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James Hammond

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In a move that surprised the City of London, the Bank of England announced on 14 July that the Bank Rate would remain frozen at 0.5% – the level they have been at since March 2009 – at least for the time being.

Only one member of the Bank’s nine-strong Monetary Policy Committee voted for a cut to a 0.25% – which some commentators had expected in response to the fall in the value of the pound and financial upheaval following the referendum result.

As I stated last time, it’s very early days and it’s clear that the Bank of England won’t rush into any hasty decisions. On the positive side, the Bank’s latest monetary policy summary highlighted the strength of the UK economy. saying that “[m]arkets have functioned well, and the improved resilience of the core of the UK financial system and the flexibility of the regulatory framework have allowed the impact of the referendum result to be dampened rather than amplified”.

Nevertheless, it does highlight some early warning signs, including falls in consumer and business confidence. It adds: “[r]egarding the housing market, survey data point to a significant weakening in expected activity.”

Meanwhile the Royal Institute of Chartered Surveyors (RICS) has reported a decline in new buyer enquiries in June 2016, “with 36% more chartered surveyors nationally reporting a fall in interest”.

The RICS UK Residential Market Survey for June 2016 also reported that although house prices continued to rise, they did so at a “more moderate pace”. However, the report suggests that a slow-down in the housing market would have been likely in the second quarter with or without the referendum, as a result of rush to complete buy-to-let purchases before the new tax regulations came into force earlier in the year.

The coming months will tell us more. Overall, there is a sense of caution right now. But caution isn’t necessarily a bad thing in uncertain times. We’re looking very carefully at all the different indicators to make sure we can provide our clients with the best possible advice when they need it. Have your financial or property plans been influenced by the Brexit vote? If you’ve got any concerns, we’d be very interested to hear from you.

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James Hammond

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So, it’s over. Whether you agree with the result or not, we’ve all got to come to terms with Brexit. We’ve read the news, watched the television, talked to our friends but only one thing seems really clear – nobody knows quite what happens next.

In my last blog, I mentioned some of the predictions for property and rental prices to fall in the wake of a leave vote. The Guardian has already reported on a “wobble” in the housing market and a forecast by KMPG that prices could potentially decrease by 5% outside London – and maybe more within it.

The Financial Times, meanwhile, has talked of an “immediate effect of Brexit chill” on the housing market, with reports of buyers pulling out of deals put in place shortly before the referendum.

It is hardly a surprise that some are spooked by the market uncertainty.

So what – or who – should we believe? The obvious first point to make is this: it’s early days.  For any informed longer-term predictions, we need to wait to see the results of the monthly house price indices – that means waiting until September or October to get a real insight even into the short-term trends.

Of course, at Limetree we’ll be keeping a very close eye on these along with other key data such as mortgage lending and economic performance. We know that uncertainty in the market can be hugely unsettling if you’re trying to make a major financial decision. And, of course, we can’t promise to know exactly what will happen next.

But what we can do is draw on our insight and experience to give you clear-sighted independent advice. So that you can make the most informed decision based on your specific circumstances. If you’re concerned about how Brexit might affect your financial future or property investments, we’d like to hear from you.

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James Hammond

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In this fine weather, it’s all-too easy to forget the cold wet winter.

However, for those who suffered home damage in the devastating floods in December and January, it’s no doubt much harder to put out of mind. Storms Eva and Desmond flooded an estimated 16,000 homes in the UK – many of which did not have adequate cover for the necessary repairs.

Back at the start of the year, I was pleased to share a blog on Flood Re: a new collaborative initiative between the insurance industry and the Government focused on flood risk. So it was exciting to hear that the scheme was officially opened for business last month.

It aims to offer affordable cover for the 350,000 homes in the UK deemed at high risk from flooding. It does this by offering participating insurers the opportunity to pass on the flood risk part of a policy to Flood Re.

In fact as a property owner, you should never need to deal directly with Flood Re. Flood Re collects an annual tax from every home insurer in the UK; it then takes on the flood risk part of policies for properties in high-risk areas from participating insurers. If you need to make a claim, the insurer will process this normally. Flood Re then reimburses the participating insurer accordingly if any validated flood-related payments are made.

For those who don’t own properties but rent in high flood-risk areas, it also aims to make contents insurance more affordable.

By taking on the risk of flood cover from the insurers, it aims to create opportunities for those in high-risk areas to receive more competitive insurance prices. But Flood Re doesn’t set the prices for the insurance companies; how any potential reduction in exposure is passed on to the consumer is determined by the insurer.

If you want to find out more about how it works and who is involved, take a look here.

Let’s hope we don’t have to see or experience the devastation that floods can cause any time again soon. But if it does happen, it’s good to know that Flood Re is up and running – helping people to get affordable cover in high-risk areas.

And of course, with a variety of insurers already participating in Flood Re, it’s important to know exactly who offers the best cover at the best prices. With our longstanding experience in the home insurance market, we’d love to help you find the very best deal and the right level of cover.

 

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James Hammond

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In the aftermath of the 2008 financial crisis, perhaps you didn’t expect to see the 100% mortgage again. Back then, sub-prime loans had become so toxic that the whole financial house of cards almost collapsed.

But it’s back. As of this month, Barclays has modified its Family Springboard mortgage for first-time buyers so that a 5% deposit is no longer essential.

There is, of course, a catch. There had to be. To qualify for this 100% home loan, the borrower’s parents must deposit 10% of the mortgage value in a Barclays savings account for three years. The mums and dads won’t go unrewarded for their generosity. In three years’ time, if mortgage payments are kept up, they’ll get the money back with interest calculated at the base rate plus 1.5%. The borrowers, meanwhile, pay a fixed-rate 2.99% interest for the three-year period.

So, given the average UK house price in 2016, those who don’t have a deposit are going to need parents with a tidy £28,800 which they don’t mind putting away for three years.

It seems that family help is still critical to many trying to get on the property ladder. According to data reported in the International Business Times, parents will contribute £5bn towards property purchases in the UK in 2016 – which would put them in the top ten largest mortgage lenders.

So is the Barclays 100% mortgage a good deal? It could be, if you’ve got parents who are able and willing to help. But certainly if you can pull together a deposit of some kind, there are lots of interesting other options which could offer preferential rates and terms.

Give us a call to see how we might help you explore your options. No strings attached.

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James Hammond

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OK, so it doesn’t come as much of a shock. But the latest Halifax House Price Index still makes for some interesting reading. The headline news is that UK house prices are still going up – a 10.1% increase for the first three months of 2016 compared to the first three months of 2015.

The average UK house price in the first quarter of 2016 was £214,811 according to the Halifax’s seasonally adjusted calculations – up 2.9% from the last quarter of 2015.

So far, so predictable, right? But it isn’t necessarily just a case of more of the same to come. Martin Ellis, Halifax housing expert said: “Worsening sentiment regarding the prospects for the UK economy and uncertainty ahead of the European referendum in June could result in some softening in the housing market over the next couple of months.”

Despite these factors, he continued: “Current market conditions, however, remain very tight with an acute supply/demand imbalance continuing despite an improvement in the number of properties coming on to the market for sale in recent months. This, together with continuing low interest rates and a healthy labour market, indicates that house price growth is set to remain robust.”

Interestingly, some separate Halifax research (included in the House Price Index report) also shows that, since 2008, UK flat prices have risen significantly more than other residential property sectors. On average, a flat bought in 2008 is worth 57% more now – compared to a 37% increase for all residential properties. So it shows that going smaller can sometimes pay dividends.

No one can predict the future 100%. But at Limetree, we provide the information and insight from which to make informed financial decisions. From the headlines to the small details, we’ve got a track record in understanding the market – give us a call to find out how we could help you.

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