U.K. mortgage approvals rose for the first time in four months in March as the effects of the worst cold snap in three decades and higher taxes on property sales faded.
The Centre for Economics and Business Research said yesterday that house prices will extend their recovery this year as low borrowing costs and the shortage of homes support the property market. Today’s report comes as Prime Minister Gordon Brown battles to stay in office two days before the May 6 general election.
“Housing activity may be starting its slow upward grind,” said Philip Shaw, chief economist at Investec Securities in London. “It’s nothing spectacular, but it does confirm the economic recovery is gaining ground and some traction.”
The pound stayed lower against the dollar after the report and was down 0.3 percent at $1.5202 as of 12:19 p.m. in London.
‘Stabilize’
Brown’s government is trying to help potential homebuyers in the run-up to the election. It scrapped a tax on house purchases for first-time buyers spending less than 250,000 pounds in its budget in March. The prime minister said on April 21 that he expects house prices to “stabilize” on increasing demand from such buyers.
Banks have squeezed credit to help rebuild balance sheets after the financial crisis, making it harder for potential homebuyers to get mortgage loans. The number of Britons seeking a property for the first time has fallen to the lowest in almost two decades, London-based GfK NOP said on April 21.
Today’s mortgage approval figure compares with a low of 26,600 at the trough of the financial crisis in November 2008, though it’s still less than half the 120,000 recorded at the peak of the boom.
Recent data paint a mixed picture of the housing market. Hometrack Ltd. said on April 26 that prices rose last month at the slowest pace since January as the supply of homes for sale picked up. A separate report by Nationwide Building Society said values jumped as much as twice as economists forecast.
Consumer Debt
Today’s Bank of England report showed that households added to their unsecured debts in March. Net consumer credit rose by 325 million pounds. Economists predicted a 400 million-pound increase, according to the median of 18 forecasts in a Bloomberg survey.
Credit-card lending increased by 190 million pounds, while personal loans and overdrafts rose by 135 million pounds.
A measure of M4 money supply that the bank uses to assess the effectiveness of its asset purchases rose 5.9 percent on an annualized basis. The gauge excludes financial companies that specialize in intermediating between banks, such as holding companies and non-bank credit grantors.
Source (Bloomberg)
Standen Homes are housing developers in the Nottingham area with fantastic new housing develoments in Mapperley, Nottingham
Sunday, 25 April 2010
Tuesday, 20 April 2010
Mortgage exam 'needed for first-time house buyers'
Mortgages should only be given to some first-time buyers "after study and an exam", according to the chairman of a debt charity.
Home loans should be sold with a health warning, not tax breaks, said Malcolm Hurlston of the Consumer Credit Counselling Service.
Those who had bought a home too soon were most likely to get into debt, he added.
Inspiration could come from pre-buying education in the US, he said.
'Trap'
In a speech to members of the credit industry, Mr Hurlston said that the credit crunch had changed the financial system.
But he added that some lessons had not been learned for first-time buyers - many of whom found that home ownership was a "trap".
"The people most likely to get into debt in Britain are those on low incomes who have wrongly or too soon embarked on home ownership," he said.
"Think Northern Rock. Was it not apparent to everybody here that 110/120% mortgages, some partially disguised as unsecured, were dangerous madness?"
He added that some form of tuition should be considered for those on low-incomes getting a mortgage for the first time.
"First time mortgages should be sold not with pretty ribbons and tax breaks but with health warnings," he said.
"They should be sold like driving licences, after study and an exam."
US model
He called for the City watchdog, the Financial Services Authority, to supervise all first mortgages, and for home ownership certificates for anyone buying a first house.
Mortgage applicants in the UK do face some scrutiny
He pointed to a federal mortgage programme in the US for those on low incomes.
Those who apply for the loan can also get free or low-cost advice on buying a home, renting, default, repossession and credit issues.
In 2007, about 1.7 million individuals and families in the US received housing education and counselling, with the numbers growing since the early 1990s, the CCCS said.
Sue Anderson, of the Council of Mortgage Lenders, said that lenders would consider the comments as an interesting perspective.
She said there was a case for strengthening general guidance on credit, so that potential buyers could equip themselves with the appropriate information.
But she said this raised questions on whether this was what consumers wanted, and whether it would make a difference in the numbers getting behind on their mortgage payments.
She added that most people who got into trouble did so because of a change in their circumstances, such as losing their job.
A separate report by the National Landlords Association found that the lack of mortgages for first-time buyers, as well as the demand for higher deposits from lenders, meant that would-be buyers would rent for longer.
Source (BBC News)
Standen Homes are developers of new homes in the Nottinghamshire area with a selection of fantastic new homes in Mapperley, Nottingham
Home loans should be sold with a health warning, not tax breaks, said Malcolm Hurlston of the Consumer Credit Counselling Service.
Those who had bought a home too soon were most likely to get into debt, he added.
Inspiration could come from pre-buying education in the US, he said.
'Trap'
In a speech to members of the credit industry, Mr Hurlston said that the credit crunch had changed the financial system.
But he added that some lessons had not been learned for first-time buyers - many of whom found that home ownership was a "trap".
"The people most likely to get into debt in Britain are those on low incomes who have wrongly or too soon embarked on home ownership," he said.
"Think Northern Rock. Was it not apparent to everybody here that 110/120% mortgages, some partially disguised as unsecured, were dangerous madness?"
He added that some form of tuition should be considered for those on low-incomes getting a mortgage for the first time.
"First time mortgages should be sold not with pretty ribbons and tax breaks but with health warnings," he said.
"They should be sold like driving licences, after study and an exam."
US model
He called for the City watchdog, the Financial Services Authority, to supervise all first mortgages, and for home ownership certificates for anyone buying a first house.
Mortgage applicants in the UK do face some scrutiny
He pointed to a federal mortgage programme in the US for those on low incomes.
Those who apply for the loan can also get free or low-cost advice on buying a home, renting, default, repossession and credit issues.
In 2007, about 1.7 million individuals and families in the US received housing education and counselling, with the numbers growing since the early 1990s, the CCCS said.
Sue Anderson, of the Council of Mortgage Lenders, said that lenders would consider the comments as an interesting perspective.
She said there was a case for strengthening general guidance on credit, so that potential buyers could equip themselves with the appropriate information.
But she said this raised questions on whether this was what consumers wanted, and whether it would make a difference in the numbers getting behind on their mortgage payments.
She added that most people who got into trouble did so because of a change in their circumstances, such as losing their job.
A separate report by the National Landlords Association found that the lack of mortgages for first-time buyers, as well as the demand for higher deposits from lenders, meant that would-be buyers would rent for longer.
Source (BBC News)
Standen Homes are developers of new homes in the Nottinghamshire area with a selection of fantastic new homes in Mapperley, Nottingham
Friday, 9 April 2010
Will the stamp duty cut invigorate the property market?
The recent stamp duty break introduced by the government was supposed to get more budding first-time buyers into the market, but not everyone believes it is actually working.
The British Property Federation (BPF) says it believes the problems faced by first-time buyers cannot be solved by freezing stamp duty.
"'The affordability of properties isn't determined by how much they cost or how much you can shave off stamp duty, it's by how well you can get your hands on finance," says the BPF's spokesman Andrew Teacher.
"So if you can't get hold of a mortgage, if you can't raise the deposit you need to get that mortgage, then the property is still unaffordable whether stamp duty is 1% or 5%."
Two year freeze
Stamp duty is a tax which is calculated as a percentage of how much the property is bought for.
Before the change last month, a first-time buyer, like all others, would have paid 1% in stamp duty on a property worth up to £250,000.
But from now until 25 March 2012, they will not have to pay the tax on properties up to that value.
The move is meant to encourage more new buyers to take that first step onto the housing ladder.
Industry experts like Melanie Bien from Savills Private Finance think it is working.
"I think already it's having a huge impact on the number of first-time buyers coming into the market, just looking at what is around at the moment," she says.
"It's a really nice bonus for someone who already has a deposit and can afford the mortgage.
"It saves up to £2,500, which they can spend on anything really - home improvements, the move or new furniture," she adds.
Source (BBC News)
The British Property Federation (BPF) says it believes the problems faced by first-time buyers cannot be solved by freezing stamp duty.
"'The affordability of properties isn't determined by how much they cost or how much you can shave off stamp duty, it's by how well you can get your hands on finance," says the BPF's spokesman Andrew Teacher.
"So if you can't get hold of a mortgage, if you can't raise the deposit you need to get that mortgage, then the property is still unaffordable whether stamp duty is 1% or 5%."
Two year freeze
Stamp duty is a tax which is calculated as a percentage of how much the property is bought for.
Before the change last month, a first-time buyer, like all others, would have paid 1% in stamp duty on a property worth up to £250,000.
But from now until 25 March 2012, they will not have to pay the tax on properties up to that value.
The move is meant to encourage more new buyers to take that first step onto the housing ladder.
Industry experts like Melanie Bien from Savills Private Finance think it is working.
"I think already it's having a huge impact on the number of first-time buyers coming into the market, just looking at what is around at the moment," she says.
"It's a really nice bonus for someone who already has a deposit and can afford the mortgage.
"It saves up to £2,500, which they can spend on anything really - home improvements, the move or new furniture," she adds.
Source (BBC News)
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