The National Association of Estate Agents (NAEA) said [...]]]> First time buyers are “rarely seen”, estate agents warn with their share of the UK housing market having fallen to a three year low.Sales to those buying their first home fell from a 22% share of the market in September to a 16% share in October, figures suggest.

The National Association of Estate Agents (NAEA) said this was the lowest proportion since December 2008.

One economic research company has also scaled back its price growth forecast.

The level of sales and homes going on the market in the UK was little changed in October compared with September, according to the NAEA.

However, it said that first time buyers had suffered a “heavy blow” to their share of the overall housing market.

The association said that, despite some evidence of mortgages being approved by banks, there remained significant lending barriers for those trying to buy their first home.

“The first time buyer is rarely seen as they struggle to get mortgages and over-optimistic vendors with a lack of motivation continue to stifle certain areas of the market,” said Martyn Baum, who represents the NAEA in the Midlands.

It still believes that house prices will rise from next year.

The research company also said that the government’s housing strategy could initially push up prices slightly but would have no effect on values after the first year.

That figure represented a [...]]]> Mortgage lending in Scotland rose in the third quarter – but at a much lower rate than the UK as a whole, according to the latest data released by mortgage lenders.The Council of Mortgage Lenders (CML) Scotland said 12,400 loans were taken out, which was 900 more than in the previous quarter.

That figure represented a rise of 8% for the period.

In the UK as a whole, lending for house purchase increased by 16%.

Loans to first time buyers and home movers in Scotland increased in the third quarter.

A total of 4,600 loans worth £429 million were advanced to first time buyers, which was a rise of 7% by volume and 10% by value.

CML Scotland said there were “small improvements” in lending criteria for all Scottish house purchasers in the quarter.

First time buyers typically borrowed 80% of their property’s value, up from 79% in the second quarter – bringing the average loan-to-value ratio in Scotland in line with the UK average.

Home movers borrowed on average slightly less of their property’s value from July to September than April to June – 70% compared to 71% – but they spent 8.8% of their income on mortgage interest payments, the lowest since records began in 2005.

A total of 9,600 remortgage loans worth £900 million were taken out, a 5% increase on the previous quarter.

CML Scotland policy consultant Kennedy Foster said: “The mortgage market in Scotland is currently stable, albeit at a low level.

“We anticipate growth is likely to remain slow going forward, although welcome developments – such as smaller deposits – have emerged and a Scottish mortgage indemnity scheme for new-build properties is being introduced.

“The uncertain economic outlook and low levels of consumer confidence will likely result in a continuing constrained mortgage market in Scotland, as in the UK in general.”

The number of mortgages taken out for house purchases was 48,200 in September, down 2% from the month [...]]]> Economic uncertainty makes the future of the UK mortgage market “difficult to call”, a mortgage lenders’ group has said.Paul Smee, director general of the Council of Mortgage Lenders (CML), said the market for home loans was currently stable.

The number of mortgages taken out for house purchases was 48,200 in September, down 2% from the month before, the CML said.

First time buyers needed an average deposit of 20% of a home’s value.

The number of mortgages approved for house purchases was 3% higher than in September 2010.

However, mortgage lenders have suggested that the cost of loans has started to rise because banks are charging more to lend to each other.

The rising cost has resulted from banks’ confidence in lending to each other being knocked by the eurozone crisis, and Mr Smee said this made the future for the mortgage market more difficult to predict.

“Although both house purchase and remortgage loans experienced a small drop in September the overall market to date shows a stable picture,” said Mr Smee.

“However, the backdrop of global and domestic instability makes the future more difficult to call.”

Over the third quarter of the year, the number of home loans advanced for house purchases was up 16% compared with the previous quarter at 144,200.

This was 6% lower than the number in the same period in 2010.

The number of homeowners remortgaging in the third quarter was up 23% on the same three months in 2010.

However, the latest figures show the steam might have come out of the remortgaging market, with the number of remortgaging loans approved in September down slightly on the previous month.

The number of loans taken out by first-time buyers rose slightly in September from a low base.

The level of deposit required remained unchanged compared with August, but had eased compared with a year earlier.

This increase follows a rise in the rate at which banks lend to each other – Libor – which has been [...]]]> Mortgage interest rates could start to rise again as a result of the turmoil in the eurozone brokers are warning.Some lenders, including Woolwich, Halifax and Santander, have pushed up their tracker rates for new borrowers.

This increase follows a rise in the rate at which banks lend to each other – Libor – which has been inching higher amid worries over the eurozone crisis.

The increase in Libor indicates that banks are less confident about lending to each other.

Although the average tracker rate has hardly altered since the summer, there are straws in the wind which suggest that the direction could be shifting from down to up.

On Wednesday, the Chelsea Building Society put up the cost of some of its most competitive tracker mortgages by 0.2%.

In recent weeks, the Halifax raised its two-year tracker by 0.15% to 3.34%, while Woolwich increased the rate its trackers revert to after two years by 0.4%.

Santander pushed up its Abbey-branded lifetime tracker in two moves from 2.95% to 3.09%. Nationwide and ING have also raised some rates as well.

One indication of the pressure on lenders comes from Libor – the London Interbank Offered Rate – the short-term interest rate at which banks will provide funds to each other.

While some lenders draw mostly on their customers’ savings to fund mortgages, others have to borrow large amounts on the money markets, hence the importance of rates such as Libor.

Since August, three month sterling Libor has risen from 0.83% to 1%.

This is a significant change compared with the Bank of England’s key rate, which has been stuck firmly at 0.5% since March 2009. On Thursday, the Bank said it would keep rates on hold again following the latest meeting of the Monetary Policy Committee.

It said that the housing market had remained “highly resilient” despite weakness and a deteriorating [...]]]> UK house prices rose by 1.2% in October compared with September, but have fallen over the last year according to the Halifax.The lender, part of nationalised Lloyds Banking Group, said that values had fallen by 1.8% compared with a year ago.

It said that the housing market had remained “highly resilient” despite weakness and a deteriorating outlook for the UK economy.

The average home in the UK was valued at £163,311, the Halifax said.

Its house price survey is based on its own mortgage data.

The Halifax said that there was a 0.3% fall in prices in the three months to the end of October compared with the previous quarter. This was the first time this measure has recorded a fall since June.

Martin Ellis, Halifax’s housing economist, said that this was an indication of the general stability of prices, despite the month-on-month figures having shown some volatility during the year.

“The housing market has proved highly resilient in recent months, despite the weak economic recovery and the deterioration in the outlook for both the UK and global economies,” he said.

“The prospect of exceptionally low official interest rates over the foreseeable future is likely to continue to support the market in the face of a very difficult economic climate.

“Both prices and activity levels are expected to remain close to current levels over the coming few months.”

The survey’s findings are similar to the picture painted by the Nationwide Building Society. A week ago, it said that UK house prices were “treading water”.

The Nationwide said the annual change in October was a 0.8% rise.

However, the year-on-year comparison is calculated slightly differently by the two lenders. The Halifax compares the previous three months with the same three months a year earlier to give a smoother comparison, rather than a direct comparison of the equivalent months.

The number of first-time buyers, at 18,200, fell back by [...]]]> The number of mortgages lent in July was still much lower than a year ago, figures from the Council of Mortgage Lenders show.The number of new loans to house buyers was 48,400 in July, up 1,000 from June but still 6,900 lower than a year ago.

The number of first-time buyers, at 18,200, fell back by just 300 from June and was 1,300 down on a year ago.

First-time buyers are still having to put down deposits averaging 20% of their purchase price to obtain a loan.

“August saw global financial turmoil and unrest closer to home and recent Bank of England approvals figures do not necessarily suggest a continuing upturn in lending in coming months,” said the CML’s director general Paul Smee.

“However, it is likely that this reflects weak consumer appetite for borrowing, more than any additional constraints on the availability of mortgages,” he said.

Figures from the Bank of England showed that in July 49,239 new mortgages were approved, but not yet lent, to house buyers. That represented the third monthly increase in a row and would normally suggest an impending upturn in sales.

With house prices rising slightly so far this year, the average new mortgage has gone back up to £120,000, the CML said.

As a result, the total amount of money involved in the new loans in July rose to £7.3bn from £6.9bn in June, putting gross lending at its highest level since August last year.

It warned those on lowest incomes were likely to [...]]]> Household budgets could be squeezed for the next 10 years as the impact of tax rises and cuts is felt, the Institute for Fiscal Studies (IFS) has warned.Its survey suggests families have seen the biggest fall in living standards in 30 years in the last financial year.

It warned those on lowest incomes were likely to suffer a further significant reduction in their spending power.

The IFS cross-country study found that UK households had been relatively insulated from the immediate impacts of the recession, partly because of state welfare systems and increases in state financial support.

It said much of this protective effect was concentrated on households in the bottom half of the income distribution.

But it said earnings, state benefits and tax credits had all fallen in real terms in the UK over the past year.

IFS researchers estimated this was likely to have led to a fall in median net household income of 3.5%, the largest single-year drop since 1981, returning it to its 2003-04 level.

The pain of the recession had been delayed rather than avoided, they concluded.

Robert Joyce, a research economist at IFS and a contributor to the report, said: “The current economic downturn began more than three years ago, and may seem like old news.

“But, as in other developed countries, the most severe consequences of the recession on UK living standards have only just begun to be felt, and will continue to be felt for years to come.”

Previous IFS research has shown that the decline in average living standards looks set to continue until at least 2013-14.

There have been a growing number of calls in recent weeks from opposition politicians and some economists for the government to rethink its programme of spending cuts in the light of weak economic growth, not only in the UK, but also in Europe and the US.

The latest report found that the fall of 6% in UK GDP from peak to trough during the recession lies somewhere in the middle of the international experience.

The Irish Republic, Japan and Sweden had experienced sharper falls, whereas countries such as Canada saw smaller falls.

The rate of employment fell by a good deal less than GDP – by 1.6 percentage points between 2007 and 2009, the IFS said.

Again, this was roughly in the middle of the global experience. Over the same period, the employment rate rose in Germany, was almost unchanged in France and fell by more than four percentage points in the US.

Mortgage rationing in the past few years has led to home sales [...]]]> The number of mortgage deals available has returned to the level of early 2008, before the banking crisis reached its peak.Of the 2,557 mortgage types on offer, 64% require at least a 20% deposit and only 2% need a deposit of 5% or less.

Mortgage rationing in the past few years has led to home sales falling by more than half.

Moneyfacts, which compiled the figures, said lending to people with small deposits was still very restricted.

“While the number of deals for borrowers with a 5% deposit or less has increased, the majority require a guarantor to qualify or are from lenders which offer restricted lending,” said Michelle Slade of Moneyfacts.

“First-time buyers still really need at least a 10% deposit before they can find any real mortgage options.”

She said lenders were worried about borrowers defaulting if interest rates rose, and were concentrating their lending on people who could put down at least a 25% deposit.

Severe mortgage rationing has been in place since 2008, when banks and building societies decided to restrict their lending because of the financial crisis.

The knock-on effect has been that people who would normally be regarded as highly creditworthy have been having problems obtaining a loan to buy a home.

Despite a clean credit history, several lenders are rejecting home loan applications.

As a result the mortgage decision making  process is getting slower and slower. Previously mortgages were agreed in six days or so now the process can take up to three months.

The typical home now costs £165,914, the lender [...]]]> House prices fell slightly in August with values expected to stay the same or drift modesty lower for the rest of 2011 Nationwide says.The building society said that property prices were 0.6% lower in August than in July, and 0.4% down on the same month a year ago.

The typical home now costs £165,914, the lender said.

It also warned that prices could be pushed down further if more workers were laid off.

“For some time now the residential property market has been moving sideways, as weak demand for homes co-existed with a situation where relatively few homes were coming on to the market,” said Nationwide’s chief economist Robert Gardner.

“A further fall in employment would be likely to upset the relatively delicate demand-supply balance and put downward pressure on prices.”

However, he said that threats to UK economic growth meant that interest rates were expected to remain on hold until well into 2012, providing support for homeowners and domestic spending.

The Nationwide data is based on a sample of the lender’s own loans during the month.

Other house price surveys include figures from the Land Registry which, although they lag behind the Nationwide data, provide a regional breakdown of prices.

The most recently published Land Registry figures showed that prices in the North East of England fell by 8.8% in the year to July. There was also an annual drop in prices in every area of England and Wales, except London.

The financial information service said that availability was rising for those offering a deposit of just 10%.

But [...]]]> The number of different mortgage products available in the UK market has risen to the highest level since November 2008, figures show.The increased competition has contributed to falls in the interest rates for new mortgage deals, according to Moneyfacts.

The financial information service said that availability was rising for those offering a deposit of just 10%.

But there has been no return of the pre-banking crisis deposit-free deals.

Only a handful of mortgages remain on the market for those offering a deposit of less than 10%, and they often have other restrictions attached.

However, there has been a rise in the number of mortgage products at the 10% deposit level, from 176 a year ago to 261 at the start of July.

However, banks remain strict about who they lend to – such as checking applicants’ credit history.

The largest category of a total of 808 mortgage products still require a deposit of 25%.

The increased availability has created more competition which has helped reduce the cost of home loans.

A week ago, Moneyfacts reported that interest rates on new mortgage deals had fallen to their lowest level, on average, in 23 years.

The average two-year fixed rate deal were at 4.32%, three-year fixed deals now averaged 4.92%, five-year fixes were at 5.29% and the average two-year tracker deal was now at 3.37%, it said.

New mortgages approved for house purchase, but not yet lent, rose to 45,940 in May from 45,447 in April.

Despite the slight increase, May’s approval figure was lower than [...]]]> Mortgage approvals are still subdued new figures from the Bank of England suggest.Which means that the UK property market is set to remain subdued in the forthcoming months.

New mortgages approved for house purchase, but not yet lent, rose to 45,940 in May from 45,447 in April.

Despite the slight increase, May’s approval figure was lower than the average for the previous six months.

The data suggests that house sales, which have been running at half their pre-2007 levels, will also stay low in the coming months.

Meanwhile, building societies have complained again that National Savings & Investments (NS&I) is being too agressive in trying to attract savers’ money.

NS&I recently relaunched its inflation-proofed investment policies.

The Building Societies’ Association (BSA) said this had contributed to another outflow of funds from its members in May, of £613m.

This has been due to the expectation that the Bank of England is unlikely to raise its bank rate above [...]]]> Interest rates on new mortgage deals have fallen to their lowest level for 23 years since 1988, according to new research.
This is due to lenders finding it cheaper to raise funds in the wholesale financial markets.

This has been due to the expectation that the Bank of England is unlikely to raise its bank rate above 0.5% anytime soon.

However most mortgage deals still require buyers to put down at least a 20% deposit.

The intra bank swaps rate determines the cost of borrowing for banks and building societies when they want to borrow longer term money in the financial markets at a fixed rate to lend onto their customers.

The market provides an indication of when banks expect the Bank of England to raise short term interest rates.

Until recently, a rate rise had been expected as soon as September.

But following a set of weak economic data, as well as the decision by a new member of the Bank’s rate setting committee to vote for no change in rates, markets now do not expect a rate rise until well into next year.

According to Moneyfacts, the average two-year fixed rate deal is now at 4.32%, three year fixed deals now average 4.92%, five-year fixes are at 5.29% and the average two-year tracker deal is now at 3.37%.

Homeowners in the 10 areas with highest growth rates in [...]]]> The average house price rose in the 10 most prosperous areas by 219%
The value of homes in the most economically prosperous UK locations – including Cornwall, the Isles of Scilly, Bournemouth and Poole – surged ahead of properties in the country’s poorest areas, a survey showed.

Homeowners in the 10 areas with highest growth rates in economic activity per person saw the value of their property nearly quadruple between 1998 and 2008 the Halifax found.

The average house price in the 10 most prosperous areas rose by 219% over the period to £214,162, while the average price in the 10 least prosperous regions rose by 195% to £165,430.

The average house price in the 10 areas with the highest levels of economic activity in 2008 is 61% higher than the average in the 10 locations with the lowest levels of activity, the survey found.

Also the survey found that house prices have fared better in the most economically resilient locations since 2008 during the market downturn.

House prices have fallen on average by 24%, Halifax said, in the 10 areas with the biggest falls in economic activity since 2008.

This is almost double the average 13% decline in house prices in the 10 areas that recorded the smallest falls in economic activity since 2008 – including Cornwall and the Isles of Scilly, and Dorset.

Seven of the 10 local areas that have seen the smallest falls in economic activity over the last three years are in southern England but all 10 locations that have recorded the largest falls in economic activity are in the northern regions of the UK.

Interest [...]]]> The interest rates charged on fixed rate mortgages fell to a record low during May as lenders passed on reductions in their own funding costs to borrowers.
The average cost of a two year fixed rate deal dropped for the third consecutive month, falling by 0.19% to stand at 3.47%, according to the Bank of England.

Interest charged on tracker mortgages remained at their record low of 3.45%, while there was also a fall in the cost of five year fixed rate deals, with the cost of these now averaging 5%.

The downward momentum on mortgage rates appears to have continued into June, with a flurry of lenders slashing their rates during the past few days, including big names, such as Halifax, Nationwide, Lloyds TSB and NatWest.

The reduction in the price of fixed rate mortgages is being driven by a fall in swap rates, upon which the deals are partially based, as the Bank of England’s Monetary Policy Committee is widely expected to put off raising the base rate until the final quarter of this year.

There has also been a further improvement in the number of mortgages available to people with only small deposits, with 31 different loans now available for people with 5% to put down, up from 24 at the start of the year and the highest level since December 2008.

Choice for people with deposits of 10% has also risen to 244 from 199 during the same period, while there are now 545 mortgages available for those borrowing 85% of their home’s value, compared with 480 at the start of the year.

The figures point to the continued stagnation of the property market, with few sales and prices [...]]]> Mortgage lending fell back in April due to seasonal factors the Council of Mortgage Lenders (CML) has found.
The total amount of new funds lent fell by 14% from March to £9.8 billion and was down 5% from April last year.

The figures point to the continued stagnation of the property market, with few sales and prices subsiding.

However, the CML said last month’s drop was due to Easter falling in April and the extra public holiday because of the royal wedding.

“Statistical noise, associated with extended holidays around Easter and the royal wedding, makes it harder to read the immediate market situation,” said the CML’s chief economist Bob Pannell.

“This represents an unfortunate temporary loss of signal, at a time when it would be useful to gauge the resilience of house purchase demand to economic uncertainties and the pressure on household incomes.

“Levels of activity look set to remain broadly flat over the near term,” he added.

Although pre-tax profits fell 7% to £317 million, this was largely due to accounting changes, and underlying [...]]]> Nationwide has announced that it had a strong year despite a smaller savings and home loan markets.Britain’s biggest building society, Nationwide, has said it had a “strong” financial year despite a backdrop of a smaller mortgage and savings market.

Although pre-tax profits fell 7% to £317 million, this was largely due to accounting changes, and underlying profits rose 30% to £276 million.

Chief executive Graham Beale said it was an “excellent” performance given the tougher economic environment.

The amount written off for bad loans to customers fell 35% to £359 million.

Total net inflow of money for the year was £600 million, a big turnaround from the previous year when Nationwide saw outflows of £8.2 billion.

There was a £1.6 billion increase in retail deposits and more than 350,000 new current accounts were opened.

Nationwide’s gross lending was £12.8 billion, representing a market share of 9.5%.

The society’s Tier 1 ratio, a key measure of financial strength against future financial problems, rose to 12.5% from 12.2%.

However, this was still 10% fewer than in March 2010 and suggests that activity in the coming months will remain [...]]]> Mortgage lending by the UK’s main banks is still very subdued claims the British Bankers’ Association (BBA).
The number of new mortgages approved by its members for house purchase rose by just 1,482 in March to 31,660.

However, this was still 10% fewer than in March 2010 and suggests that activity in the coming months will remain depressed.

The BBA said worries about the economy were depressing all forms of bank lending.

“Weak trading activity is discouraging businesses from borrowing to expand and most are oriented towards repaying debt and reducing their operating costs,” said the BBA’s statistics director, David Dooks.

“Householders also remain focused on paying down debt, leading to a net contraction of unsecured borrowing and low net mortgage lending, although new mortgage lending is holding up fairly well,” he added.

The BBA explained that unsecured lending by its members – such as on credit cards, overdrafts and bank loans – had been flat in March, with no increase in the amount outstanding.

“Demand for unsecured borrowing remains subdued, despite stronger reported retail sale volumes in March, suggesting that cash, not credit, is being used for spending,” the BBA said.

Millions of homeowners will be [...]]]> Mortgage interest rates have been held at a record low for 25 months now- should you fix your rate or stick on a variable rate?
With the Bank of England’s Monetary Policy Committee voting on interest rates many think that it is a question of when, not if, rates will go up.

Millions of homeowners will be affected when they do change- and they have to decide if switching to a fixed rate deal would be a better option.

About 69% of people with mortgages are on variable rates, according to industry figures.

That means many of them, who are enjoying unusually low monthly payments now, could be affected immediately when interest rates do rise.

With predictions that the base rate will be at 2% by the end of 2012, maybe rising to 3% after that.

The biggest benefit of switching to a fixed-rate mortgage is that it gives you peace of mind. You know exactly how much you need to pay each month, and so you can budget accordingly.

However it might not be the cheapest option.

Many companies charge expensive fees for swapping from one mortgage deal to another and the new rates are not always particularly attractive.

So the fixed-rate deal would not save them any money until base rate had gone up several times, to 1.75%.

Home-owners could in fact find it difficult to switch to cheap fixed-rate deals.

The best ones are only available for people who can pay big deposits, or have large chunks of equity in their homes.

Here are some steps you can take to boost your chances of getting the best possible rates.

• The first thing to do is overpay. Reduce the amount you owe as much as possible.

• Check your credit history, make sure there are no mistakes on there.

• Pay any debt you have. So, if you’ve got any debts on your credit card, pay that down first.

Chancellor George Osborne said in [...]]]> Business Secretary Vince Cable has said tax on high value properties may have to rise – if the 50p tax rate is axed.
Nick Clegg told the Financial Times it would not be a return to the Lib Dem “mansion tax” policy but could include looking at council tax or stamp duty.

Chancellor George Osborne said in the Budget that the 50p rate would be temporary but the government would look at tax on “very high value” properties.

Mr Osborne said high personal tax rates “crush enterprise, undermine aspiration and often undermine tax revenues as people avoid them”.

Mr Cable said he agreed with the chancellor that the government had to move away from “extremely high rates of tax on income” if it turned out to be “counter-productive”, but at a time when people were suffering hardship that tax had a “political purpose”.

There was a “strong argument” for having a “proper base for taxing property”, he said.

In the Budget, Chancellor George Osborne said he agreed with his Labour predecessor Alistair Darling, who introduced the 50p tax rate, that it should be temporary – but now was not the right time to remove it.

He said he had asked HM Revenue and Customs to look at how much it was actually raising, but said the wealthiest should pay more and the government would be “redoubling our efforts to find ways of ensuring that owners of high value property cannot avoid paying their fair share”.

A Treasury spokesman said the chancellor had been referring specifically to tax avoidance and evasion, and not to new ways of taxing property.

In 2009 while in opposition, Mr Cable conceded that he should have consulted more widely in his party after his “mansion tax” proposal for a 0.5% charge on properties worth more than £1m prompted criticism from some fellow Lib Dem MPs.

The party later raised the threshold to £2m, a policy which was in the Lib Dem manifesto last year.