A Slow Down in Mortgage Rate Rises?

The theme for much of the latter half of April and the beginning of May was one of continued mortgage rate rises and the threat of an increased number of households faced with a significant increase in monthly payments. The knock on effect that this had would conceivably leave more households in the so called ‘mortgage trap’; unable to afford higher payments but not in a position to switch lenders as they were unable to meet stricter criteria.

However, there are suggestions within the industry today that the mortgage hikes may soon be coming to an end and Ray Boulger, senior technical manager at mortgage lender John Charcol leads the voices making this suggestion.

“I think that this upward rate movement that we have seen, we are probably fairly close to the end of that,” Mr Boulger said.

“We have seen over the last two months or so, a series of lenders continuing to push rates up – typically only by ten or 20 basis points at a time, but it is a steady increase – and most lenders have increased their rates several times over the last few months simply to try to stem the flow of business,” he added.

The reaction came after several weeks of mortgage rate hikes which have been tempered to some extent by cuts from some lenders. The overall picture tends to balance itself out, although that may not be welcome news for those in the ‘mortgage trap’ who have suffered at the hands of a recent increase.

“We are now coming to the stage where we are seeing some lenders put rates up but some lenders cut them, whereas a few weeks ago nearly all the rate changes were upwards,” Mr Boulger added.

“So there are signs that this upward movement in fixed-rates is coming to an end.”

The reaction comes in reply to a survey from Which? that pointed to worrying signs in the housing market with significant percentages of property owners facing difficult periods if their lenders were to increase their monthly payments. That survey showed that 70% of people interviewed held fears of prospective interest hikes while 14% were already having difficulty in paying their mortgage.

Elsewhere, monthly figures released by Nationwide claim that property prices fell by 0.2% in April and are now 0.9% down from the same period last year.

Overall, this may point to mixed news depending on where you are in the property chain. For first time buyers it suggests that this is a good time to get onto the ladder but if your variable rate is increasing and you can’t switch lender, news of impending cuts will come as little consolation.

Latest Which? Survey Reveals Mortgage Concern

In recent weeks there have been many reports of lenders increasing their mortgage rates and there has been plenty of additional discussion about the impact that this may have. Results of a survey from Which? have just been released that highlight consumers concerns over the hike in their monthly charges.

Amidst reports that over a million customers would be facing a collective rise of £300m in mortgage payments, the organisation found that of those surveyed, 70% of mortgage holders are concerned about monthly increases while 14% declared that they were already struggling to meet higher payments.

Which? claim that those worst affected can be put into the bracket known as ‘mortgage prisoners’ – those who are not able to move to another lender for whatever reason.

Of those people surveyed, 41% said that if their mortgage were increased by £50 a month then they would have to cut back on regular household essentials such as food with 11% stating that they simply wouldn’t have enough for the vital areas of the family budget.

The percentages continue to increase in line with potential higher payments and for anyone facing a £100 a month rise, 11% said that they would simply be unable to pay their mortgage.

Which? went on to find some worrying statistics with regards to those already facing up to mortgage debt. The organisation found that an encouraging amount of people in this situation had already contacted their lender but very few were being met with any real help.

“Our advice to anyone struggling with their mortgage repayments is speak to your lender straight away.  It is encouraging that a third of people we spoke to had approached their lender, but, worryingly, in one in five cases, they said their lenders offered no help at all,” said Peter Vicary-Smith, Chief Executive of Which?

“This is just not good enough and we want to see banks do more to help their customers who are struggling. These SVR rises are the consequence of the lack of competition in the market and the failure of the Government to take action to promote competition.

“This is why the new financial regulator, the FCA, needs to be a watchdog not a lapdog. It must stand up for consumers and stand up to the banks.”

This ‘Watchdog not Lapdog’ campaign that Mr Vicary-Smith referred to wants lenders and the FCA to protect their customers against unjustified rate rises and ensure that they are offered options of fixing payments at a reasonable level. Which? also wants lenders not to take advantage of those who are unable to switch mortgages.

DIY Tasks to Tackle This Bank Holiday Weekend

The Bank Holiday weekend is almost upon us and a survey carried out by HSBC suggests that over 50% of us will be staying at home to carry out some of those DIY jobs that we’ve been putting off since the beginning of the year. A significant percentage of those people will be working around the house with a view to selling their property and there are many small and larger tasks that are known to help achieve a quicker sale.

If you believe the weather forecast, we are certainly in line for the type of weather that suits indoor DIY but what are the jobs that will carry most value when it comes to selling your home?

The 2012 HSBC Home Improvement Survey shows a list of jobs that property experts believe will add value to your house, while it also indicates how much importance individual homeowners place on those tasks.

As far as the experts are concerned, de-cluttering space is the most vital job by far with 93% claiming that this task made a bigger impact on potential buyers than anything else. In contrast however, only 71% of property owners felt that this was necessary.

This is just one area where experts and individuals disagree and it shows that there are many popular misconceptions over which jobs are vital to the vendor. It even seems in some cases that property owners are still falling into the clichéd traps of putting out fresh flowers and brewing fresh pots of coffee.

One of the key elements that HSBC stress is the importance of first impressions and there are many jobs that can be done right now that will have a tangible impact on any potential buyer.

“Many householders spend the Bank Holidays on DIY projects to help boost property value and saleability. However it is often the smaller jobs like painting the front door that can make all the difference when looking for a quick sale,” said Peter Dockar, head of mortgages at HSBC.

The front of the property is simply vital in regards to those crucial first impressions so aside from the front door itself, if you have an immediately visible garage door then this should be looked at. Door furniture is important too and if you have tired finger plates and letter boxes, they can be easily and cheaply renewed.

Fences and gates are other areas that experts believe will aid a successful property sale and above all, the HSBC survey highlights the disparity behind those expert views and the ones held by the homeowners themselves.

If you want to achieve a quick sale at a price to suit, the results of the survey should certainly be considered by any vendor.

Typical Spring Bounce But Mortgage Approvals Down

A significant rise in the number of homes sold in the UK was recorded by HM Revenue and Customs (HMRC) in March and they claim that this is largely down to a seasonal ‘spring bounce’ that is evident in the housing market on an annual basis. HMRC also suggest that the Stamp Duty holiday has had an effect on property figures for the earlier part of the month.

HMRC recorded 74,000 sales during March as opposed to 63,000 for the previous month with Gross Mortgage Lending up by 30% over the same period according to the Council of Mortgage Lenders (CML).

This is the third year in a row that housing market activity has increased sharply from February to March but the figures are still some way short of those declared during the most recent housing boom. Sales activity for March 2012 stands at around 50% of the number of transactions recorded in March 2007.

In the meantime, the British Bankers Association (BBA) have produced a set of figures which at first glance seem slightly at odds with the claim that gross lending had risen sharply. The organisation indicated that mortgage approvals slumped alarmingly in March and they now stand at a ten month low.

Approvals had hit a two year high of 37,977 in January but after falling back to 32,840 in February they have dropped further to 31,888 in March. The BBA also point to the Stamp Duty Holiday as a reason for masking some of the figures but Howard Archer of IHS Global Insight fears that these figures indicate a worrisome trend that could lead to a depressed period for the UK housing market.

Moreover, Mr Archer is concerned that news confirming Britain’s return into recession will have severe implications for the property market as a whole.

“The housing market may well be hit by heightened consumer concern over the economic outlook following the news that the UK is officially back in recession with gross domestic product contracting 0.2pc quarter-on-quarter in the first quarter,” Mr Archer said.

“It is also possible that housing market activity and prices will be softer in the near term as a result of the stamp duty concession having brought forward a significant amount of fist-time buyer activity,” he added.

As we’ve seen in recent weeks, the recent Stamp Duty Holiday has been given credit for inflating many of the statistics within the property market within the first three months of this year. It had been widely expected that those statistics would be lower for the rest of 2012 but with consumer uncertainty over the recession, there are clear fears of an alarming slump.

Lenders Succumb to Mortage Rate Rise

Some of the UK’s biggest lenders have announced fixed rate mortgage rate rises this week as they finally succumb to the pressures that funding costs provide. At least ten lenders will have announced their increases by the time April comes to an end making it ever harder to obtain home loans for new purchasers.

The Bank of England has also announced that an average two year fixed interest mortgage backed by a 25% deposit has risen from 2.9% last September to 3.45% in March. However, that September 2011 figure marked an all-time recorded low after this type of funding peaked at 6.35% in 2008.

The Council of Mortgage Lenders (CML) indicate that this latest batch of rises backs up their claims that rates would have to increase because funding costs meant that the current low levels were unsupportable.

“Funding costs have been experiencing upward pressure for lenders, who have been operating at low margins,” said Sue Anderson of the CML.

“So at some point lenders will take the decision to raise rates for good balance sheet management,” she added.

The market seems to be experiencing a typical ‘reverse domino’ effect with lenders reacting to rises from their competitors and increasing their own rates accordingly.

“Lenders seem to have increased their rates in two stages this week, some at the beginning and the others catching up later in the week,” said Trinity Financials’ Aaron Strutt.

Among those increasing their rates this month are Abbey, Halifax, Santander, Lloyds TSB Britannia, HSBC, and Cheltenham & Gloucester.

“When you take into consideration that some lenders have raised their rates at least twice in the past month, they all add up,” Aaron Strutt added.

The figures also come at a time when certain organisations were pointing to a market dampening and the impact of greater restrictions on lending criteria. At the beginning of March, the Bank of England warned borrowers to expect more difficulty in obtaining finance and that seems to be the case.

The National Association of Estate Agents (NAEA) are also concerned at the moves which they believe will stunt a market which had showed signs of improvement during the stamp duty holiday.

“The recent move by some major lenders to severely limit the availability of interest-only mortgages is no doubt dampening the levels of supply in the market,” said Wendy Evans-Scott of the NAEA.

There have also been rises in the variable rate offered by some lenders and it is widely expected that more will follow the lead of their rivals in the weeks to come.

Interest in New Homes Soars

New homes have been firmly in the news of late with government schemes announced that attempt to encourage construction companies and local authorities to build the houses that will meet demand. Now, as we enter the second quarter of 2012, leading house builder Barratt Homes have announced that they have experienced their busiest start to a year for five years.

The increase in activity began with a vastly increased number of searches on the company’s website back in January and this has subsequently been supported by a rise in visits to new sites and reservations on new properties.

As a result, Barratt claim that some sites are selling homes at twice the national average. The company’s figures have also been backed up by Right Move, who confirm a 27% rise in property searches since the start of the year.

Barratt believe that potential buyers are making their move as they become aware that home ownership is more cost effective than renting.

“We believe that one of the key factors is that savvy customers have worked out it’s now cheaper to buy than rent,” said Lisa Preston of Barratt West Midlands.

“We simply can’t believe how busy we are especially at a time when all you hear in the news is doom and gloom. It just feels like the people of Burton have decided to get on with their lives.”

Lisa Preston also added that she believes people are becoming aware that there may never be a more affordable time to buy their own property.

“In recent years many people have had to put their lives on hold but it seems that they are not prepared to wait any longer,” she added.

“Home buyers have also woken up to the fact that with interest rates low and house prices still some way below their peak, buying is more affordable now than many believe.”

Staying in the Midlands, home builder David Wilson have announced the development of six new sites across Leicestershire as they also start to meet an increase in demand.

“The Prime Minister has said again and again that one of the best ways to boost economic growth and get people working is through building more homes,” said Philip Lacey, David Wilson’s sales director for the area.

Mr Lacey also went on to confirm that over 1,500 jobs would be created for local people as a result.

“In addition to the local construction jobs created in building the new homes, the local people who move into the new housing will also spend their wages locally. This translates into a significant boost for local retailers at a time when concerns remain about the national financial picture. It’s exactly what this area needs,” he concluded.

In the midst of government announcements, the claims from these two home builders may just be tangible proof that the housing market, for new properties at least, may show a marked improvement in 2012.

Thousands Trapped By Generation Rent

In recent weeks and months, much of the focus in the property market has been on rental properties and the constant argument between buying and renting. Recent surveys have indicated that in pure financial terms, renting is actually a better option and other positives continue to be highlighted.

On the downside, we’ve seen a rise in complaints about landlords to the Ombudsman and while it seems that property rental is a growth area, it’s been suggested that it’s not exactly a preferred option and there are many who would rather own their home but are simply unable to do so.

A recent survey was conducted by YouGov on behalf of Countrywide, who include an estate agency, a lettings arm and a mortgage broker within their business and are therefore ideally placed to offer an unbiased view of all sides of the market.

The survey of 18-34 year olds found that 45 per cent claimed that the issue of deposit affordability was the biggest stumbling block to buying a home. More tellingly, of the private tenants surveyed, only 32 per cent declared that they were happy where they were and just 5 per cent of tenants claimed that they were delaying a property purchase because they believed that house prices would fall.

“We see first-hand that mortgage deposit and repayment affordability remain the biggest issues facing homebuyers in the UK,” said Grenville Turner, Chief Executive of Countrywide.

“These findings confirm that we are at a crossroad for homeownership, where we could see the next generation becoming a nation of renters without the right intervention from Government.

Mr Turner went on to claim that movement in the property market was so slow that it could go on to have serious implications for estate agents all over the UK.

“Based on current levels of activity, the average home owner moves house once every 25 years as opposed to once in every 12 years,” he added.

“These levels are unsustainable and we call for further support as a strong, vibrant housing market contributes to gross domestic product growth and will dramatically improve the economy.”

In amongst all of these statistics Countrywide maintain that the desire to own one’s own home remains high right across the UK. Throughout the first few weeks of the year we’ve seen figures released relating to property market activity but we seem set for a long period of stagnation if those potential buyers remain trapped in unwanted rental arrangements.

Empty Homes Charity Helps to Ease the Housing Shortfall

As pressure to address the housing crisis in the UK grows stronger and stronger, new solutions are starting to emerge that could help to ease the strain.  According to UK charity Empty Homes, there are currently 1.7 million families on council housing waiting lists and that figure continues to grow.  The UK population is growing and yet house building rates have not been this low since the 1920s.

It Could Cost as Little as £10,000 to Renovate an Empty Property

New ideas come and go on how to ease this problem, but one idea that can’t be ignored is the idea of reusing the thousands of homes currently standing empty across the UK.  Empty Homes has spent a great deal of time collating local council statistics and estimate there are currently 720,000 empty properties in the UK.  Renovation of each property could cost as little as £10,000.  With new-build homes at an all-time low, this seems like the ideal solution to the shortfall in available housing.

Thousands of Properties Ready to Be Renovated

Often these properties are privately owned or properties that have fallen into disrepair.  Some have been inherited by owners who simply don’t have the resources to renovate the property.  Whatever the reason, it’s apparent that many of these homes could be made habitable for the thousands of families desperate for accommodation and that’s exactly what Empty Homes sets out to achieve.

Empty Homes was first established in 1992.  Over the years they have acted on behalf of those individuals and families desperate for somewhere to live by challenging Government policies and suggesting ways to take advantage of thousands of empty homes.  One of the largest problems faced by the owners of these empty properties is the lack of funds to renovate and repair them.  Empty Homes successfully campaigned for tax-breaks for these owners helping them to raise the funds to make them habitable once more.

Help Empty Homes to Rehome Thousands of UK Families

On a local level, Empty Homes is helping thousands of individuals to bring homes back into use. On a national level, every council in the UK now has a named officer whose responsibility it is to restore empty homes back into habitable condition.  These are just some of the initiatives that Empty Homes has addressed and they plan to continue working with home owners and local authorities to help ease the housing crisis and help the thousands of people desperate for a place to call home.

Empty Homes provides a wealth of free advice and assistance to those looking to renovate an empty property and to those looking to invest in empty property.  You can also report an empty property through their website so they can investigate further.

Rental Demand Continues to Outstrip Supply

Renting is back in the spotlight this week with the news that more and more homes are being put on the private rental market by owners who simply can’t sell their properties. However, it seems that despite this increase in available homes, demand in the rental sector is still outstripping supply by some considerable margin.

The findings have come from the Association of Residential Letting Agents (Arla) who have noted a significant increase in rental properties that have come on to the market as a result of this scenario.

However, in many cases, the homes remain on the market and this could prove a problem for anyone renting and looking for a long term arrangement.

“Renting is often seen as a low-hassle, lower risk option when compared to purchasing a home, yet many people find the prospect of renting a home daunting, whatever their age or experience,” said Ian Potter, Operations Manager at Arla.

“First time tenants – young or old – should remember to keep the process as focussed and simple as possible. Keeping to some simple guidelines can help tenants navigate the process from property hunting to signing a tenancy agreement.”

The organisation has gone on to provide a series of tips for anyone renting for the very first time and these can be found in full at the website – www.arla.co.uk.

Included in the advice is a tip to research your postcode, which has a great bearing on the price you can expect to pay. Sometimes, even moving a mile away from a certain location will have a favourable effect on your monthly charge so remember to ask a letting agent for advice.

Arla also advise that the lettings industry is unregulated and at present, agents do not have to subscribe to an Ombudsman scheme. However, looking for an agent that is Arla affiliated will help to give you peace of mind.

You should also make sure that your deposit is safeguarded. This is a significant outlay for tenants and by securing it in a scheme such as TDS (the Tenancy Deposit Scheme) you can help to safeguard your money.

Arla also advises to get a proper inventory drawn up and agreed when you move in. This will identify any damage to the home – and its contents if you are renting furnished and will prevent any problems when the time comes to move out again.

Full details of this advice can be found on the Arla website and if you are renting for the first time, it makes sense to follow them and be sure of what you are entering into.

Estate Agents Can Survive the Downturn

The housing market is unsettled at best and among the victims of the current property climate are Estate Agents. In March, the Times newspaper revealed that 80 agents had closed their doors in February of this year due to low sales volumes and the increased costs of running their business in the first place.

That would tend to indicate a gloomy outlook for Estate Agents as a whole as we enter the second quarter of the year but  Richard Murray from Eurolink technology limited – a market leading consultant to agents in the UK believes that if businesses are pro-active, they can deal with the current situation and stave off the threat of closure.

“The screws are tightening and estate agents who can’t run a tight ship are sadly diminishing,” Richard Murray warned.

“We are often called in to estate agencies to find solutions to cutting costs and increasing productivity and we find that simple changes can make a huge difference.“

As they continue to provide assistance to help agents thrive in the current market, Eurolink have issued a list of top ten tips for an efficient and cost effective property business.

1. Automation: Streamline your processes, in particular, the repetitive manual ones which take up valuable time that is better spent on negotiating and closing deals.

2. Setup a solid IT infrastructure: Ensure your systems are functional, reliable and easy to navigate and that staff are well trained in using them.

3. Maintain a dependable IT support network: Use a reputable IT support provider to ensure consistently quick access to data and to prevent being caught out when systems go down.

4. Keep staff knowledge up to date: Provide regular training sessions and news updates for staff, advising them of new legislation changes, local events and your key point of difference from local competitors, and how these might affect business practice and your varied client base.

5. Customer Relationship Management: Ensure that your software application can deliver all of the relevant contact information for every individual client you deal with. Understanding who the person is and what they mean to your business will ensure that all potential opportunities can be explored.

6. Integration: Utilise one software system for both estate and lettings work. This allows for the cross sharing of customer data, reduced data storage and is cost effective (you only pay for one license, one technical support team etc.)

7. Familiarity: Implement a software system that is familiar to your staff, as a complicated and unfamiliar interface will make adoption difficult. A product like the Veco-onesystem™ which appears similar to Microsoft Outlook allows for easy navigation and will mean staff take less time to embrace the latest and most innovative technology.

8. Organisation of data: A complete software solution allows your business to free itself from the restraints of filing cabinets and storage units and is also environmentally friendly.

9. Streamline customer communications: Link your network phone system to your software solution to enhance customer communications by delivering a fast and knowledgeable service.

10. Security: Store data in a secure software storage facility. Information can still be easily accessed by authorised staff, and access can be monitored.

By following these tips, Eurolink are confident that any agency can thrive through the harshest of market conditions.

“Your offering needs to provide more for less – that is, less cost to you, the business and less cost to the customer,” Richard Murray added.

“Innovative technology can improve business decision-making and, ultimately, customer service, which is one of the benefits of IT advances of the last few decades.”