The Mortgage Market Q3, 2018

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

Your home may be repossessed if you do not keep up repayments on your mortgage.

According to figures from UK Finance, buy to let lending remains subdued as a result of recent tax, regulatory and legislative changes. In addition, demand for house purchases for both first-time buyers and home movers has also lessened as affordability constraints continue to present a barrier to property ownership and refinancing.

Lenders signed off 58,800 mortgages in September, a fall of 6.5% compared to the same time last year, according to figures from UK Finance. This is the lowest number of mortgages lent in the month of September since 2014.

In particular, there has been a fall in the number of new mortgage issued over the last 12 months due to the new tax rules on buy-to-let properties, and the wider property market shows signs of slowing down.

Although there was an overall drop in the number of mortgages signed off, this was due to the large fall in buy-to-let purchase mortgages approved due to rule changes in the past few years, which increases the amount of tax purchasers must pay. In fact, buy to let mortgages fell faster than other types of borrowing with the number dropping by 18.8% since September 2017 to 12,300. The total value of lending for these types of loans also fell by just over 22%. There could also be further declines in the purchase of buy-to-let properties after changes announced last month’s budget which will affect landlords

Similarly, mortgages issued to those moving home dropped by 8.4% which is the lowest level since 2010. First time buyer numbers fell too but the total value of lending remained the same year on year. The average first time buyer taking out a mortgage in September this year was aged 30.

In the latest Budget, Chancellor Philip Hammond unveiled plans to reduce the time period in which homeowners can claim relief on capital gains tax by half, meaning they will have a larger bill when they decide to sell.

Talk to us at Derngate to find out more about the mortgage market, and to find the best mortgage deal for your individual circumstances.

Read more: https://www.independent.co.uk/news/business/news/uk-house-prices-mortgage-interest-rates-brexit-halifax-index-a8434251.html

Now it’s Even Harder to Get Onto the Property Ladder

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Young people are finding it even harder to get onto the property ladder with the news that the average salary requirement has risen by 18% over the last three years in some cities. In fact, first-time buyers need an average £53,000 salary to buy a home in the UK’s 20 largest cities.

Research company Hometrack has carried out research into the affordability of property for first time buyers, and one of the findings was that only three out of 20 major cities has become more affordable since 2015.

The cities with the biggest drop in affordability in the past three years were Bristol and Manchester. This is a result of where rapid growth in house prices had pushed up the average wage needed by a first-time buyer by almost a quarter.

A first-time buyer in Bristol now needs to earn £58,826 per year in order to afford the average property, while three years ago they would need £47,283. In Manchester the salary requirement of those wanting to get onto the property ladder has jumped by more than £6,500 to £34,770. London is still too expensive for many young first-time buyers, with the study showing that £84,250 was the average income required to buy an average property.

In addition, it has become harder for first-time buyers to buy a property in Leicester, Birmingham and Nottingham, with home values rising by more than the rate of growth in earnings over the past three years.

It is believed that over 30% of young people may never own their home and could be forced to live and raise families in insecure private rental accommodation throughout their lives. The Institute for Fiscal Studies also said the chances of a young adult on a middle income owning a home in the UK had halved in the past 20 years.

Although wages have risen just above the rate of inflation, property values have risen at a much faster rate.  There has been a slowdown and drop in London, but most of the country has seen values rise by more than 3% each year, and in Scotland this is even higher as demand continues to outstrip supply.

Property in the north-west has seen annual increases of about 5.6% and properties in the south-west and West Midlands rising by about 4.4%. In contrast, the annual increase in average weekly pay was 2.9% in the UK.

In London, Cambridge, Oxford and Aberdeen, affordability has improved slightly where the average income needed to buy a home has risen by 1% in the past three years.

Higher interest rates could make it harder for more people to buy a home, while there were also affordability caps imposed on mortgages to stop banks lending to people who may find it difficult to repay their loans.

If you would like advice on buying a property for the first time, contact Derngate Wealth today.

Read more: https://inews.co.uk/inews-lifestyle/money/can-your-social-media-account-affect-your-mortgage/

October 29, 2018adminBlog

First Time Buyers are on the rise

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

Your home may be repossessed if you do not keep up repayments on your mortgage.

The reported number of first time buyers was on the rise in May, whereas the number of approved buy-to-let approved mortgages fell.

This could be because tax changes and policies have changed recently, making it more difficult and less profiatable to become a landlord, and so rebalancing the housing market.

According to financial services lobby group, UK Finance, in May there were 8.1% more first time buyers compared to the same time last year, and lending was up by 12.5%.  In addition, the average first time buyer has an annual salary of £42,000 and has a 15% deposit, with an average age of 30.

The Help to Buy scheme and shared ownership initiatives have all played their part in helping people to buy a property, and without these they would not have been able to afford to buy their own home.

In contrast, the buy-to-let market fell by 9.8% and lending was 22% lower than it was the same time last year. This is due to regulatory and tax changes, and the buy-to-let market could further suffer as the full effect is felt by landlords.

One of the biggest changes was the stamp duty being increased for those buying a second home, making a buy-to-let property unaffordable for some people.

Despite this rise in first time buyers, it’s still difficult for some people to get onto the property ladder. Affordability is a stumbling block for some, and this is reflected in the increase in loan to income multiples.

If you would like advice on buying a property for the first time, contact Derngate Wealth today.

Read more: https://www.theguardian.com/business/2018/jul/12/first-time-buyers-on-the-rise-as-buy-to-let-mortgage-market-falls

July 15, 2018adminBlog

First time buyer myths

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

Your home may be repossessed if you do not keep up repayments on your mortgage.

If you’re a first time buyer, the mortgage process can be overwhelming and confusing. There are often many myths surrounding buying a property for the first time.

Buying a home involves more than getting just a mortgage, it’s about having a place of your own when you can relax and shut the world out.

Here are some of the most common myths:

My salary isn’t big enough

There are many different types of mortgages available, and so it’s not a case of ‘one size fits all’. As well as standard mortgages, there are also specialist mortgages available that you may not be aware of that are suitable for those with complicated circumstances, and an independent mortgage broker has access to these.

My deposit isn’t large enough

One of the biggest worries when it comes to getting a mortgage is having a deposit that’s large enough. We all know that the more you can pay up front the better, as it will keep your monthly outgoings down and secure you a much better rate. However, not everyone will have a large sum saved, especially if you’ve been paying rent, but it’s good to remember that some mortgages only require 5% deposit.

I need a good credit rating

Many people bury their head in the sand when it comes to credit ratings, but there’s nothing to worry about it. You won’t need a perfect score, and there are many factors that will affect your overall score. The key things are to ensure you’re on the electoral register, you don’t miss any credit card or loan payments, you don’t max out your credit cards without repaying them and you don’t apply for too much credit.

I can’t afford the fees

Many mortgages let you spread the cost of the fees as part of your borrowing, and when you talk to a mortgage advisor they will go through all of the fees that you’ll have to pay including legal fees, stamp duty and mortgage arrangement fees. You won’t have to pay more than you can afford.

I don’t know what house to buy

That’s where a good estate agent comes in! They will be able to advise you on the house prices, the local market, what you can realistically get for your money and guide you as to the process of buying a property.

If you would like advice on buying a property for the first time, contact Derngate Wealth today.

First-time Buyer: Hit and myths of buying your home

 

June 25, 2018adminBlog

Could you cope with a mortgage base rate rise to 2%?

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

Your home may be repossessed if you do not keep up repayments on your mortgage.

The Bank of England’s rate-setting committee has hinted that homebuyers could see the base rate rise to 2% in the near future. Rate rises will be gradual, so do you know what will happen to your mortgage repayments if there is mortgage rate rise?

At present the base rate is 0.5%, so a rise to 2% means 1.5% percentage points on your annual interest repayments. Although it sounds low, it equates to an additional repayment of £138 a month if you are an average British homebuyer with typical outstanding mortgage of £175,000.

If the base rate rises to 3%, things could get more difficult as it could mean £238 per month more each month for the average homeowner.

Over 55% of borrowers are on a fixed rate deal, which means that monthly repayments will stay the same until the borrower reaches the end of your current mortgage deal. This is when borrowers could be in for a shock as the rise could be difficult to manage as the borrower will automatically move on to the lender’s variable rate.

There are already signs that lenders are increasing their new fixed-rate deals in anticipation of this rate rise.

The Resolution Foundation has found that one in 10 households will be immediately affected by a rate rise because home ownership has declined, and so many of those with mortgages are now on fixed rates.

House prices will also be affected, as a turn in economic confidence will result in a fall in house prices. In fact, house prices have already started to fall in London and parts of the south-east. A rate rises could push the decline further north.

However, it’s good news for savers as the interest paid on savings rates will finally start to rise, although banks do have a habit of delaying passing on any rise in interest rates. 

If you would like advice on how any rate changes could affect you, contact Derngate Wealth today.

https://www.theguardian.com/money/2018/apr/20/what-would-base-rate-rise-mean-average-homebuyer-mortgage-repayment

 

 

May 12, 2018adminBlog