Remortgaging tips balance on lending in Q1 2011

 

The balance between house purchase and remortgage lending tipped towards remortgaging at the start of 2011, according to the Council of Mortgage Lenders. Remortgaging accounted for 37% of all lending in the quarter, an increase from 30% in the last quarter of 2010.
The number of loans advanced for house purchase in March increased by 24% to 37,800 from February, and the value increased by 26% to £5.4billion. While this is a significant increase compared to the start of the year, house purchase lending activity is still below the levels seen at the same time last year - down 17% in volume and 16% in value.
There were 33,900 loans for remortgage, worth £4.1billion, advanced in March, up 16% by volume and 17% by value compared to February and up 17% by volume and 13% by value compared with March 2010.
Looking at the first quarter as a whole, house purchase lending was down 26% by volume and 27% by value from the last quarter of 2010. Remortgage lending was up 14% by volume and 11% by value from the fourth quarter.
The increase in remortgage activity is likely linked to the expectations of an increase in interest rates.
Although any significant rise in rates is unlikely, recent increased sentiment in favour of remortgaging looks set to be reflected in a strengthening of remortgage lending over the next few months,
The number of mortgages to both first-time buyers and home-movers fell on a quarterly basis. First-time buyers fell 23% and home movers 28%.
CML director general Michael Coogan said: "We saw a significant increase in both house purchase and remortgage lending in March but, over the first quarter of the year as a whole, the picture was subdued and that is unlikely to change for the foreseeable future.
"Looking ahead to lending figures in the coming months, the Easter, royal wedding and May bank holidays will impact on the level of activity, timing and spread of completions in the second quarter meaning that any one month's data should not be interpreted as a reflection of a trend. It may take until publication of the second quarter's activity to get a full understanding of how the market has reacted to the squeeze on household incomes."

Political Report

 

Monday 2^nd May 2011
Lloyds Banking Group – Million pound home sales rise at fastest rate since 2006
The number of homes sold for more than £1million increased at its fastest rate for four years during 2010 as the top end of the property market bounced back, according to research from Lloyds Banking Group.
A total of 7185 properties changed hands for a seven-figure sum during the year, 54% more than in 2009 and the biggest annual increase since 2006.  Edinburgh accounted for almost half of Scotland's £1million sales and saw more homes sold in the top bracket than anywhere in the UK outside the south east of England.
But despite the increase, sales of homes for £1million or more are still 13% below the level they reached in 2007, before the financial crisis struck.  The group estimates that there are now around 184,000 homes in Great Britain that are worth at least £1million.
Tuesday 3^rd May 2011
Department for Communities and Local Government – Grant Shapps: Government backs self-builders
Housing Minister Grant Shapps MP has announcedthat the Government will help self-build to become a mainstream housing option – and that Government would play its part by making available publicly-owned land for use by ordinary people to build their own homes.
Self-builders are Britain's largest housebuilder, accounting for about one in five of Britain's new homes each year; but the UK has one of the lowest proportions of new homes built by self-builders in Europe.
Grant Shapps said he wanted to see more land being made available – both private and public – to enable more individual and community self-build schemes.  He called on private investors to bring forward plots, and for local authorities and Housing Associations to show their support.
The Minister said central Government would lead the way: he will shortly announce the first publicly-owned sites to be made available to housebuilders to include plots exclusively for self-builders.
Wednesday 4^th May 2011
Nationwide – House Price Index, April 2011
The Nationwide has published its latest house price index for Aprilwhich shows a 0.2% drop during the month:

Headlines	Apr 11	Mar 11
Monthly Index *	329.1	329.9
Monthly Change *	-0.2%	0.5%
Annual Change	-1.3%	0.1%
Average Price	£165,609	£164,751

 

* Seasonally adjusted figure (Note that monthly % changes are revised when seasonal adjustment factors are re-estimated)

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said: “The price of a typical house fell by 0.2% in April, which left prices 1.3% lower than the same period of 2010.  The three month on three month measure of house prices, a better measure of the underlying trend, showed a modest rise of 0.6%.
“There is still little evidence to suggest that price declines will accelerate in the months ahead.  While the UK economy only managed a modest bounce-back at the start of the year, after the weather-induced contraction in late 2010, the economic recovery is expected to gather momentum.”
Bank of England – Lending to Individuals, March 2011
The Bank of England has reportedan increase in the number of home loans approved for house purchase, from 46,708 in February to 47,557 in March. It was the highest mortgage approvals figure for five months, with activity rising slightly after a winter slowdown.
But the figure is still down on the 48,967 loans which were in the pipeline in March 2010, and significantly below the 70,000 to 80,000 a month that economists consider to be consistent with a stable housing market.
Building Societies Association – Mortgage approvals by mutuals jump 29% in March
Mutuals approved £2.1billion worth of mortgages in March 2011, which is up 29% on the £1.7billion approved in March 2010 and compares to £1.7billion in February 2011, according to the Building Societies Association (BSA).
Gross lending by mutuals totalled £1.7billion in March 2011. This is up 8% compared to £1.6billion in March last year, and compares to £1.5billion of lending in February this year.
The key statistics for March show that:
-     Mutuals’ gross lending amounted to £1736million in March 2011 compared to £1605million in March 2010.
-     Net lending by mutuals in March 2011 was -£476million compared -£765million in March 2010.
-     Mortgage approvals by mutuals in March 2011 were £2145 million compared to £1666 million in March 2010.
Friday 6^th May 2011
Scottish, Welsh and Local election results
Election results have been declared from the elections held for the Scottish Parliament, Welsh Assembly and local elections in England.
In Scotland, the Scottish National Party claimed a majority for the first time in the Scottish Parliaments, having claimed 69 seats out of a possible 129, up by 23 seats from the last election.  Labour failed to capitalise on the haemorrhaging of support from the Liberal Democrats, losing seven seats to leave them with 37 overall.  The Liberal Democrats now have only five MSPs, falling into fourth place behind the Conservatives.
In Wales, Labour failed to claim a majority, having won 30 seats in the 60 seat Assembly.  The leader of Plaid Cymru, Helen Mary Jones, lost her seat in Llanelli, as her party lost four seats overall, leaving the nationalists as the third party in Wales with 11.  The Conservatives are now the main opposition in Wales, with 14 seats.
Local elections also took place for 279 councils, with Labour increasing the number of councils which they control by 57, and with 800 additional councillors overall.  The Conservatives fared better than expected, with an increase of 81 councillors and more importantly, 157 councils.  The Liberal Democrats were again the ones to suffer, losing 10 councils and 1056 councillors.

Sellers emerge to test housing market

 

Supply of property increased during April, as sellers returned to test the Spring housing market, according to the latest RICS UK Housing Market survey.
Around a fifth (18%) more chartered surveyors reported a rise rather than fall in new instructions, up from 4% more in March. Spring is traditionally a busier time of year, but respondents suggest that a stabilisation in property prices has also tempted many back.
Demand also showed signs of steadying, with new buyer inquiries moving to a net balance of 0% and taking the series out of negative territory for the first time in 10 months. During April, respondents noted that the good weather led to increased numbers of viewings from potential buyers in some parts of the UK. Despite this, surveyors continue to report that a lack of mortgage finance is hindering many, with only the cash-rich able to really take advantage of the market.
Significantly, average sales per surveyor over the past three months rose to 15.2, the best level since December. Alongside this, newly agreed sales also edged up in April, as 8% more surveyors reported increases not falls in agreed sales, taking the series to its best level for a year.
The picture remains more downbeat for house prices, in part due to the continued imbalance between demand and supply.
Some 21% more surveyors reported prices fell rather than rose in April, but this is the best level since June last year. Similarly, surveyors' expectations for prices over the next three months remain in negative territory, at a net balance of -18, also taking the series to June 2010 levels.
Looking ahead, 11% more surveyors predict sales to increase rather than decrease over the next three months.
RICS housing spokesperson, Michael Newey, said: "The return of sellers to the market is positive, but activity still remains subdued and it is difficult to see it picking up materially over the coming months.
"Although there are signs that some lenders may be reducing their grip on the purse strings, in particular with mortgages aimed at first-time buyers, there is still a long way to go before lending levels increase enough to have any real impact. Economic uncertainty may also continue to weigh on sentiment for a while to come."

Political Report

 

Tuesday 26^th April 2011
Halifax – Buying 14% more affordable than renting
The cost associated with buying a home in the UK is typically 14% lower than renting a property, according to new research by Halifax.  The average monthly costs associated with buying a three-bedroom house in the UK stood at £608 in March 2011; 14% (£98) lower than the average monthly rent paid on the same property type of £706.  Three years ago, the average cost of buying was 43% more than the typical rent paid.
The significant fall in the monthly cost associated with buying compared to renting has been driven by the decline in the average mortgage rate since 2008.  The mortgage rate for a new borrower has fallen to an average of 3.59% from 5.82% in March 2008, helping to reduce the average monthly mortgage payment by 39%.
Despite the improvement in the affordability of buying relative to renting, the tightening in lending criteria since 2007 has meant that many potential buyers have not attempted to enter the market.  Nonetheless, market data shows that the average deposit paid as a percentage of the purchase price has been broadly stable since early in 2009 at around 27%, following a marked rise in 2008.
Home Builders Federation launches local election manifesto
The Home Builders Federation's local election manifestooutlines the need for local politicians to shoulder the responsibility of tackling the country's housing crisis and enable the construction of the homes the country needs.
The manifesto underlines the economic benefits of increasing house building to local areas. In total across England house-building could create around 200,000 jobs and £1.2billion of investment from central Government through the New Homes Bonus.
Among the measures requested in the manifesto, HBF is asking councillors to pledge to immediately draw up Local Development Plans to ensure a sufficient supply of viable land for housing.
HBF has also called on councillors to work with home builders to reduce the cost, complexity and uncertainty of regulation that is preventing the building of more homes.
Wednesday 27^th April 2011
British Bankers Association – March 2011 figures for the main high street banks
The latest statistics from the British Bankers Associationshow that the annual growth of the banks' net mortgage lending was 2.3% in March, remaining substantially ahead of the 0.7% for the whole mortgage market in February.
Gross mortgage lending of £7.7billion in March was slightly lower than the recent six month average of £7.9billion and 11% lower than gross lending in March 2010.  Despite gross mortgage lending holding up fairly well recently, this is due to stronger remortgage activity rather than new house purchases.  However, net mortgage lending increased by only £0.8billion in March, due in part to higher repayments.
House purchase approvals were slightly higher than in February but 10% lower than in March 2010.  The average value (£145,400) was 0.5% lower than a year earlier.  Numbers of remortgage approvals in March were 7% lower than the previous month but 1% higher than in March 2010.  Approvals for equity withdrawal continue to be weak and were 19% lower than March 2010.
House of Commons – Debate to take place on social housing in London
A debate on social housing in London, hosted by Jeremy Corbyn MP (Lab, Islington North), will be held in the House of Commons main chamber on Thursday 5 May.
The debate will focus on current proposals for changes to the administration of local housing allowance after several MPs representing London constituencies requested that a debate take place.

More confidence in stronger property prices - Rightmove

 

The number of people expecting house prices to go down over the next year has fallen, according to the latest Consumer Confidence Survey from Rightmove.
The proportion of those expecting prices to drop has slipped from 32.3% to 24.9%.
Despite this, a further finding of the survey is that across the UK consumers feel prices in their local area are overvalued and need to come down.
Rightmove director Miles Shipside said: "Our Q1 survey measured the highest proportion of home movers recorded to date forecasting that prices would be lower in 12 months’ time.
"That was the position of a third of them then, but now that proportion sharing that view has dropped to a quarter."
Each quarter for the past two years Rightmove has charted whether the home-moving public believe prices will increase, decrease or stay around the same.
For this latest survey the public were also asked whether they believed prices in their area were overvalued, undervalued or about right. The results reveal that just under half (48%) of respondents believe prices in their local area are overvalued, with just 15% of the opinion that they are too low.
In London (60.8%), the South East (51.7%) and the South West (52.7%) the proportion of those feeling prices were overvalued were in the majority.
Shipside said: "There is a growing sense that many homes coming onto the UK housing market are priced too high and this is borne out by the views expressed in this survey.
"We now have a situation where half of the UK public feel house prices are too high, yet three quarters of the same public are expecting prices to either stay the same or increase over the next 12 months.
"This suggests the prospect of a market stand-off and rising unsold stock levels if sellers don’t wise up to the house price views of their target market."