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90% LTV product choice doubles as lenders return to market: Moneyfacts

Increase

The number of residential mortgage products has risen for the third consecutive month to 2,893 – the highest availability recorded since April 2020 as the impact of the pandemic was beginning to be felt, the latest Moneyfacts data shows.

The largest monthly growth in availability was at 90% LTV, where the number of products almost doubled, increasing by 72 to 160, the highest seen since June 2020.

Those with higher levels of equity or deposit have also seen an improvement. At 75% LTV, availability rose to 629 deals, the highest level seen since July 2020.

The average two-year fixed rate for all LTVs increased for the sixth consecutive month, rising by 0.03% to 2.52% – the highest this rate has been since January 2019 when it was also 2.52%. This is now 0.08% higher year-on-year and is an increase of 0.53% compared to the record low of July 2020.

The equivalent five-year average fixed rate also increased this month. However, at 2.71%, this remains lower than the 2.74% seen this time last year, but is still a rise of 0.46% compared to the low of July.

Eleanor Williams, finance expert at Moneyfacts, said: “The UK property market remained unseasonably buoyant in the lead up to the New Year, where, perhaps bolstered by the increase in product availability over recent months supporting demand from borrowers, the latest Bank of England data recorded that house purchase approvals had rocketed to the highest level seen since August 2007. Following the sharp drop off in availability in 2020, it is positive to see that we are beginning 2021 with the total number of mortgage deals rising for the third consecutive month. With 111 more deals on offer this month, at 2,893 this is the highest we have seen since April 2020, when the sector experienced mass product withdrawals as the impact of Coronavirus and subsequent base rate cuts began to be felt.

“This month also saw further positive movements at the higher end of the LTV spectrum, with the number of products for those looking to secure a deal at 90% LTV nearly doubling to 160, and at 85% LTV increasing by 43 to 439. As more lenders have returned to these higher LTV tiers, there is greater choice for those borrowers with lower levels of deposit or equity, who spent much of last year with so few options available to them. Furthermore, this has also extended to those who have higher levels of deposit or equity, who may be pleased to note that in the 75% and 80% LTV tiers we have also recorded increased availability, with both brackets now offering the most products they have since July.

“Not only is the increase in product choice a positive for borrowers, but it seems that a measure of competition may have started to return to some sectors as well. At the higher end of the LTV tiers, both the average two and five-year fixed rate deals for those looking to secure a mortgage at 90% LTV saw the largest monthly reductions, dropping by 0.14% and 0.13% respectively this month, while the equivalent rates at 85% dropped by 0.05% and 0.06% respectively, indicating that lender confidence may be returning to this part of the market, despite the still uncertain economic outlook.

“However, not all LTV tiers saw rates fall this month, which has resulted in the overall two-year average rate continuing its march upwards for the sixth consecutive month. At 2.52%, this is 0.08% above where this rate sat this time last year and equals the high this rate last reached in January 2019. Those who are interested in the slightly longer-term stability of a five-year fixed rate deal may notice that this rate, while rising by 0.02% this month, at 2.71% remains 0.03% down year-on-year. Those who are considering securing a new mortgage may feel motivated to explore their options now, before rates potentially increase further.

“This improvement in options for mortgage borrowers has occurred at a time when high levels of borrower demand have been fuelled by those hoping to benefit from the stamp duty holiday and by those who re-evaluated what they want from a home and were part of the unleashed demand that arose after the first lockdown in 2020. As we navigate our way through another period of restrictions, this time the property market is expected to remain open for business. However, with timescales for processing mortgages potentially subject to delays, and with the average shelf life for mortgages remaining at just 28 days, it has possibly never been more vital to call upon the knowledge and help of a qualified adviser to progress any applications and explore what may be the best option for their circumstances.”

Original Article from Financial Reporter 11/01/2021

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Good news for first time buyers as 10% deposits make a return

FTB

HSBC UK is re-introducing its 90 per cent Loan To Value mortgages from next week – a possible lifeline for first time buyers scrabbling to save a deposit. 

Many lenders withdrew low-deposit mortgage deals last year, as worries over the housing market’s response to the Coronavirus led to lenders becoming more cautious. 

The Yorkshire Building Society and TSB have made tentative moves back towards low-deposit mortgages, but HSBC is seen as a symbolic ‘big player’ making such a move.

The bank has confirmed that it will offer a range of two and five-year fixed rate options up to 35 year terms. Mortgage rates will be announced on January 12.

Michelle Andrews, HSBC UK’s head of buying a home, says: “These mortgages build on our significant support for brokers and mortgage customers throughout 2020 and will be available across the board – for home purchases, first-time buyers and to those remortgaging – all up to a maximum of 35 years.

“The new lockdown will undoubtedly present challenges, but the experience of overcoming numerous difficulties during the original lockdown, for example making more use of automated valuations, will be invaluable. 

“We are all seeking a return to normal, although for many it will feel like we may not see that for a while. With us returning to the higher LTV space, hopefully that is a little bit of welcome normality.”

Original Article from Estate Agent Today 08/01/2021

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Lenders approving more mortgages as crash risk subsides, says broker

Nationwide

Lenders including the Nationwide are taking a more positive outlook about the housing market as valuations rise.

Mortgage lenders are taking a more relaxed view of the housing market’s future and one of the largest, Nationwide, has returned to offering 90% LTV mortgages, a leading mortgage broker has claimed.

Dan Lee of Total Landlord Mortgages says over the past week or so his team have been able to get 90% LTV mortgages approved by the lender, and that other mortgage firms are following suit.

“Only a few weeks ago we had clients whose mortgages were being rejected by the lender and house sales were falling apart,” he says.

“But now we’re able to go back to them and say their mortgage application is likely to be given the green light, which will be good for the property market.”

Dan also says that this underscores the importance of brokers, which these days handle approximately 80% of all mortgage applications.

He says lenders clearly believe that the risk of a post-boom housing crash is easing off, helped by a surge in property price valuations in recent weeks.

This includes the most recent Halifax house price index, which revealed a staggering 7.3% annual increase in house prices including a leap of 1.2% last month.

“At the moment it feels like the good times of the early noughties, and it’s certainly not where I thought we would be now following two lockdowns,” adds Lee.

“And as the Covid vaccine is rolled out, and if the Chancellor modifies his plans to end the stamp duty holiday on 31st March, then this boom may continue.”

Original Article from The Negotiator 10/12/2020

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What are the Benefits of Owning a Property in Chelmsford?

Owning a property
Homing in on the future as a property owner

Are you renting in Chelmsford at the moment? Perhaps you are a tenant in a lovely property but you have aspirations of buying your own place?

Renting is great, and can be the right solution for some people for any number of reasons, but it’s also true to say that for many people it is simply a stepping stone towards home ownership.

There are many factors as to why people rent or buy in Chelmsford, and no two situations are really the same. Everyone has their own unique circumstances and you should know this before you start comparing yourselves with other people who either rent or buy.

But at the end of the day, it’s often all about money, and the financials of being able to afford a property in Chelmsford. Because of this, and we know it sounds obvious, it is so important to make sure you get it right from the start.

To be fair, as we know, there are pros and cons for both renting in Chelmsford or owning a property.

Writing a list of pros and cons will really focus your mind and help you to come to a decision. And don’t forget, it is absolutely OK to say that you’ve always wanted to own a house rather than rent.

It can be an exciting time but you must know the responsibilities and the financial implications and don’t just let your heart rule your head.

The Benefits of Owning a Property

1. As a homeowner, you have more control over what you do with the property – decorating or adding a conservatory for example. There may be restrictions depending on where you live, or if the house is listed, but you can do a lot to a property to make it a home.

If you rent, you may be restricted on whether you can have pets or even children in the house. So buying a house can help you grow your family – whether it’s with a baby or a furbaby!

2. You are investing your time and your money into a building that you own, rather than paying someone else, although chances are you will have a mortgage to pay.

3. When you come to sell your house in years to come, you should be able to make some profit, all being well, and that money will come to you. Of course, market conditions will affect this so it’s worth bearing that in mind.

So, a massive benefit is the financial security owning a property in Chelmsford can bring. They say that bricks and mortar are a sound investment and it is largely true so it’s definitely worth a look.

4. When you’re paying a mortgage, you’re always stepping towards owning your house outright, and that’s a key driver for many people, perhaps like you, who want to get on the property ladder right now. Interest rates and mortgage packages can be very competitive so it might even be that you won’t pay as much as you would in rent.

You’ll need to work out how much you can afford, how much a mortgage is, and how much you’ll need for additional costs when buying a property.

5. It can be such a wonderful opportunity and a real sense of satisfaction when you are living in a property where you are the homeowner. 

6. The benefits will continue into your later years too as there are schemes that allow you to release equity from your home to help fund your retirement.

Therefore, not only can owning a house benefit you today, it will help you when you are older too.

There does seem to be a British tradition about owning your own home and after all, “An Englishman’s House is his castle”, but buying property is a personal decision.

According to Government statistics, “the proportion of 25-34 year olds in owner occupation has increased and there are now almost equal proportions of 25-34 year olds living in the private rented and owner occupied sectors”.

This, we think, means that owning your own home is once again becoming more and more popular with younger people, reversing, or at least slowing the trend towards renting.

There are so many benefits to owning your own place, but we know it can also be a daunting journey to begin.

Do your research, your homework, and talk to experts. 

In fact, come and talk to us here at Essex Homes And Lettings as we have years of experience in helping people like you to become homeowners.

If you need some advice, don’t hesitate to call us on 01245398466 or email us at sales@essexhomesandlettings.co.uk and we will be delighted to help you in your search for a property in Chelmsford.

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7 Easy Ways to Save a Deposit For Your First Home in Chelmsford

Deposit

Lots of people dream of no longer living with their parents or throwing money at their landlord every month and instead buying their own home in Chelmsford. However, one of the things that often stands in the way of first time buyers is raising a deposit. The average house price in the UK is just over £234k, and nearly all mortgages require a 5% deposit, so that’s a large amount to save. 

With this in mind, here are some ways you can raise the cash to get on the property ladder. 

1. Look carefully at your outgoings

While you may think you’re living quite frugally, most people have some areas where they can cut back a little. For example, if you buy a £2.75 takeaway coffee every working day, that works out at £55 a month or a whopping £3,300 over five years. Even chipping away at these small expenses can improve your finances, and when it comes to applying for a mortgage, you can show that you have a pattern of sensible spending.

One big outgoing that non-homeowners have to deal with is rent. While it’s not the most fun solution, if you can move back with your parents for a year, then you could put away a lot more cash. The loss of freedom may be worth it if it means you aren’t stuck in rented accommodation for years to come.

2. Get a side hustle

Many millennials now have a full-time job and a side hustle, which is basically something they do in their spare time for a little extra cash. Side hustles are often something that’s creative or a little more interesting than your day-to-day job, from selling handmade items on sales platforms like Etsy to creative writing, but if you don’t have a particular skill in these areas, then you could always consider selling things on eBay, evening bar work, or anything that fits in with your work schedule. 

3. Ask for family help

Around 23% of first-time buyers admit that they got help from their parents for their deposit. If you parents have the savings and are willing to give you money towards your deposit, then you will no doubt be pleased to take it. However, you need to consider the impact on your mortgage application. Mortgage lenders will still want to know that you can afford the mortgage repayments and will need a signed declaration from your parents that the money is a gift, and you aren’t going to be paying them back.

If your parents don’t have the savings to help you with cash, they may still be able to give you a helping hand onto the property ladder. For example, some banks do offer 100% mortgages that are secured against your parent’s home. However, it’s important that you all do your research before you take out this sort of product as it is a huge commitment.

4. Take money out of your account at payday

Many people wait until the end of the month, see what’s left over in their account (if anything), then transfer that into their savings account. However, a better way to save is to work out what you need to live on for the month, with a little cushion for emergencies, then set up a payment for anything left over on payday. This means you’re more likely to live frugally throughout the month.

5. Move to a cheaper area

If rent, travel and other outgoings are wiping out your income each month, a solution may be to move to a cheaper area whilst you save for your deposit. You certainly wouldn’t be alone, last year over 300,000 people moved out of London, many of them families with young children, while cities such as Bristol and Manchester saw influxes of ex-Londoners. 

It can be difficult to leave a location you love, so think about the things you like most about it, then try and find similar aspects in a cheaper location.

6. Lock away your savings

When interest rates are low, it’s worth considering taking out an ISA (Individual Savings Account). These products allow you to save tax-free, and if you choose an ISA where your money is locked away, with penalties for early withdrawals, you’ll usually get a far better interest rate. This can also stop you dipping into your savings.

7. Buy with a friend

Getting on the property ladder can be tough if you’re single. It’s slightly easier if you’re a couple with two incomes, as you can both save and the mortgage will take both incomes into account, but you don’t have to be romantically involved to share a mortgage! Ideally, it should be someone you’ve lived with before, perhaps a long-term roommate, and someone who is financially responsible and you’re happy to live with potentially for years.

If you want to get on the property ladder, there are many ways that you can do so. Whether you make small or large lifestyle changes to get there, it will be worth it in the end.

For impartial first time buyer advice contact our expert team at Essex Homes And Lettings on 01245398466 and we will be delighted to assist. 

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Mortgage approval numbers hit new highs: BoE

Mortgage approvals

Mortgage approval totals for house purchases rose again in October after spiking in September, rising from 92,000 to 97,500, show Bank of England figures.

This, it says, is the highest number counted since 2007 and is 33 per cent higher than the figure seen in February of this year.

October’s purchase approvals equaled £20.6bn in value compared to £19.5bn in September.

Remortgage approval figures, meanwhile, were steady, rising from 32,800 in September to 32,900 in October – but were still 40 per cent lower than seen in February 2020.

The value of remortgage approvals decreased slightly from September to October, moving from £6.2bn to £6.1bn.

Households borrowed an additional £4.3bn in October compared to £4.9bn in September, the BoE adds.

It also says that the interest rate paid on newly drawn mortgages rose from 1.74 per cent to 1.78 per cent on a monthly basis in October, which is still below the level seen in January this year – 1.85 per cent.

Coreco managing director Andrew Montlake says: “For mortgage approvals to be the highest since September 2007, the month when people queued outside Northern Rock and the Global Financial Crisis symbolically began, shows the sheer extent of the pent-up demand caused by the first national lockdown.

“This data is bittersweet, of course, as we all know that 2021 could see the real economic impact of the pandemic start to bite. It’s hard to celebrate such robust mortgage approvals data when we all know what’s round the corner.

“Unsurprisingly, lenders are circling the wagons due to concerns over rising unemployment levels and their impact on house price growth. Getting a mortgage at higher loan to values remains an almost insurmountable challenge.

“What’s vital is that lenders don’t become overly cautious and stop lending to borrowers with larger deposits. With a vaccine looming, lenders will hopefully avoid entering panic mode.

“There are still many landlords and owner-occupiers with equity and decent incomes, who are perfectly viable borrowers, and the banks shouldn’t forget this.”

Phoebus Software sales and marketing director Richard Pike adds: “It is not only the stamp duty saving that is driving the market but there is also the number of people looking to escape city life since the lockdown. And, as the ‘working from home’ culture continues this is likely to endure past the limitations imposed by Covid-19.

“The problem then will be the age-old one of supply and demand. Despite the government’s promises, we are, according to the ONS last week, way behind our target for new housebuilding in the last year.

“With the knock-on effect of the pandemic, this is something that isn’t going to be fixed quickly. So, the mass exodus from our cities that has been predicted, could turn into a trickle come the spring.”

Original Article from Mortgage Strategy 30/11/2020

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Market boom goes on according to strong mortgage search figures

strong mortgage figures

A mortgage technology platform has released figures suggesting the housing market remains strong, with high numbers of searches by buyers for the best loans.

Twenty7Tec’s latest figures show the state of the mortgage market after the second week of the latest England lockdown.

Weekly mortgage online search volumes are currently at 87.33 per cent of the year’s highest figure, down just 0.5 per cent on the previous week.

Specifically, owner occupation mortgage search volumes are at 85.94% of the year’s high, down 1.9 per cent on the week before, while buy to let mortgage search volumes are at 94.18 per cent of the year’s high, up 2.3 per cent on the previous week.

“Any drop in mortgage demand prior to lockdowns – and we have seen this each time regionally and nationally – is offset as soon as the actual lockdown begins. The demand doesn’t want to stay pent up for too long explains James Tucker, chief executive of Twenty7Tec.

“This week is traditionally very busy in the run up to the peak period that runs from beginning October to mid-December. This year, two factors have combined to make it even busier: the stamp duty holiday end date and the longer lead times to get a mortgage approved. 

“We believe that these factors will sustain the levels of searches and documents for at least the next three weeks. It’s worth remembering that we are still at least 10 per cent busier now for both residential and buy to let than we were in our busy springtime.”

He adds: “Buy to let had a definite slump in the run up to lockdown 2.0 and troughed on November 4, the day this second lockdown began. However, since that low, on a seven-day rolling average, we’ve seen quite a return of buy to let search volumes and a smaller but definite recovery in buy to let documents being prepared.

“Buy to let currently forms 19.76 per cent of all searches in the past week and 21.33 per cent of all documents prepared against in the past week. Buy to let searches volumes currently form slightly less than the long term average of market activity – 20.49 per cent and just above average for documentation 21.13 per cent.”

Original Article from Estate Agent Today 23/11/2020

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‘Millions on tenterhooks’ as conveyancing logjam hits 650,000 transactions

Rightmove

Activity is strongest in the upper end of the housing market where stamp duty savings are most significant.

Rightmove says 650,000 property sales are now waiting to move to completion, 67% higher than the same time last year.

The portal says mortgage lenders, valuers and solicitors now face an unprecedented tsunami of transactions to process, of which two thirds will be hoping to take advantage of the stamp duty holiday that cuts off on 31st March next year.

The other third are those who are stamp duty exempt anyway, such as purchasers of properties under £125,000 and first time buyers.

“This ongoing activity means that the processing log-jam continues to pile up because of the sheer number trying to reach the finish line by the end of March,” says Tim Bannister, Rightmove’s Director of Property Data. “Millions of people are on tenterhooks until their sale or purchase has completed.”

His data also reveals that sales agreed in the higher end of the market where stamp duty savings are the most significant have doubled year-on-year and also seen the number of days it takes to find a buyer drop to a record low of 59 days.

But sales agreed in the £100,000 to £200,000 sales band, where stamp duty savings are minimal, increased by just 16%.

Unusually for such a busy period, asking prices have dipped during November by 0.5%, which suggests vendors are accepting lower offers in order to get a sale and be able to purchase their next home before the stamp duty cut-off.

North London agent Jeremy Leaf, says: “Nearly all [home movers] are acutely aware that delays in arranging mortgages, valuations and conveyancing will mean meeting the 31 March deadline won’t be easy, even if deals are agreed in the next few weeks.”

Original Article from The Negotiator 16/11/2020

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More mortgage products are available but rates continue to rise

Mortgage products

The number of mortgage products on the market has increased for the first time since June, as lenders look to meet growing demand, but average borrowing rates have increased further, the latest research from Moneyfacts shows.

There are currently 2,404 mortgage products available on the market, up from 2,259 a month earlier.

According to Moneyfacts, the strongest growth in mortgage products over the past month has been seen in the 75% and 80% loan-to-value (LTV) sectors where product numbers have increased by 43 and 49 respectively.

There has been a significant increase in demand for mortgages, as buyers rush to acquire property before stamp duty goes back to its normal rate.

The latest data and analysis from NAEA Propertymark shows that in September the number of prospective buyers registered per estate agent hit a 16-year high.

Eleanor Williams, finance expert at Moneyfacts, said: “Some positive news for those would-be borrowers comes from our latest data, which shows that at 2,404, the number of available mortgage products has risen for the first month since June 2020, following the re-opening of the property market after the first UK lockdown, when 2,810 deals were on offer.”

She added: “It is notable that 63% of the 145 additional products made available this month are offered in the 75% and 80% LTV sectors, where product numbers increased by 43 and 49 respectively.

“Indeed, availability increased across all the LTV tiers this month, with the exception of the limited 95% and 100% tiers where there was no change, and the smallest fluctuation was seen in the next highest LTV bracket at 90%. This could be indicative of the fact that lenders are focusing their offerings towards traditionally lower-risk borrowers with a larger equity or deposit.”

According to the research, there are less than half the number of products available to consumers now than were on offer 12 months ago, while borrowing rates are rising.

Average Mortgages Rates
March 2020July 2020October 2020November 2020
90% LTVAverage 2 year fixed rate2.57%2.90%3.64%3.76%
90% LTVAverage 5 year fixed rate2.91%3.16%3.89%3.98%
85% LTVAverage 2 year fixed rate2.49%2.11%2.93%3.12%
85% LTVAverage 5 year fixed rate2.81%2.34%3.07%3.25%
80% LTVAverage 2 year fixed rate2.41%2.13%2.58%2.67%
80% LTVAverage 5 year fixed rate2.71%2.38%2.82%2.96%
75% LTVAverage 2 year fixed rate2.29%1.92%2.23%2.27%
75% LTVAverage 5 year fixed rate2.56%2.15%2.47%2.51%

Williams continued: “The steepest monthly increase was seen in the 85% LTV tier, which remains the maximum offered by many providers. Here, the average two-year fixed rate jumped up by 0.19% to 3.12%, while the five-year equivalent experienced a similar 0.18% rise to 3.25%.

“This means that today’s borrowers with a 15% deposit or equity will be facing rates that are 0.65% and 0.45% higher than they would have a year ago and is perhaps reflective of how uncertain and changeable the economic outlook remains.

“Also demonstrating how fluid the mortgage market remains is the fact that the average shelf life for a mortgage product has reduced to 28 days, which is the lowest on Moneyfacts’ records since providers reacted to the Bank of England base rate increasing from 0.50% to 0.75% in August 2018.”

Original Article from Property Industry Eye 10/11/2020

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Mortgage holiday set to be extended as housing market stays open

housing market open

There’s one key takeaway for agents from the weekend’s announcements on the next England-wide lockdown – the housing market is staying open.

However, there will be some short-notice changes on the fringes of agency activity.

This includes an extension to the owner occupiers’ and landlords’ mortgage holiday; and an extension of the furlough system. Both are being extended until at least the scheduled end of the latest lockdown, which is December 2.

An announcement is expected from the Financial Conduct Authority today concerning the extended mortgage holiday, which began in the spring and should have finished on Saturday October 31 – just 48 hours ago. It is thought likely that the extension will be for another six months. 

Under the old system, owner occupiers and landlords who needed help were able to request a payment holiday until October 31 – this is now to be extended, along with the corresponding ban on repossessions.

As before, future mortgage payment holidays and partial payment holidays under this government initiative will not have a negative impact on credit files.

For agents and industry suppliers with staff who were expected to come off furlough on October 31, the Saturday just gone, there may be relief that the scheme is to be temporarily extended until the end of the England lockdown on December 2.

Employees will receive four-fifths of their current salary up to a maximum of £2,500..

In the meantime the housing market will remain open. 

Mark Hayward, chief executive of NAEA Propertymark, says: “It is essential all agents continue to play their part in reducing the spread of the virus through following all relevant guidance. Agents must operate in accordance with government and Propertymark guidelines, to keep the market moving through these uncertain times.”

Statements by Housing Secretary Robert Jenrick and the Ministry of Housing, Communities and Local Government over the weekend both gave a ‘stay calm and carry on’ message to agents and the industry, urging people to continue following existing guidance. 

Original Article from Estate Agent Today 02/11/20