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With so many mortgage products from so many mortgage providers it pays to take independent advice from the whole of the market.
It’s now nearly three months from the shock result of UK to leave the EU. We’ve been told that “Brexit means Brexit”, but for the time being, nobody seems to know exactly what will happen next – politically or economically.
In terms of property, such uncertainty breeds uncertainty – and borrowing has dropped considerably. According to data from the Council of Mortgage Lenders, total borrowing by house owners was £10.6 billion in July 2016 – down 13% compared to the previous month and a 12%.drop compared to the previous year. At 58,100, the total number of loans taken out by homeowners was also down 14% month on month and 13% year on year. First-time buying also took a hit – down 19% month on month and 6% lower than June 2015.
So should we be worried about a slowdown? A drop in borrowing can suggest a cooling off in the market, but there may be factors other than the referendum result at play here.
Paul Smee, director general of the Council of Mortgage Lenders, said: “It is hard to determine whether these figures reflect a first uncertain reaction to the referendum vote, or are a sign of a market which was already cooling. It will be quite some time before a full assessment can be made. We do believe that the Buy-to-let lending market is still readjusting after the large level of activity before the changes to stamp duty on second properties in April.”
It’s important we look at the context. If we go back to the data for June 2016 from the Council of Mortgage Lenders, we see some striking rises: a 29% month-on-month increase in borrowing by homeowners (12% year on year) and a 28% month-on-month increase in borrowing by first-time buyers (25% year on year). This flurry of activity in June puts the drops in July in a slightly different light, as such peaks in growth were unlikely to be sustained.
It’s also interesting to note that some sectors of the borrowing market are definitely on the up. Remortgage activity reached £6 billion in June 2016, 7% higher than the previous month and a 20% year-on-year increase. Following the base rate cut in August to 0.25%, it seems home owners wanting to unlock some of the value of their property are taking advantage of ultra-low rates.
So I don’t think it’s time to talk about the property market getting the Brexit blues just yet. But a little forward-planning can go a long way. If you have an idea of how you’d like your finances or property portfolio to look in five years’ time, we’d love to talk about how we could help you make it happen.
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Have you ever wondered about retiring somewhere different? Or what place might be the best to bring up the kids? According to two recent surveys, for family life the East of England comes out top, but for retirement you might want to look West or South.
uSwitch.com has just published its first ever Better Family Life Index and the top three areas are all located in the East of England: Hertfordshire, Cambridgeshire and Central Bedfordshire.
Based on government data, the index ranked local authorities on 33 indicators significant to a good family life, including housing, crime, health, education, sunshine and time spent with family. Hertfordshire came out on top thanks to high scores in areas such as employment rate (81%), proximity to GPs and high GCSE scores.
In second place, Cambridgeshire scored well with a high annual pay of £32,761and 80% of people between 18 and 64 in employment.
For those at a later stage in life, the Prudential has just named Dorset as the best spot to retire to in the UK, with West Sussex and Herefordshire coming in joint second. Its Quality of Retirement Index 2016 ranked each of the 55 counties in England and Wales according to seven key indicators: resident pensioners as a proportion of the counties’ population; disability-free life expectancy; access to healthcare; crime levels; the number of pensioners moving to the county; pension income; and weather.
Dorset scored highly across the board – it’s the sixth most popular place for retirees to move to and it has the third largest number of pensioners. The West Country does well with Devon also coming in fourth place. The Isle of Wight and East Sussex share joint fifth place, but it is Surrey’s pensioners who receive the highest average retirement income of £21,200.
Because there are so many factors to consider, such big choices are of course a very personal decision. If you are considering a move, it’s obviously essential to have clear view of your financial standing and the implications that relocating could have. We’d love to hear from you if there are any issues you’d like to discuss.
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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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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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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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