The number of people who own propery worth £1m and more has rocketed during the course of the last decade.
Data compiled by Santander Mortgages (formerly Abbey) shows that the UK is now home to 393% more property millionaires than it was at the start of the century.
It calculates that there are currently 131,996 homes worth over £1m in this country, almost a five-fold increase on the 26,776 that existed in the year 2000.
When property prices fell following the onset of the credit crunch, 43,000 properties lost their £1m+ status. However, since 2009 the market for top-end properties has recovered strongly. Over the past year, the number of £1m+ properties has risen by around 29,000, returning the number of property millionaires close to its early 2008 peak when there were 147,000 of them.
The recovery at the top-end of the market has been largely attributed to overseas buyers looking for a good home for their capital and some bankers continuing to enjoy large bonuses.
Around 78% of £1m+ homes are located in London, with the capital's SW post code holding 29%. London's SE postcode area has also showed a staggering 23-fold increase in its number of property millionaires in the past decade.
Phil Cliff, director of mortgages at Santander, said:
"For many of us our ‘home is our castle' and in recent years we've often viewed our home as a key investment too. Whether you're a property millionaire or not, prospective buyers and those remortgaging need to ensure they get a fair deal on their house and mortgage.
Nigel Lewis, analyst at property website PrimeLocation.com, commented:
"It's amazing how fast £1m+ property prices have recovered since the dark days of mid-2008 when the market experienced significant price reductions.
"Our research shows that the number of million pound homes for sale has risen considerably over the past year and the number of people looking to buy them has also jumped by 20% - so it's no wonder that the prime property market is recovering so fast."
Monday 19 July 2010
Buy-to-let confidence rises
Confidence in the private sector is on the up, with nearly a third of landlords reporting rising tenant demand and one in five planning to invest in the next quarter, according to Paragon Mortgages.
Paragon's survey revealed that 29% of landlords saw tenant demand increase in the second quarter of the year, compared to 10% who reported a fall.
This is up on the first quarter of the year when 24% of landlords saw rising demand and 8% saw a decrease.
The majority of landlords (54%) said that tenant demand was stable during the second quarter, while 7% said they were unsure which direction demand was heading.
Paragon's figures showed that landlords are confident that tenant demand will continue to strengthen, with 35% expecting demand to be higher in 12 months, while 8% forecast a decline.
This confidence is also reflected in that 21% of landlords surveyed intend to invest in further property during the third quarter, compared to just 12% in the last quarter.
However, securing buy-to-let mortgage funding continues to be a problem, with over half finding it more difficult, while just 13% said it was easier.
Nigel Terrington, chief executive of Paragon Group, said:
"Strong tenant demand is great news for landlords, but will lead to rental inflation for tenants unless the private rented sector is able to expand to meet this demand. Pressure is building on the finite number of properties in the sector because the lack of buy-to-let mortgage availability has prevented landlords from growing their property portfolios."
He added: "There is obviously a dislocation between landlords' intention to purchase and their actual ability to do so given the continued scarcity of buy-to-let mortgage finance.
"However, our survey confirms that landlords still value residential property as an investment vehicle."
Paragon's survey revealed that 29% of landlords saw tenant demand increase in the second quarter of the year, compared to 10% who reported a fall.
This is up on the first quarter of the year when 24% of landlords saw rising demand and 8% saw a decrease.
The majority of landlords (54%) said that tenant demand was stable during the second quarter, while 7% said they were unsure which direction demand was heading.
Paragon's figures showed that landlords are confident that tenant demand will continue to strengthen, with 35% expecting demand to be higher in 12 months, while 8% forecast a decline.
This confidence is also reflected in that 21% of landlords surveyed intend to invest in further property during the third quarter, compared to just 12% in the last quarter.
However, securing buy-to-let mortgage funding continues to be a problem, with over half finding it more difficult, while just 13% said it was easier.
Nigel Terrington, chief executive of Paragon Group, said:
"Strong tenant demand is great news for landlords, but will lead to rental inflation for tenants unless the private rented sector is able to expand to meet this demand. Pressure is building on the finite number of properties in the sector because the lack of buy-to-let mortgage availability has prevented landlords from growing their property portfolios."
He added: "There is obviously a dislocation between landlords' intention to purchase and their actual ability to do so given the continued scarcity of buy-to-let mortgage finance.
"However, our survey confirms that landlords still value residential property as an investment vehicle."
Flat house prices forecast for 2010
Property portal Rightmove predicts that the value of UK residential property will remain largely stable this year, with the average home losing any gains made in the first half of 2010 during the remainder of this year.
Rightmove’s latest monthly House Price Index calculates that the average asking price for a property fell by 0.6% between June and July, to stand at £236,332, as the supply of available homes has increased to such a level that it has outstripped demand for the first time in a year.
The website reports that the number of new property sellers currently outpaces mortgage approvals by 5.2%, creating a buyer’s market in which asking prices are likely to be forced down slightly throughout the rest of the year.
It records that new-to-market sellers dropped their asking prices for the first time this year in June, down by 0.6% (£1,435) this month.
Miles Shipside, commercial director of Rightmove, said:
“The number of new mortgages being approved each month is less than half the number of new sellers, with the imbalance being exacerbated by the increase of nearly 50% in the number of properties coming to market compared to a year ago.
“More aggressive pricing is now the order of the day, which means that conditions are ripe for a strong buyers’ market in the second half of 2010.
“This is likely to see the average price gains of 7% for the first half of the year wiped out by year-end, in line with Rightmove’s original forecast for the year of no net change in house prices”.
Rightmove’s annual forecast in roughly in line with well-regarded house price index compilers and mortgage lenders Halifax and Nationwide both of which foresee little annual change in typical property values.
Rightmove’s latest monthly House Price Index calculates that the average asking price for a property fell by 0.6% between June and July, to stand at £236,332, as the supply of available homes has increased to such a level that it has outstripped demand for the first time in a year.
The website reports that the number of new property sellers currently outpaces mortgage approvals by 5.2%, creating a buyer’s market in which asking prices are likely to be forced down slightly throughout the rest of the year.
It records that new-to-market sellers dropped their asking prices for the first time this year in June, down by 0.6% (£1,435) this month.
Miles Shipside, commercial director of Rightmove, said:
“The number of new mortgages being approved each month is less than half the number of new sellers, with the imbalance being exacerbated by the increase of nearly 50% in the number of properties coming to market compared to a year ago.
“More aggressive pricing is now the order of the day, which means that conditions are ripe for a strong buyers’ market in the second half of 2010.
“This is likely to see the average price gains of 7% for the first half of the year wiped out by year-end, in line with Rightmove’s original forecast for the year of no net change in house prices”.
Rightmove’s annual forecast in roughly in line with well-regarded house price index compilers and mortgage lenders Halifax and Nationwide both of which foresee little annual change in typical property values.
Friday 9 July 2010
House prices stabilizing
Average UK property prices fell by 0.6% in June.
According to the latest Halifax House Price Index, this was the second consecutive monthly decline, following a decrease of 0.5% in May.
However, looking at longer-term trends, prices in the second quarter of this year are just 0.1% lower than the first quarter, indicating stabilization rather than freefall in the housing market.
According to Halifax data, the average UK property is now worth £166,203.
Martin Ellis, housing economist at Halifax, said:
"This continued the slowdown in house price growth since the beginning of the year following the moderate recovery in prices during much of 2009. This pattern is in line with our view that house prices will be broadly unchanged over 2010 as a whole.
"A shortage of properties for sale in 2009 contributed to an imbalance between supply and demand and was a key factor driving up house prices last year. An increase in the number of properties available for sale in recent months has helped to reduce the imbalance, relieving the upward pressure on prices. The low level of interest rates, however, continues to support housing demand."
Nigel Lewis, analyst at property website FindaProperty.com, commented:
"It is no surprise that the latest Halifax house price index shows a dip in house prices; our own figures show that there has been an influx of stock over the past few months which has served to drive prices down.
"There are currently 23% more properties for sale on our site than there were a year ago and this imbalance between supply and demand is now affecting pricing.
"We are reverting back to a buyer's market and therefore sellers must vie for their attention with more competitive prices."
According to the latest Halifax House Price Index, this was the second consecutive monthly decline, following a decrease of 0.5% in May.
However, looking at longer-term trends, prices in the second quarter of this year are just 0.1% lower than the first quarter, indicating stabilization rather than freefall in the housing market.
According to Halifax data, the average UK property is now worth £166,203.
Martin Ellis, housing economist at Halifax, said:
"This continued the slowdown in house price growth since the beginning of the year following the moderate recovery in prices during much of 2009. This pattern is in line with our view that house prices will be broadly unchanged over 2010 as a whole.
"A shortage of properties for sale in 2009 contributed to an imbalance between supply and demand and was a key factor driving up house prices last year. An increase in the number of properties available for sale in recent months has helped to reduce the imbalance, relieving the upward pressure on prices. The low level of interest rates, however, continues to support housing demand."
Nigel Lewis, analyst at property website FindaProperty.com, commented:
"It is no surprise that the latest Halifax house price index shows a dip in house prices; our own figures show that there has been an influx of stock over the past few months which has served to drive prices down.
"There are currently 23% more properties for sale on our site than there were a year ago and this imbalance between supply and demand is now affecting pricing.
"We are reverting back to a buyer's market and therefore sellers must vie for their attention with more competitive prices."
Interest rate held at 0.5%
The Bank Base Rate has been maintained at 0.5% for the 15th consecutive month.
The Monetary Policy Committee of the Bank of England voted to maintain the Base Rate at its current level amid ongoing economic uncertainty.
The decision will be welcomed by mortgage borrowers on tracker deals, which are linked to the Bank Base Rate, and also by people sitting on the Standard Variable Rates (SVRs) of those lenders who have promised not to increase the rate by more than a given margin over Base Rate.
Jonathan Samuels, chief executive of Drawbridge Finance, said:
"Interest rates are on hold again but the hawks, led by Andrew Sentance, are beginning to circle. The minutes of this latest MPC meeting due to be published later in the month will offer a strong clue as to when Bank Rate will finally rise.
"Even when rates do rise, we expect the percentage increases to be small and incremental and this, coupled with the fact the market has already begun to price them in, is unlikely to put the property market into reverse.
"Higher rates will naturally add to the headwinds facing borrowers and the property market but at the same time they are a necessary evil, a key step back to a more normal functioning of the economy and lower inflation.
"The important thing is that the up-cycle, when it does commence, is managed smoothly to avoid shocks and enable the economy, markets and borrowers to adjust."
The Monetary Policy Committee of the Bank of England voted to maintain the Base Rate at its current level amid ongoing economic uncertainty.
The decision will be welcomed by mortgage borrowers on tracker deals, which are linked to the Bank Base Rate, and also by people sitting on the Standard Variable Rates (SVRs) of those lenders who have promised not to increase the rate by more than a given margin over Base Rate.
Jonathan Samuels, chief executive of Drawbridge Finance, said:
"Interest rates are on hold again but the hawks, led by Andrew Sentance, are beginning to circle. The minutes of this latest MPC meeting due to be published later in the month will offer a strong clue as to when Bank Rate will finally rise.
"Even when rates do rise, we expect the percentage increases to be small and incremental and this, coupled with the fact the market has already begun to price them in, is unlikely to put the property market into reverse.
"Higher rates will naturally add to the headwinds facing borrowers and the property market but at the same time they are a necessary evil, a key step back to a more normal functioning of the economy and lower inflation.
"The important thing is that the up-cycle, when it does commence, is managed smoothly to avoid shocks and enable the economy, markets and borrowers to adjust."
Friday 25 June 2010
Bank lending steady
British Banker's Association figures (BBA) show UK high street provider's are lending figures remain unchanged since last month.
However the banking sector trade body said the annual growth in the banks' net mortgage lending of 4.3% still substantially exceeds the figure for just 0.9% in April for the mortgage market overall.
Subdued spending has led to consumer credit contracting by 2.5% over the year, it said.
BBA statistics director, David Dooks said:
"High street banks are the main providers in the mortgage market, supplying 75% of all new lending and approving more than 35,000 loans for house purchase each month.
"The low interest rate environment is resulting in customers choosing to reduce or pay off borrowing, particularly personal loans, rather than saving.
"Lending to non-financial companies continues to be slow as demand for loans remains subdued," he added.
According to the figures, the high street banks are currently providing over 70% of approvals for house purchase, compared with around 55% three years ago.
The average value of house purchase approvals, at £150,500, was 10.5% higher than a year ago. Numbers of remortgaging and equity withdrawal approvals continue to be lower than a year earlier.
However the banking sector trade body said the annual growth in the banks' net mortgage lending of 4.3% still substantially exceeds the figure for just 0.9% in April for the mortgage market overall.
Subdued spending has led to consumer credit contracting by 2.5% over the year, it said.
BBA statistics director, David Dooks said:
"High street banks are the main providers in the mortgage market, supplying 75% of all new lending and approving more than 35,000 loans for house purchase each month.
"The low interest rate environment is resulting in customers choosing to reduce or pay off borrowing, particularly personal loans, rather than saving.
"Lending to non-financial companies continues to be slow as demand for loans remains subdued," he added.
According to the figures, the high street banks are currently providing over 70% of approvals for house purchase, compared with around 55% three years ago.
The average value of house purchase approvals, at £150,500, was 10.5% higher than a year ago. Numbers of remortgaging and equity withdrawal approvals continue to be lower than a year earlier.
Mortgage rates could drop further
The interest rates charged on mortgage loans could fall further this year.
The Centre for Economics and Business Research (CEBR) is predicting a slowdown in UK economic growth as a result of yesterday’s Budget, which it says could result in the Bank of England Base Rate staying at its current level of 0.5% until the end of 2012.
The continuing low Base Rate could prompt lenders to reduce mortgage rates from an average of around 4% to 3% by early next year, according to the CEBR.
The news comes hot on the heels of a report from data website Moneyfacts, which revealed that mortagage rates have fallen to a seven year low.
The average rate on a two-year fixed rate mortgage deal now stands at 4.52%, its lowest level since September 2003.
The cost of fixed rate mortgage deals has been falling since September last year.
Among the best two-year fixed rate mortgages currently available are a deal from The Co-operative Bank at a rate of 2.95% and a deal from HSBC at 2.99%.
Yorkshire Building Society also offers a two-year fixed rate mortgage deal at 3.05%.
The Centre for Economics and Business Research (CEBR) is predicting a slowdown in UK economic growth as a result of yesterday’s Budget, which it says could result in the Bank of England Base Rate staying at its current level of 0.5% until the end of 2012.
The continuing low Base Rate could prompt lenders to reduce mortgage rates from an average of around 4% to 3% by early next year, according to the CEBR.
The news comes hot on the heels of a report from data website Moneyfacts, which revealed that mortagage rates have fallen to a seven year low.
The average rate on a two-year fixed rate mortgage deal now stands at 4.52%, its lowest level since September 2003.
The cost of fixed rate mortgage deals has been falling since September last year.
Among the best two-year fixed rate mortgages currently available are a deal from The Co-operative Bank at a rate of 2.95% and a deal from HSBC at 2.99%.
Yorkshire Building Society also offers a two-year fixed rate mortgage deal at 3.05%.
Tuesday 4 May 2010
Mortgage approvals still sluggish, figures show
The number of mortgages approved for home buyers rose slightly in March, the Bank of England has said.
The total increased to 48,901 in March from 46,882 the month before, and the figure was 17% higher than in March 2009.
However, the Bank's figures still suggest that mortgage lending has had a sluggish start to the year.
Approvals in the first three months were the lowest on record for the first quarter of any year, apart from 2009.
"The Bank of England mortgage approvals data do little to dilute the belief that the housing market is finding it difficult to regain momentum after flagging at the start of 2010," said Howard Archer, economist at IHS Global Insight.
"We expect house prices to be erratic over the coming months and they may very well be no better than flat over the rest of the year," he added.
'Fragile' market
Meanwhile building societies experienced another outflow of savers' money, with a net £318m being removed in March.
It was the 12th time in the past 13 months that savers have taken out more money than they have put in from their accounts with building societies.
Despite this, Adrian Coles of the Building Societies Association was optimistic.
"The mutual sector continues to offer some of the most consistently competitive savings rates, but people may instead consider making additional mortgage payments or using savings to support their incomes in this challenging economic climate, or they may be looking to invest in the equity markets," he said.
"The mortgage market will remain fragile as there is uncertainty in relation to employment, interest rates, house price inflation, mortgage availability and, conceivably even after the election, the political outlook."
A key factor still restraining mortgage lending has been the continued level of mortgage rationing due to the credit crunch and the banking crisis.
Despite the recent revival in profitability of the UK banking system, lenders are still demanding deposits from borrowers averaging 25% of the value of the homes being purchased.
And mortgage lenders have continued to warn that from 2011 onwards banks will have to repay the government the £300bn it provided in emergency loans during 2008.
This suggests that mortgage rationing will continue for several years, though the availability of funds has been thawing slightly in recent months, according to the financial information service Moneyfacts.
'Slight improvement'
Moneyfacts said that the number of mortgage deals available at the start of May was up by 12% from a month ago to 1,928, which was also 36% more than at the start of the year.
There are still very few deals requiring just a 0% or 5% deposit, but the number asking for a 10% or 15% downpayment went up from 461 to 520.
As a proportion of the market they accounted for 27% of all deals on offer - the same as a month ago - while the proportion of deals asking for at least a 25% deposit was also steady, remaining at 57% of all mortgages.
"It is good news for borrows that lenders are slowly acclimatising to a new landscape of the mortgage market and continue to improve on the competitiveness of new mortgage deals," said Darren Cook of Moneyfacts.
"But lending figures show that there is only a slight improvement in the market; we still have a way to go before the market returns to any sort of normality," he added.
The total increased to 48,901 in March from 46,882 the month before, and the figure was 17% higher than in March 2009.
However, the Bank's figures still suggest that mortgage lending has had a sluggish start to the year.
Approvals in the first three months were the lowest on record for the first quarter of any year, apart from 2009.
"The Bank of England mortgage approvals data do little to dilute the belief that the housing market is finding it difficult to regain momentum after flagging at the start of 2010," said Howard Archer, economist at IHS Global Insight.
"We expect house prices to be erratic over the coming months and they may very well be no better than flat over the rest of the year," he added.
'Fragile' market
Meanwhile building societies experienced another outflow of savers' money, with a net £318m being removed in March.
It was the 12th time in the past 13 months that savers have taken out more money than they have put in from their accounts with building societies.
Despite this, Adrian Coles of the Building Societies Association was optimistic.
"The mutual sector continues to offer some of the most consistently competitive savings rates, but people may instead consider making additional mortgage payments or using savings to support their incomes in this challenging economic climate, or they may be looking to invest in the equity markets," he said.
"The mortgage market will remain fragile as there is uncertainty in relation to employment, interest rates, house price inflation, mortgage availability and, conceivably even after the election, the political outlook."
A key factor still restraining mortgage lending has been the continued level of mortgage rationing due to the credit crunch and the banking crisis.
Despite the recent revival in profitability of the UK banking system, lenders are still demanding deposits from borrowers averaging 25% of the value of the homes being purchased.
And mortgage lenders have continued to warn that from 2011 onwards banks will have to repay the government the £300bn it provided in emergency loans during 2008.
This suggests that mortgage rationing will continue for several years, though the availability of funds has been thawing slightly in recent months, according to the financial information service Moneyfacts.
'Slight improvement'
Moneyfacts said that the number of mortgage deals available at the start of May was up by 12% from a month ago to 1,928, which was also 36% more than at the start of the year.
There are still very few deals requiring just a 0% or 5% deposit, but the number asking for a 10% or 15% downpayment went up from 461 to 520.
As a proportion of the market they accounted for 27% of all deals on offer - the same as a month ago - while the proportion of deals asking for at least a 25% deposit was also steady, remaining at 57% of all mortgages.
"It is good news for borrows that lenders are slowly acclimatising to a new landscape of the mortgage market and continue to improve on the competitiveness of new mortgage deals," said Darren Cook of Moneyfacts.
"But lending figures show that there is only a slight improvement in the market; we still have a way to go before the market returns to any sort of normality," he added.
Tuesday 9 February 2010
Mortgage Rates hit record low as 90% LTV return
Mortgage rates on tracker deals, which move in line with the Bank of England base rate, plummeted to a record low in January, providing a much-needed boost for borrowers and the housing market.
Figures out today from the Bank of England show that the average rate charged on tracker mortgages that have a 25 per cent deposit fell to 3.63 per cent in January, down from 3.92 per cent in December and the lowest rate recorded since comparable records began in 1997.
The rate on two-year fixed-rate deals also fell to a six-year low of 3.97 per cent, down from a high of 6.35 per cent in June 2008.
But while lenders are becoming keener to attract customers, borrowers with smaller deposits are still being forced to pay much higher rates.
The Bank stopped collating information on 95 per cent loan-to-value mortgages in 2008 as there were so few on the market. But there are signs that lenders are becoming more willing to lend to borrowers with smaller deposits, although there is unlikely to be a return to the abundance of 95, 100 and 125 per cent mortgages seen before the credit crunch.
The number of deals available to people who need to borrow up to 90 per cent of the value of their home jumped by 26 per cent in January, while Nationwide yesterday said that it was reducing the minimum deposit people needed to put down to qualify for its best rates from 40 per cent to 30 per cent on nearly half of its mortgage products.
Figures out today from the Bank of England show that the average rate charged on tracker mortgages that have a 25 per cent deposit fell to 3.63 per cent in January, down from 3.92 per cent in December and the lowest rate recorded since comparable records began in 1997.
The rate on two-year fixed-rate deals also fell to a six-year low of 3.97 per cent, down from a high of 6.35 per cent in June 2008.
But while lenders are becoming keener to attract customers, borrowers with smaller deposits are still being forced to pay much higher rates.
The Bank stopped collating information on 95 per cent loan-to-value mortgages in 2008 as there were so few on the market. But there are signs that lenders are becoming more willing to lend to borrowers with smaller deposits, although there is unlikely to be a return to the abundance of 95, 100 and 125 per cent mortgages seen before the credit crunch.
The number of deals available to people who need to borrow up to 90 per cent of the value of their home jumped by 26 per cent in January, while Nationwide yesterday said that it was reducing the minimum deposit people needed to put down to qualify for its best rates from 40 per cent to 30 per cent on nearly half of its mortgage products.
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