Scotland increased by 10.6% over the year to March 2021, compared with a rise of 10.2 % in England, 11% in Wales and 6% in Northern Ireland. What’s more, the latest figures from the Nationwide House Price Index show that house price growth reached its highest level for seven years in May at 10.6% and month-on-month prices grew by 1.8%, down slightly from 2.3% in April.

This time last year, property market activity collapsed in the wake of the first lockdown with housing transactions tumbling to a record low of 42,000 in April 2020. However, activity surged in the last quarter of last year and into 2021, hitting a record high of 183,000 in March. Although the stamp duty holiday gave the market momentum, this continued as interest rates remained low and the government announced the Mortgage Guarantee Scheme.

Why is this happening?

Pent up demand caused by the lockdown, a re-evaluation of housing needs, the stamp duty holiday, low interest rates and the reintroduction of high LTV mortgages have resulted in the number of transactions from January to March being nearly half on the start of last year.

The figures from the Office for National Statistics (ONS) reveal that the average price of detached properties in the UK is rising faster than flats as buyers seek more internal space to accommodate an increase in home working, along with high demand for outside space following a year of lockdowns and only being able to socialise with friends and family in our gardens.

Buyers who have continued to earn have also been saving money given that they have been unable to take overseas holidays, make large life changing purchases, or spend money socialising.

Fast-moving market

Many homes across Scotland are getting snapped up within days – sometimes hours – of hitting the market, as competition is rife. The supply can’t meet the current demand, and this is pushing up prices. This fast-moving property market can cause issues for buyers – especially first time buyers – as they are being priced out of the market. In addition, those who have sold quickly are struggling to buy.

According to research from Nationwide, of those moving or considering a move, 33% were looking to move to a different area, while nearly 30% were doing so for more outside space. The majority of movers were looking to make the move to more rural areas especially among the older generation. What’s more, 36% said they were more likely to consider enhancing their home as a result of Covid-19, with nearly half 46% of these looking to add or maximise space.

First time buyers

Demand for property from first time buyers is extremely high and the inevitable upward pressure on prices is making it particularly hard for first-time buyers to get onto the property ladder. Prices are accelerating faster than they can save for a deposit and they are struggling to meet the affordability criteria.

The stamp duty holiday and re-introduction of 95% loan-to-value mortgages have played a huge part in the increase in buyer numbers – with the repeated introduction of restrictions resulting in buyers looking for more space to accommodate the continuing home working requirement. First time buyers who have had difficulty with their credit rating are also struggling as lenders continue to be cautious however, there are options available for credit impaired buyers. However, many people are in the position where they are stuck paying rents that are substantially higher than mortgage payments.

If you are looking to remortgage, move up the ladder or buy your first home, talk to us at The Mortgage Hub to find out how we can help you to secure the best mortgage for your circumstances.

The Rising Availability of 95% Mortgages

According to the latest figures from Moneyfacts, the 95% mortgage market tripled in the last month. At the start of May there were 112 mortgage deals requiring just a 5% deposit whereas at the start of April there were just 34.

Last month we saw the introduction of the Mortgage Guarantee Scheme – the aim of the scheme was to encourage banks to reintroduce high LTV mortgage products after they were largely withdrawn from the market as a result of the pandemic. The scheme enables buyers to purchase a property up to the value of £600,000 with just a 5% deposit and is available to all buyers not just those purchasing their first home. However, buyers using the scheme do need a very good credit rating and many of the 95% mortgages are not available to new-build buyers.

Although there are currently 112 banks offering 95% mortgages, only 40 are using the Mortgage Guarantee Scheme indicating that confidence in returning to low deposit lending has vastly increased and that the scheme was seen as a sign of confidence in the property market, while some lenders decided to launch low LTV products independently from the scheme. In addition to the 95% mortgages, there were also 41 new products launched for 90% mortgages bringing the current total to over 480 compared to just 100 this time last year. Comparing the number of available mortgage products, it is currently around three quarters of pre-pandemic levels. For those with a 20% deposit, there has been an 18% increase in products available compared to the same time last year.

Across all types of mortgages, interest rates are still historically low and borrowers with big deposits can fix for five years at 1.27%. The Bank of England has shown that net mortgage borrowing in March reached the highest level ever recorded. Moneyfacts has reported that the number of residential mortgages increased for the seventh consecutive month in May, while the average two-year fixed rate dropped very slightly to 2.57 per cent while the average five-year fixed rate increased very slightly to 2.79 per cent.

Finally, more good news – deals are on the market for longer with the average shelf-life of a mortgage deal increasing by three days to 32 in April giving buyers longer to secure the right home and mortgage product.

Talk to us at The Mortgage Hub if you would like to find out more about securing a high LTV mortgage. We can scour the whole of the market to find deals that you may not have access to from high street lenders, and can advise you on the best deal for your individual circumstances.

The Mortgage Guarantee Scheme for First Time Buyers

In his Budget last month, Chancellor Rishi Sunak confirmed that the 95% mortgage scheme would boost the market and bring back the low-deposit mortgages that were largely withdrawn as a result of the pandemic. Most lenders were offering a maximum 90% loan to value mortgage. This made it difficult for many buyers to get onto the property ladder as they were unable to save a sufficient deposit. In addition, the market was largely closed during the first lockdown and by the time it reopened, a pent-up demand and a re-evaluation of buyer’s requirements resulted in a buoyant market and rising house prices. This further priced first time buyers out of the market.

The new government-backed low-deposit mortgage guarantee scheme is now available to lenders meaning that more options are available to first time buyers with a small deposit. What’s more, the scheme is open to all buyers, not just first time buyers and is available for all properties costing up to £600,000 and is not limited to newly built homes. According to figures from Rightmove, this accounts for 86% of all homes currently for sale.

The aim was “a policy that gives people who can’t afford a big deposit the chance to buy their own home.”

Until now, first time buyers have been unable to find a 95% LTV mortgage deal although one or two lenders would release products for a few days or weeks at a time and they would be restricted to certain postcodes.

Following the budget announcement, Rightmove reported that the use of their mortgage calculator jumped by 85% within half an hour of the announcement and traffic to the site jumped by 16%.

Mortgages under the scheme will be available until 31 December 2022. The affordability checks will remain the same with most mortgage lenders offering loans of up to 4.5 times the buyer’s salary.

If you are considering taking advantage of this new scheme, talk to us at The Mortgage Hub. We can advise you as to whether this is the best option for you and the costs involved.

Applying for a 95% Mortgage? What You Need to Consider

It was announced in the spring budget earlier this month that the government will be introducing a new 95% mortgage guarantee scheme from April 2021, which will run until December 2022. The scheme has been introduced in response to a large-scale withdrawal of low LTV mortgages following the pandemic, pricing many first time buyers out of the market. As the Prime Minister put it, the new scheme will help ‘generation rent become generation buy’.

The new scheme means that some of the UK’s major lenders will be able to offer low-deposit mortgages on all residential properties valued up to £600,0000. The announcement was welcome news for many people, including those wanting to move up the property ladder or remortgage their existing home as the scheme is open to all. You don’t even technically need to be a first-time buyer to apply.

However, it’s important to understand that obtaining a 95% mortgage isn’t an easy or simple process, as you will still need to be prepared and meet the lender’s criteria especially in terms of affordability. In fact, affordability tests have not been relaxed as part of the scheme, which will catch out some buyers without prior experience of mortgage applications.

Here’s what to consider if you are thinking of applying:

Credit history

A good credit score is essential when looking to secure a good mortgage deal. If you’re a first time buyer applying for a low-deposit mortgage you will need a good credit score for your application to be accepted. It’s important to keep up with your credit card, utility bill, mobile phone, loan and other payments to show lenders that you are able to repay your debts. You should also be on the electoral register. It’s important you aren’t financially tied to someone with a bad credit score as this can negatively impact you.

Affordability

Even though the mortgage guarantee scheme means you only need a small deposit, you’ll still have to prove that you can afford the monthly repayments. Mortgage lenders have to adhere to restrictions whereby no more than 15% cent of their new business can be through offering mortgages that are over 4.5 times over the applicants’ annual income. This means that lenders won’t typically lend to higher LTI (loan to income) applicants for those with a 5% deposit. This is something to be aware of when applying, especially if you’re buying alone.

COVID19

Have you been impacted by the pandemic? Lenders will be cautious about lending to people who have been financially adversely affected by the pandemic. If you have been furloughed, taken a mortgage holiday, or have had your days or hours reduced, you could find it more difficult to secure lending. You will need to provide bank statements, P60 and proof of deposit or income to accompany your application.

Get the right advice

It’s essential that you talk to a whole of market mortgage broker if you would like to apply for the new mortgage guarantee scheme. At The Mortgage Hub, we can talk you through the application process and find out if you are eligible for a mortgage without it impacting your credit score. We can also find the best mortgage for your circumstances and work out what your repayments will be.

COVID-19 Property Market Update 

Many existing and potential homeowners are wondering whether to move now or delay their plans until they have a clearer picture of how long the pandemic will last. 

Since the market reopened here in Scotland in June, people have flocked to estate agents to purchase a new home. Properties are going to closing date, achieving record offers overs and competition is fierce as pent up demand combined with government incentives and a re-evaluation of our priorities has resulted in a mini property boom. 

The recent tax break announcement created a flurry of interest from buyers and gave an immediate boost to the housing market – according to The Telegraph, the lockdown resulted in £27bn of lost sales and buyers and sellers have been making up for this ever since.

The prime rural market has benefitted the most as people search for more space and better value. Buyers appear to be prioritising larger properties with more outside space, and they have re-evaluated the importance of proximity to transport links, local amenities and the ability the work from home. 

According to Zoopla, agreed sales fell by 92% during lockdown. Buyer demand, which is measured by the number of property enquiries, has jumped to 46% above pre-lockdown levels with a significant rate of recovery.

The prime rural market has benefitted the most as people search for more space and better value. In July, asking prices reached a new high of £320,265 – a rise of £7,640 (Rightmove) and Zoopla has forecast price growth of between 2% and 3% by the end of the year. Here in Glasgow house prices were 2.3% higher in August compared to 2% in August 2019.

 What is the outlook?

 With few distressed sellers just now – which is usually what drives house prices down in a crisis – it appears that the property market is holding strong. This is due to job and payment retention schemes and the availability of mortgage holidays. In addition, the eviction ban is protecting tenants who can’t pay their rent. 

At its peak, there were 1.9 million homeowners that took a mortgage repayment break – a sixth of all mortgaged homeowners. However, lenders have reported that only a small number of these requested an extension. If these people were to become forced sellers at the end of their mortgage break, but this would still not top pre pandemic property transactions. In addition, Hansen Lu, of Capital Economics, said that when the mortgage break scheme ends, regulatory changes mean that lenders’ own internal forbearance procedures will be more generous than they were ten years ago, and the impact will be reduced.

What’s more, according to the Bank of England, mortgage approvals reached a 13-year high in August as the rush to buy homes continued. The number of mortgages approved hit their highest level since October 2007 with a total of 84,700 mortgages  approved in August, a 28% increase on the previous month’s total.

It’s a seller’s market, so the advice is to sell now and for buyers, there are still some exceptional mortgage deals available. Even with the strict guidelines surrounding house sales, people are still encouraged to go on house viewings especially as initially it can be done virtually as agents increasingly embrace technology. Although many buyers tried to negotiate discounts when the market reopened, agents instead are seeing competitive bidding. Estate Agency is still subjected to social distancing measures and a change in the way they conduct themselves with restrictions on viewings to one member of a household, a ban on open houses and vendors vacating the property during the measuring, photography and viewings. However, this doesn’t appear to have dampened appetite.

Talk to us at The Mortgage Hub on 01698 200050 if you would like to discuss your mortgage options and for general advice about the property market here in Scotland.

What’s Driving The Property Mini-Boom?

Despite the country slipping into recession, house prices currently are at their highest level. What has driven this mini-boom and how long will it last?

On Monday Rightmove reported that the portal has had its busiest week in 10 years. Since June 29th when the property market in Scotland reopened, estate agents have reported a surge in enquiries, house prices have been steadily rising, mortgage applications have rebounded, properties are achieving record numbers of viewings and the offers over are far exceeding the pre lockdown levels.

According to The Halifax, the average UK house price has hit the highest level on record in July following months of pent up demand from house hunters. What’s more, the announcement that the LBTT threshold has been increased has provided a further boost to the market.

Reports suggest that we are facing a looming unemployment crisis when the Furlough scheme comes to an end at the end of the year. However, the sharp decline in GDP currently is not matched by the property market and there is little evidence to suggest that this mini-boom will end any time soon.

Pre Covid, the property market was strong and RICS data showed that there was a ‘Boris Bounce’ in February following the election and mortgage approvals for homebuyers were at their highest levels in four years at the start of the year. Lockdown meant that these property transactions were delayed and completed as soon as the lockdown was eased.

What’s more, since March there has been an increase in people’s desire to move home. They have possibly spent more time outdoors and appreciated the importance of access to a garden or green space and have come to realise the importance of having space to work from home. Being in lockdown for the best part of four months will also have made people assess what they do and don’t like about where they currently live.

Those who were most affected Covid are less likely to be homebuyers – and those hit the hardest are the people on a lower income. The lower the pay the more likely they are to lose their job in the recent round of redundancies. The average first-time buyer is in their early 30s and it is those in their early to mid 20s who have been most likely to have been furloughed.

The LBTT threshold change to £250,000 has also had an impact. The Institute for Fiscal Studies warned that this could result in an increase in house prices, making first time buyers worse off.

There is no doubt we are in a mini-boom, but we believe that this will level out later in the year into 2021 but this will be dependent on unemployment levels, the availability of high LTV mortgages and demand for rental property. A recent report from global bank ING says that prices will level out later on in the year.

Should You Continue With Your House Purchase?

This week it was announced that the UK is officially in recession. So, what does this mean for you if you’re planning to move?

During a recession when finances are tight job security is in question, many are cautious about buying a new home. However, this is a very unusual time for everyone in the UK – the likes of which we have never seen before.

The property market came to a standstill in March and went off with a bang when it reopened on June 29th . It was feared that house prices would crash but to date, the opposite has happened. The recession is a result of a public health crisis and not a financial one, so the financial system isn’t at a standstill as it has previously been. The government has taken unprecedented steps to protect jobs and prop up the housing market. Estate Agents have reported a huge upsurge in interest in properties and new seller enquiries and property portals have reported incredible visitor stats since the start of July.

What’s more, in July it was announced that LBTT would be waived for all properties up to £250,000 until March 2021 to further incentivise those considering moving and the Help to Buy scheme has been extended. There has been restored confidence in the market and transaction figures have rebounded – with a particular rise in the purchase of first homes and newly built properties.

The concern surrounding buying a home during a recession is that house prices may fall after a property purchase leaving buyers in negative equity. There’s also a fear that the Furlough scheme has delayed the number of job losses and that when the scheme ends there will be a raft of redundancies.

One thing is for sure – house prices are steadily rising and mortgage companies are bringing back products. House prices fell in 2018 due to a very specific lack of funding in the mortgage market. This isn’t the case this time so we believe that property will still be one of the strongest investments you can make. At present, there is an imbalance between demand and supply which is putting upward pressure on prices at the moment, and as a result we have seen the price growth for UK homes rise to 2.7% in June, up from 2.4% in May. We see this trend continuing for the foreseeable future.

If you’re buying a new home, you may prefer to delay your  purchase and wait to see how the recession plays out but the danger is that if your job is secure and you have the funds and meet the lending criteria, now is a great time to secure an attractive mortgage rate.

If you are thinking buying, make sure you have the right advice and don’t miss out on the LBTT break and low mortgage rates. Talk to us to discuss your circumstances before making a decision as we may able to help you decide what’s best for you.

Lowest Ever Mortgage Rates

The average interest rate for two-year and five-year fixed rate mortgages has dropped to the lowest levels since records began in 2007 according to the latest figures from Moneyfacts. That makes it a great time to remortgage.

We are currently averaging lower rates than last month’s record low rate following two emergency cuts made to the basic rate in response to COVID-19 – this is the interest rate that the bank sets for lending to other banks. The fall in the official cost of borrowing impacts swap rates upon which fixed-rates mortgages are based – and lenders have passed on the reduction in borrowing costs to their customers.

However, some banks and building societies have reviewed the level of risk they take in lending – this is due to the impact that COVID-19 is having on the UK economy.

With these record-breaking fixed rate deals, now is a great time to remortgage, especially if your deal is coming to the end. In addition, if you’re still sitting on your lenders’ SVR, you could save thousands per year by switching to an average two-year fixed rate deal. The gap between the cost of a two-year and a five-year fixed-rate deal has also narrowed so you could pay a lower premium for the peace of mind knowing what your mortgage repayment will be for the next five years.

However, the number of mortgage products to choose from has more than halved – from over 5,200 products to 2,500.

There are currently less products available to borrowers with a low amount of equity or small deposit – those with 5% can choose from 22 products compared to 279 previously available and the choice for those with a 10% has dropped from 563 to 50. That’s why it’s essential to talk to a mortgage broker to find the right deal.

Although lenders have increased rates on loans for people borrowing 95% of their home’s value, this is only a small rise of 0.04% for a five-year fixed rate and 0.1% for a two-year fixed rate and they are still open for business for this sector of the market.

Because lenders have cut rates for people borrowing 90% of their property’s value this shows that competition is still strong in this area even though there are fewer products available.

At The Mortgage Hub we can scour the whole market on your behalf and help you find the best deal and find out if your application will be accepted. Talk to us for advice – we are currently closed but still working remotely until it is safe to open.

 

A Rise in Buyer Demand

The latest House Price Index from Zoopla shows that UK city house price growth has hit a two year high of 3.9%. In addition, figures show that housing demand was up 26% over the first few weeks of this year compared to the same period in 2018 and 2019.

This means that city house price growth is at a 2 year high. HMRC data shows that in December last year sales were 11% higher than the same period in 2018

Northern regions registered stronger price growth throughout 2019 than many of the southern cities, although there are signs that the spread of price growth across the country has been narrowing in the last few months.

A summary of factors including house affordability, position in the current housing cycle, time to sell and price achieved indicate cities where the momentum in growth over the last quarter of last year will carry into next year.

According to Zoopla, Nottingham, Edinburgh and Glasgow rank as the top three cities with the strongest prospects for 2020 indicating that they will be towards the top of a relatively narrow range of price growth this year.

An examination of market fundamentals by city – including housing affordability, position in the current housing cycle, discounts to asking price and time to sell all indicate cities where the momentum in growth over the final quarter of 2019 will likely carry over into 2020. The ranking for all cities is shown in Table 2 along with the current annual growth rate.

Nottingham, Edinburgh and Glasgow rank as the top three cities with the strongest prospects for 2020, indicating they will be towards the top end of a relatively narrow range of price growth this year. During the four weeks to January 20th this year, the demand for housing has ‘bounced’ with a 26% more people looking for a home than the same period in 2018 and 2019. In fact, all cities apart from for Belfast have recorded an increase in demand compared to the last 2 years.

Demand for housing in Edinburgh remains strong overall with 6% annual growth in prices over 2019. However, demand has levelled out in the first 4 weeks of the year compared to the last 2 years.

If you would like to take advantage of the predicted growth this year by investing in property in Edinburgh or Glasgow, talk to us at The Mortgage Hub about securing the best mortgage for your circumstances.