by admin | Jan 15, 2021 | Mortgage News
COVID19 is battering the economy. Brexit has happened. There is no telling what 2021 will bring and yet the housing market is forging ahead. According to the Halifax House Price Index average house prices have increased 7.6% in the year to November and 1.2% between October and November. This begs the question of why house prices are rising.
The Stamp Duty holiday
Possibly the most obvious reason why house prices are rising is the Stamp Duty holiday. Quite simply, by making most buyers pay less to HMRC, the Treasury left them with more budget available for the offers themselves.
If this is the only factor driving the housing market, then its effect should begin to wear off very soon. The offer is due to come to an end on 1st April 2021. That’s basically for three months. What’s more, the Stamp Duty holiday only applies to purchases completed before that date. In other words, the conveyancing has to be finished.
The great escape to the country
The great escape to the country may be a bit of an overstatement. There is, however, clear evidence that home buyers want more space. On a like-for-like basis, bigger properties tend to cost more than smaller ones, hence average house prices could rise, possibly substantially, at least over the short term.
Over the long term, however, there are a lot of variables to consider. One of the most obvious is the question of what happens with smaller properties? If their owners hold on to them, then the strong house price rises could continue, fuelled by the sale of the larger properties.
If, however, their owners lower the prices to get rid of them to someone, then prices could level or even fall. A lot would depend on how many smaller properties were sold and at how much of a discount to what you would expect given pre-COVID19 housing trends.
The remote working issue
The question of whether or not the appetite for more space continues may depend largely on the question of whether or not remote working becomes an established part of the (post-COVID19/post-Brexit) “new normal”.
At present, this is literally anybody’s guess. It is, however, worth noting that COVID19 has forced companies to support remote working. This demonstrates that it can work at least to some extent. The question is, therefore, really whether or not companies see any benefit to it once the current pandemic is consigned to the history books.
The answer to that question is likely to be “it depends on the company”. Some companies may be only too eager to get their staff back into the office. Others, however, may be looking at the cost-savings of reducing their office space and the opportunities offered by being able to extend their recruitment process beyond their local area.
Seizing the moment
Another possible reason why buyers are so active now is that they don’t know for sure what’s going to happen in the future. Since March 2020, the UK has essentially been in various stages of lockdown in various parts of the country. Buyers (and sellers) might have been motivated by the thought that they might not get another chance to move any time soon.
If this is the case then, again, it’s debatable how long this stimulus will last. Up until recently, talk of a vaccine has been largely just that talk. Now, it seems to be making its way into reality. Depending on how this progresses, it may calm the nerves of buyers (and sellers), who fear being trapped in an unsuitable home for another lockdown (or more than one).
Your property may be repossessed if you do not keep up repayments on your mortgage.
by admin | Jan 10, 2021 | Mortgage News
UK Finance recently published its figures for mortgage arrears and possessions for Q3 2020. Superficially, these figures are encouraging. They show a very low level of arrears and possession action. These figures do, however, have to be set in the context of the special arrangements made for COVID19. This raises the question of what happens now?
The numbers in brief
According to UK Finance’s figures, in Quarter 3, 2020, there were 74,850 homeowner mortgages with arrears of 2.5% or more of the outstanding balance. This figure is 5% higher than the figure for Quarter 3, 2019. There were also 5,400 buy-to-let mortgages with arrears of 2.5% or more of the outstanding balance. This figure is 19% higher than the figure for Quarter 3, 2019.
Repossessions were made on 160 homeowner mortgaged properties and 230 buy-to-let mortgaged properties. This was 88% and 71% lower than the figure for Quarter 3, 2019. As Quarter 3, 2020 was a period in which there was a moratorium on involuntary possessions, it is to be assumed that either these repossessions were by agreement or that the property was already vacant (or both).
The COVID19 situation
Since March 2020, it has been possible for mortgage holders affected by COVID19 to request payment holidays. As the rules currently stand, borrowers are automatically granted payment holidays of up to six months on a self-certification basis. After this time, they must either resume payments as normal or work with their lender to find an alternative solution.
There are two points which are particularly worth noting. Firstly, these payment holidays should not result in negative markers being placed on a borrower’s credit record. Secondly, lenders can continue to apply interest to the account during the holiday period. This means that the result of taking a holiday is that a borrower’s overall balance is raised.
A small win for mortgage prisoners
On a more positive note, the wheels appear to be finally turning for the UK’s mortgage prisoners, although there is still a long way to go before they are freed from their chains. The FCA now allows lenders to use “modified affordability assessments” for qualifying mortgage prisoners. This is by no means all of them but it is at least a start.
Unshackling mortgage prisoners should be a win for everyone. The former mortgage prisoners win from being able to switch to better (i.e. more affordable) deals. The fact that these deals are more affordable should reduce the risk of default, thus being a win for lenders.
The way forward
At some point, the government will have to end the special measures put in place to support those impacted by COVID19. The only questions are when this will happen and how it will happen. In particular, will all measures be ended completely at once or will they be phased out slowly? If the latter, how slowly will they be withdrawn?
Either way, it seems fair to assume that the extent to which the UK’s mortgage market returns to “business as usual” will depend greatly on the extent to which the UK’s economy returns to “business as usual”. This means not just recovering from COVID19 but also adjusting to Brexit. The speed with which this happens may vary greatly from one industry sector to another.
In the short term, lenders may have to show a lot of flexibility to borrowers while they figure out the best path forward in their own unique situation. For example, lenders may have to start allowing greater use of interest-only deals to allow existing homeowners either to make up lost income or to sell their property on their own terms.
Your property may be repossessed if you do not keep up repayments on your mortgage.
by admin | Dec 11, 2020 | Mortgage News
By this point, everyone probably knows to make sure a house looks good before a potential buyer comes to view it. For most rooms, it’s enough to make sure that surfaces are clean and everything is tidy. Some rooms, however, need more attention. The bathroom is obviously one. It may, however, be less obvious that your kitchen is another.
The power of smell
Contrary to what is often suggested, it’s actually a bad idea to try to entice home viewers with scent. The problem with this approach is that scents are very personal. This means that even popular scents, like citrus, will be disliked by some people. It would be very unfortunate if a potential buyer was one of those people.
Instead, you should be aiming for a neutral smell, a lack of odour. This can be harder to achieve than it sounds, especially in a kitchen. A kitchen is, of course, a place where you prepare food and some foods smell. Hopefully, it’s obvious that you should be emptying your bins regularly (and cleaning them too). You also need to deal with your appliances.
Cookware store Oliver’s Kitchen ran a survey on the UK’s kitchen cleaning habits and discovered that 48% of people don’t clean their fridge regularly, 69% of people don’t clean their oven regularly and 82% of people don’t clean their microwave regularly. If you’re trying to sell your house, you need to clean all of these appliances properly, along with your hob and freezer.
Don’t make your buyers sick
With all the focus on COVID19, it can be worrying easy to forget that there are many other health and safety issues to consider. The kitchen is a potential hotspot for all kinds of bacteria. Anything a buyer could potentially touch (or brush past) could transfer those bacteria to them. If this makes them ill, it could put them off buying your house.
The key point to note is that cleaning only makes a real difference if your cleaning tools are clean themselves. This may sound like stating the obvious, but the results of the Oliver’s Kitchen survey indicate that the obvious is being widely ignored. For example, 64% of respondents admitted that they didn’t wash/change their kitchen dishcloth/sponge regularly.
Unless you use hygienically clean tools the most you will do is move bacteria from one place to another. This is basically asking for trouble at any time. For completeness, hand-washing is also important, especially in the age of COVID19. If you’ve never learned about proper hand-washing technique, now is a great time to do so.
Keep out uninvited visitors
One of the great advantages of selling a house in winter is that you’re much less likely to need to deal with insects. This includes ants as well as the flying sort. Other kinds of uninvited visitors, however, can stick around over the winter months. In fact, they may find your kitchen a very appealing place to spend at least some of their time.
Even if they’re not around when your visitors appear, they can leave little traces behind. These aren’t exactly a positive sign for house viewers. What’s more, if you know you have a pest issue, then you may have to declare it or risk potential legal issues further down the line. The good news is that even in winter, most pests will stay away unless you encourage them.
The easiest way to encourage unwanted visitors is to make food available to them. This is why kitchens are such likely targets. It, therefore, follows that the easiest way to deal with this is to make sure that all food is always kept stored away unless it is actually being prepped.
If you need mortgage advice please contact us.
by admin | Dec 6, 2020 | Mortgage News
Since 2001, the UK has had no fewer than 16 housing ministers. Seven held the post under a Labour government. Nine have held the post under a Conservative government. None have succeeded in resolving the many issues with the UK’s housing market. Now it’s Boris Johnson’s turn to try.
A conference to remember
Even though the Conservative party conference is an annual event, the 2020 conference will probably go down in history as an event to remember. It was the first time the conference had been held virtually. The reason it was held virtually was due to a global pandemic and, of course, it was the last Conservative party conference before Brexit.
It was therefore entirely understandable that the Prime Minister would use the occasion to try to spread at least some cheer and general positivity. One of the ways he did this was by setting out a plan to convert the current under 40s from “Generation Rent” to “Generation Buy”.
The Prime Minister’s plan is thin on detail
At present, there is virtually no specific information available about the PM’s intentions. All he has said is that he intends to make it possible for first-time buyers to buy homes with only a 5% deposit. This statement in itself is rather odd because it is already possible for them to do so via the existing Help to Buy Equity Loan scheme.
As a quick reminder, this was due to have been closed at the end of March 2021. It has, however, been officially extended to the end of March 2023. It will, however, only be available to first-time buyers. There will also be some adjustments to the level of help available. The fundamental mechanics of the scheme will, however, remain the same.
To recap, under the existing Help to Buy Equity Loan scheme, buyers put down a 5% deposit. The government guarantees 20% of the remainder so the buyer only needs a mortgage for the remaining 75%. The government loan is interest-free for five years. After this time, the buyer can either buy them out or pay interest on the loan.
Help to Buy Equity Loan Part 2?
If Boris Johnson simply meant to extend the existing Help to Buy Equity Loan scheme without any changes, then presumably he would just have said so. This suggests that, while the basis of the idea might be the existing Help to Buy Equity Loan scheme, there are going to be some changes to it.
The risks of extending the Help to Buy Equity Loan scheme
Extending the Help to Buy Equity Loan scheme to include completed property might placate those who object to homebuilders profiting from the taxpayer. It would, however, create additional risks, which could rebound on the taxpayer.
The first risk is the risk of creating a housing bubble, or, at the very least, creating excessive house-price inflation. If it does, then there are massive risks to everyone, including, possibly especially, the next generation of first-time buyers.
The second risk is the risk of default. Quite bluntly, the Help to Buy Equity Loan scheme does not make housing more affordable by making it less expensive. It makes it more affordable by restructuring the financing. It also puts the taxpayer on the hook for much of the risk of default on that financing.
Your property may be repossessed if you do not keep up repayments on your mortgage.
by admin | Nov 29, 2020 | Mortgage News
Regardless of whether you’re buying or selling, there’s no time to lose if you want to make the most of the Stamp Duty holiday. If you’re doing both, then there’s definitely no time to lose. Being organised is always a plus in the property market. Right now it’s vital. Here are some tips to help.
Sellers should get their paperwork organised
This is a good move at the best of times. This year, it could literally make the difference between making a sale and seeing a buyer move on to another property. The SDLT holiday is due to close at the end of March 2021. That is not long to see a property transaction through from marketing to completion at any time, let alone during COVID19 and the festive season.
There is always a possibility that the Stamp Duty holiday will be extended. This is, however, very unlikely. Quite bluntly, the government is likely to want to get the tax revenue flowing again as quickly as possible. Astute buyers will be well aware of this and will therefore be looking to work with motivated and organised sellers.
Buyers could start looking while being approved for a mortgage
These days, the standard advice to buyers is to get preapproved for a mortgage before they put in an offer on a house. In principle, this advice still holds. In practice, when a clock is ticking, you need to get moving. This means that, for once, it probably wouldn’t hurt to get busy house-hunting at the sale time as you are sorting out your mortgage pre-approval.
In fact, this could be essential to beating the Stamp-Duty-holiday deadline. Keep in mind that the Chancellor’s move has created a huge demand for property. This means a huge demand for mortgages. Processing mortgage applications is skilled work, so the lenders cannot just ramp up their staff. If anything, the process will be slowed down because of COVID19.
Buyers need to be realistic about their mortgage prospects
It’s generally advisable to be realistic about your mortgage options. If you’re planning on house-hunting before you’ve been officially approved for a mortgage. Apart from anything else, currently, sellers can expect to have competing offers. Given that many sellers are also buyers themselves, they’ll probably be keen to choose a buyer who can complete quickly.
There are three key factors which will determine how much of a mortgage you are likely to be offered. These are your credit score, your deposit and your income. At this stage, there isn’t likely to be much you can do to improve your credit score. You should, however, still check it, partly so you know what it is, and partly to make sure that it is free of errors.
Make sure you understand each lender’s policy on deposits. Specifically, you will need to know the minimum deposit they will accept and if they have any rules on gifting. Also, be clear about the fact that your headline income is only an indication of your ability to service a mortgage. Lenders need to look at the issue of affordability in a much greater level of detail.
It’s advisable to choose a conveyancer before you find a house
Conveyancers are also experiencing a surge in demand due to the Stamp Duty Holiday. As with mortgage-application processing, this is highly-skilled work. It cannot just be passed off to temps. An efficient conveyancer can make a buyer’s life much easier so it’s important to choose one wisely and to be prepared to pay for quality service.
Having your conveyancer lined up in advance means that you can move as soon as you find the right property. This could make the difference between making the Stamp-Duty-holiday deadline and losing out on it.
Your property may be repossessed if you do not keep up repayments on your mortgage.
by admin | Nov 20, 2020 | Mortgage News
If you’ve paid attention to the internet, you might already have suspected it. Now it’s been confirmed by a study of 2000 UK adults carried out for online lettings agent Mashroom by OnePoll. “Gen Z” (18-24-year-olds) really are the most house-proud generation alive today.
Almost half of Gen Z renters have asked to make improvements
Even though 32% of landlords said that they had already made improvements to their properties, almost half of Gen Z renters wanted to improve them even more. They asked their landlord’s permission and presumably paid for the changes themselves.
The survey does not say what kind of improvements were requested. Given that renters are unlikely to spend money on making changes they cannot reverse easily, the likeliest options are painting/wallpapering, drilling holes in walls (to make use of vertical space) and perhaps changing accessories such handles, knobs and possibly even taps.
As many an internet article shows, these are the sorts of changes which can make a real difference to the look and feel of a home. At the same time, they’re easy to undo when you move. What’s more, if you invest in hardware, you can often reuse it or sell it on to someone else.
61% of 18-24s will update their home decor over the next year
Gen Z also led the way in updating home decor. No less than 61% of 18-24s are planning to update their home decor within the next year. That’s more than any other generation, even though Gen Z are often on the tightest budgets. This figure may have been pushed up as a result of lockdown, but so then, presumably, would the figures for other generations.
If you’ve been paying attention to the internet, you may not be surprised to hear that over a third of Gen Zers year for a modern, tidy look. Admittedly, this is not exactly the same as being minimalist. It does have to be said, however, that social media trends indicate that minimalism is still very much a strong force amongst the younger generation.
This may be a case of making a virtue out of necessity. Homes are getting smaller and Gen Zers are likely to live in particularly small homes. What’s more, younger people tend to be more geographically-mobile than older ones. Having minimal baggage helps to reduce the stress of moving. It can also give a sense of freedom in uncertain times.
Younger people want more space indoors and outdoors
What may come as a surprise is that even though Gen Zers are fairly minimalist and tidy in a lot of ways, they still want more space indoors and outdoors. Almost a third of them want a study at home, 38% want a bigger garden and 21% want a vegetable patch. Interestingly, these results are in line with other generations and other surveys.
On the other hand, these results may be far less surprising when taken in the context of the year 2020. Unprecedented numbers of people have been working from home. As has been widely pointed out, a person’s experience of home-working will often depend greatly on the quality of their home-working environment. This has already been leading to a “flight from the city”.
Similarly, other surveys have shown that the lockdown has given us all a greater appreciation of green spaces, both private and public. Having a garden brings green space, literally, to our doors. Having a vegetable patch makes it possible for us to grow our own food. These are considerations for all generations.
It’s also worth noting that Gen Zers tend to have a high level of consideration for the environment and sustainability. Growing your own food is also very much in line with this.
It’s worth bearing this in mind when selling to a first time buyer.
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