Concern over the lack of housing supply forcing prices up was the focus of much discussion and research in March.
Housing data analyst Hometrack’s February National Housing Survey revealed the UK housing market had experienced the most pronounced surge in property listings for seven years, with growth of 11.2 per cent in the number of listings in its latest data.
This would seem encouraging at first, but Hometrack quickly checked any early hopes for would-be buyers by pointing out that demand had also grown by 17 per cent in the period, representing the highest monthly increase in two years.
Shortly thereafter and seemingly contradicting Hometrack’s figures, the Royal Institution of Chartered Surveyors said that buyer numbers had fallen to their lowest rate in a year, but that supply was still “simply not enough to satisfy demand”.
It’s easy to be caught up in graphs and statistics, but the drop-off in buyer numbers may have had a very material - and soggy - cause: flooding and adverse weather.
However, Rics’ chief economist Simon Rubinsohn, pointed out that prices were still on the rise due to the ever-present housing shortage.
Help to Buy
One source of hope for would-be buyers comes from the government’s Help to Buy equity loan scheme which aims to boost housebuilding and thereby address the supply shortfalls which have been contributing to persistent price inscreases across the board.
Andy Frankish, new homes director of national intermediary Mortgage Advice Bureau, recently told FTAdviser sister title Financial Adviser that house price inflation had fallen from 4 per cent to 2 per cent in the past year.
He added that the scheme was also bringing down the costs of building new homes, which could help keep price inflation in check.
First-time troubles
March seemed to come with dreary news for first-time buyers to match the dreary weather, with LSL Property Services subsidiary Your Move claiming that the average house price for first-time buyers had risen 16 per cent to a new record of £155,832 in the year to January 2014.
The firm added that although more people had been clambering onto the bottom rung of the property ladder, the only reason they could afford to do so was the high loan-to-value loans on offer. On the other hand, price increases had outpaced wage growth.
Keep in mind that those figures are for a whole year. On a more granular scale, the Council of Mortgage Lenders revealed last month that the number of loans to first-time buyers had surged 38 per cent in January 2014 compared to the year before.
Claiming the mortgage market was “in fine fettle”, mortgage consultant Henry Woodcock said first-time buyers were taking advantage of very competitive rates.
Later in the month, CML published new figures suggesting that overall mortgage lending in February had reached £15.2bn, its highest point since 2008 and 43 per cent higher than the amount loaned in February 2013.
This position was echoed by Cambridge Building Society, which reported it had grown its mortgage book by 8 per cent in 2013 and provided funding for more than 1,200 mortgages.
This week, the Guardian reported that house prices in London had increased by 18 per cent in the past year, bringing the average price of a London home to more than double that of the rest of Britain.
Significant rises in prices, loans, and demand did not help to quell fears of a house price bubble, especially in London.
The Bank of England said it was on high alert for signs of trouble in the housing market, after the Financial Policy Committee statement following a 19 March meeting revealed that homeowners who borrowed more than four times their income accounted for the biggest share of new mortgages in the third quarter of 2013.
Stamp duty
Despite earth-shaking upheaval to the pensions industry in chancellor George Osborne’s Budget, mortgages did not have anywhere near as prominent a place (perhaps to the collective relief of the industry).
One change brought in by the chancellor was to stamp duty: anyone purchasing a property that is more than £500,000 in any kind of corporate wrapper is now subject to stamp duty of 15 per cent.
Commenting on the change, Coreco director Andrew Montlake said: “Yes, it may upset people but in London anything that helps put more available property in front of people who are actually going to live in the property rather than leave it empty most of the time is a good thing.”
The announcement could help smooth out an otherwise uneven scale of house prices, which includes ‘dead zones’ which Zoopla claims has wiped a combined £260m off the value of residential properties.
March’s top mortgage picks
According to Kevin Mitchell, mortgage adviser at Norfolk-based advice firm Blue-print Mortgages Limited, the problem buy-to-let investors are faced with are product fees.
He says there is an “obvious temptation” to add these fees to the mortgage, but warns paying interest on these fees over the mortgage term is not normally a sensible approach for borrowers.
Mr Mitchell says: “If a case fits why not try NatWest. My experience with NatWest in dealing with [buy-to-let] customers looking to remortgage has been superb. They still have some competitive buy to let rates with no products fees.
“The product also provides a free valuation and free standard legal work. At 60 per cent LTV the rate is still 4.09 per cent and at 75 per cent, 4.25 per cent both until 31 July 2016. The key ingredient of these products is no fees.
“The rental at 5.25 per cent at the pay rate plus 125 per cent is not the most favourable in the market place but is not too bad. You are restricted to a maximum of four buy-to-lets with all lenders.
“Normally the remortgage can be used for home improvements or purchase of a further property. I would always check with Live Talk because certain restrictions apply.”
