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James Hammond

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Amidst all the turmoil of the last few months and what it all means for our economic futures, it’s good to know that you can count on certain things.

So that’s why I was interested to hear about Coventry Building Society launching a new seven-year fixed rate interest rate of 1.99%. But to get that eye-turning rate, you’ll need a substantial 50% deposit and there is an arrangement fee of £999. This fixed rate reverts to the Privilege Rate for the remainder of the mortgage, currently 4.24%.

For those without such a sizable deposit, there is also a 2.55% seven-year fixed rate available for those with 85% loan to value (also subject to a £999 arrangement fee).

Of course we’ve always made it our business to keep a close eye on all the new deals coming out. And with the expected base rate cut to 0.25% by the Bank of England on 4 August, we think it could make for an even more interesting array of fixed-rate deals. From two- to ten-year deals, we really should be able to find the right package for you.

And, according to the Office of National Statistics, the housing market isn’t showing any signs of slowing up just yet. In fact, the average UK house cost £214,000 in June 2016 – that’s £17,000 more than June 2015.

So we live in some interesting times – in terms of deals and also market action. We’ll keep you posted on the updates as and when we get them.

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James Hammond

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It takes two to tango, as the saying goes. And now, more than ever, it also takes two to get on the property ladder.

In fact, according the latest English Housing Survey, the proportion of first-time buyers which were made up of single households has halved over the last 20 years. In 1994-5, 29% of first-time buys were single households; in 2014-15, this proportion had dropped to 14%.

Of course, it’s not difficult to guess why. As house prices have spiralled, having two incomes makes all the difference in making that mortgage affordable. And the survey makes it clear that usually these have to be good incomes too. In 2014-15, 72% of first-time buyers were in the fourth and fifth quintile income bracket – 10% more than in 1994-5.

Even having two nice pay cheques at the end of the month isn’t always enough. 27% of first-time buyers in 2014-15 had help from friends and family compared to 21% in 1994-5. 10% used inherited money for their deposit – twenty years previously, that proportion was just 3%. The average age of the first-time buyer has also gone up, from 30 to 33.

If you’re a single twentysomething on an average salary trying to get on the property ladder, it is a difficult scenario, no doubt.

What we would say is this: there are some great deals out there on mortgages right now as interest rates continue to stay low – we’ve scoured the market and can provide independent advice on how these work. And the Government’s Help to Buy: ISA is helping people saving to buy their own homes increase their savings by 25%. So it might require a long-term strategy, but some forward planning could be worthwhile.

Whatever your scenario, we’d love to hear from you.

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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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