UK Property Market Strongest for 11 Years

This article by Mark Deans of FX-MM on October 8th, 2013 reveals the study that suggests that the property market in UK is in its strongest for eleven years.

Several of today’s papers carry a story about the University of Newcastle upon Tyne, a member of the prestigious Russell Group of academic institutions noted for their research.

They gleefully point out that, during a rebranding project, the university’s marketers applied for trademarks for alternative new and catchy names. One was “Research University of Newcastle upon Tyne”. Another, perhaps put suggested by alumnus Roger Mellie, was “Central University of Newcastle upon Tyne. Either the marketers at Newcastle have a poor grasp of the Grey Street vernacular or the media have been conned into regurgitating a rumour first attached to Newcastle Polytechnic more than two decades ago.

Whichever is the case, the individuals concerned have neglected their study of history. The same could be said of those who rejoice that the British government’s Help to Buy Scheme is boosting consumer confidence by pushing up house prices. Can it only be six years ago that Northern Rock collapsed because it had helped stoke an asset price bubble by lending money to people who could not afford to pay it back? Last night the Royal Institute of Chartered Surveyors reported that its house price balance had risen from 41% to 54%, its highest level for 11 years. And that was the situation in September; wait until Help to Buy kicks in.

The news has done no harm to sterling though. Coincidentally (for the RICS data were only released at midnight) the pound was the top performer among the dozen most actively-traded currencies yesterday. It was not a stellar performance; sterling’s biggest gain was the three quarters of a cent it won from the Canadian dollar. But every little drop helps fill the bucket and the pound edged higher on all fronts. It was not a busy day in the FX market. Ranges were mostly narrow and the pound’s average gain was a measly 0.2%, equivalent to quarter of a Japanese yen or a third of a NZ cent.

The day’s few ecostats provided little inspiration. Euroland investor confidence deteriorated slightly from 6.5 to 6.1. Euroland gross domestic product (GDP) for the second quarter was confirmed to have expanded by 0.3%. Canadian building permits reversed the previous month’s sharp increase with a -21.2% fall. NZ business confidence improved to 38% and Australian business confidence tripled from 4 to 12. One of the two Chinese services sector purchasing managers’ indices slipped half a point to 52.4.

Ahead of London’s opening Swiss unemployment was boringly steady at 3.2% while retail sales there were up by an annual 2.4%. Germany’s trade surplus was almost unchanged at €15.6bn and France’s deficit was on target at -€4.9bn. There is not much remaining on today’s list, only German factory orders and Canada’s housing starts and balance of trade. Whatever state-sponsored US data there might have been will not appear because of the government shut-down. There is very little on that agenda likely to affect the price of cod, and no reason to expect that today’s FX market will be any more exciting than Monday’s.

Article Source: http://www.fx-mm.com/29638/trading-commentaries/daily-brief-moneycorp/uk-property-market-strongest-for-11-years/

Tips for Buyers to Survive Estate Agent's Tricks

This article by Henry Pryor of theguardian on October 6th, 2013 reveals the guidelines that buyers should follow when dealing with estate agents.

Estate agents are not your friends. They work for the seller and are paid by the seller to get the best deal for the seller.

You wouldn't play poker with all your cards face up on the table, so don't be tempted to explain why you're moving, how much you have to spend (say "we hope that we won't have to spend more than X"), or that you need to be in by January. These will all be used against you when you fall in love with the right home. The agent will know how far he can push you, how little time you have to find something, or that you have already lost out on five other houses and you've threatened divorce if you don't get this one. Don't be panicked into buying and most of all, don't be afraid to make an offer.

Here are my tips for buyers:

■ Agents get paid when deals are done. They are therefore keen to find a buyer who is serious. To make sure you are the first to be called when a new property becomes available, make sure the agent knows you are ready to go. Cash in the bank is better than someone who needs a mortgage. Someone in rented accommodation can move faster than someone with a property to sell.

■ Ignore tempting discounts or incentives to buy a new-build property. If someone is paying your stamp duty or moving costs then it's in the price and you will pay for it over the next 25 years of your mortgage.
■ Confirm every conversation you have with an agent. Viewing appointments, offers made, bids rejected together with the terms of any offer. Agents like people who know what they're doing and you will look like you have bought and sold before.

■ Ignore invitations to rush to see a property or to be panicked into bidding. Fewer than 10% of homes for sale in any one month sell. Proceed in your own time – there are 24m other homes in the UK.

■ Don't get your finance from the selling agent's financial services company. Get a quote, but then discuss it with your own mortgage adviser.

■ Don't assume that the guide price is anything more than an indication of the owner's greed or the agent's enthusiasm to get the job. Be confident and make an offer. A house is worth what you and the seller agree, not what the agent thinks it's worth.

■ Double-check everything you are told. Is it quiet on a Friday or Saturday night? Are there neighbours from hell? Is the road a rat-run and does the roof leak?

■ Don't be fooled into thinking that a bank valuation is for your benefit. It's for the lender and you have no comeback on the surveyor.

■ Don't expect an agent to send you new properties when they are available. Keep in touch, go and see possible properties and look serious. You'll be amazed how much you will learn from frequent contact.

Article Source: http://www.theguardian.com/money/2013/oct/06/tips-buyers-estate-agent-tricks

Home Loans Rocket to a 5-Year High

This article by the Express on October 1st, 2013 shows the confirmation from the Bank of England regarding the rise of mortgage approvals as property market strengthens.

 

Mortgage approvals soared to a five-year high in August as the property market recovery goes from strength to strength, the Bank of England confirmed yesterday.

Lenders approved 62,226 mortgages – up from 60,914 in July and the highest since February 2008.

Remortgages approved also rose to 36,225 – the highest level since February 2011.

Jonathan Hopper, managing director of property search consultants Garrington, said: “The mortgage market is out of the infirmary and running, not walking, back to health.

“The resurgent property market is matching it step for step.

Average prices are on the up in every region for the first time in a long time

Jonathan Hopper, managing director of Garrington property search consultants

“It’s telling that the Nationwide House Price Index is now showing average prices are on the up in every region for the first time in a long time.”

 Article Source: http://www.express.co.uk/news/property/433443/Home-loans-rocket-to-a-5-year-high

First Time Buyers Advised To Focus On Affordability

First-time buyers are advised to make sure to look beyond the property rate even if higher loan-to-value mortgages are back as revealed in this article by TheGuradian on September 15th, 2013.

First-time buyers are flooding back to the housing market as economic conditions improve, alongside fears that low mortgage rates won't last and a fresh housing bubble will push house prices beyond reach.

Mortgage lenders reported a 41% increase in first-time buyer numbers in July, while the National Association of Estate Agents says they account for a quarter of house purchases in August, the highest proportion since July 2010.

However, getting a deposit remains a stumbling block for the majority of those keen to buy. The latest figures from LSL Property Services show that the number of first-time buyers who were able to buy without help from their parents fell to 41% in July, from 51% in April.

House price rises in some areas of the country will lead some to fear that they cannot save at the same rate as prices climb, says David Hollingworth of broker London & Country. "If prices continue to rise, the deposits they have worked hard to amass could be eroded as a percentage of the purchase price."

High loan-to-value (LTV) deals such as Northern Rock's 125% mortgage, viewed by many as fuelling the appetite for credit ahead of the financial crisis, are not back on the shelf. However, lenders have started to offer more deals at higher LTVs, and there are plenty of options for borrowers with small deposits.

According to Moneyfacts.co.uk, there are 409 deals for borrowers with 5% and 10% deposits, compared to 321 in August 2012, and some of the rates on offer at 90% LTV are very competitive.

The lowest rates are available on deals fixed for two years. On Friday, Chelsea building society launched a two-year fixed-rate mortgage at a rate of 3.54% for borrowers with a 10% deposit, with a fee of £1,675. HSBC also offers a two-year fix, at 3.59% at 90% LTV with a £1,499 fee.

However, Hollingworth favours Skipton building society's two-year fix at 3.99% at 90% LTV with £160 cashback. "This deal is a good all round package with a low rate, no fee and cashback on top," he says. "There are lower interest rates on offer from other lenders, but the fees can be high, which will add a chunk to the overall value." Borrowers who can stretch to a 15% deposit could consider the two-year fix from Market Harborough building society at a rate of 2.79% and with a £995 fee. Chelsea also offers a two-year fix at 2.94% at 85% LTV.

A two-year fixed rate could appeal if you want to keep your monthly repayments down, but bear in mind that when that period ends you will move on to your lender's standard variable rate, which is likely to be higher. By that point interest rates may also have risen.

To cement your repayments for longer, there are several five-year fixes, although rates are higher. Nottingham building society offers one at 4.39% at 90% LTV with a £299 fee, while Chelsea offers one at 3.84% with a £1,545 fee. Tesco Bank has a deal at 3.69% with a £1,495 fee, and the Post Office has a rate of 3.75% with a £995 fee, both at 85% LTV.

There is still very little for borrowers who can only stretch to a 5% deposit, Hollingworth says, and rates are relatively high. Newcastle building society, for example, has a two-year fix at 5.99% at 95% LTV with a £195 fee.

Brokers warn that borrowing large amounts at record low mortgage rates may not be wise.

Adrian Anderson, director of broker Anderson Harris, says: "The important thing is not to overstretch yourself. So ask yourself: can you afford the deposit and the mortgage payments? Have you opted for a fixed rate to protect yourself against interest rate rises, if you think they are on the cards?"

Yet before buyers reach the stage of getting a mortgage, a lack of housing supply could cause problems. David Newnes, director of LSL Property Services, says: "Pressure is growing on the government's plans to lend a helping hand to the house building sector, as it needs a bigger lift. There's a lack of new homes being built, and as the number of buyers rises in line with the growing population, competition is getting stronger for the supply of properties."

Article Source: http://www.theguardian.com/money/2013/sep/15/first-time-buyers-focus-affordability

Carney Warns on Property Bubble

This article of the Belfast Telegraph.co.uk reveals Gov. Carney's warning to policymakers of another house price rise risk and pledge to take response if he has to, to recover the property market.

Bank of England governor Mark Carney has warned policymakers are "acutely aware" of the risk of another house price bubble and vowed to step in and take action to rein in Britain's resurgent property market if needed.

The new central bank boss said lenders could be asked to restrict borrowing terms or even be forced to hold more cash on their balance sheets to dampen down an over-heated property market.

His warning came as he also sought to reassure that interest rates were set to stay at record lows for at least three years as part of an effort to shore up his flagship "forward guidance" policy following a poor reception in the City.

In his highly anticipated first UK public speech, Mr Carney insisted: "Rates won't go up until jobs and incomes are really growing. The knowledge that interest rates will stay low until the recovery is well established should give greater confidence to households to spend responsibly and businesses to invest wisely."

The guidance, set out earlier this month, contained a series of caveats that have prompted fears that the Bank rate might rise sooner than expected - sending bond yields up.
But Mr Carney said: "We do not intend even to consider raising it before unemployment falls to 7%."

He added the Bank stood ready to launch more economy boosting measures if future rate expectations begin hindering the recovery.

Mr Carney, who succeeded Lord King at the helm last month, also unveiled new plans to bolster bank lending by another £90 billion.

Facing mounting criticism over stringent demands for lenders to bolster their financial reserves, Mr Carney said all banks and building societies that meet the new capital requirements will be allowed to reduce asset holdings elsewhere on their balance sheets. This will reduce holdings by £90 billion once all eight major banks and building societies meet the capital rules.

"That will help to underpin the supply of credit, since every pound currently held in liquid assets is a pound that could be lent to the real economy," he told business leaders at a CBI event in Nottingham.

Article Source: http://www.belfasttelegraph.co.uk/news/local-national/uk/carney-warns-on-property-bubble-29534154.html