Hiển thị các bài đăng có nhãn foxnews. Hiển thị tất cả bài đăng
Hiển thị các bài đăng có nhãn foxnews. Hiển thị tất cả bài đăng
Chủ Nhật, 29 tháng 11, 2015
Why Real Estate Could Soar in 2015
Mortgage lenders get tough on first-time buyers in London
House prices in London and cautious lenders trigger fall in first-time buyers trying to get on the property ladder
The number of young couples, families and professionals taking out amortgage to get on the property ladder in Greater London has fallen for the first time in a year, according to new data from the Council ofMortgage Lenders (CML).
First (Other OTC: FSTC – news) -time buyers in the capital, who, in part, drove the 2014 surge in demand, drifted away towards between October and December.
They borrowed £2.9bn or 12,000 loans in the final quarter of last year, an 11pc drop in value from the previous three month period and a 4pc drop from the winter of 2013 – despite rocketing house prices last year.
The average age of a individual securing a home loan shifted from 31 to 32 in the last quarter of the year and the income-to-loan ratio dropped back from 3.86 to 3.84 indicating a newly cautious borrower and stricter lending criteria.
“The mortgage market review [introduced in April 2014] really did do its job and slowed the borrowing process down,” said Peter Rollings, managing director of the London-based estate agent, Marsh & Parsons.
There was a hiatus towards the end of the year when people sat back and actually thought about whether they could afford their mortgage, should rates increase, he said.
“This was the main reason the market slowed down.”
The CML also reported a fall in the number and value of home loans across all age groups.
The number of home loans approved fell by 15pc to 8,800 in the three month period of October to December and the value fell 20pc to £2.9bn compared to the third quarter.
New (KOSDAQ: 160550.KQ – news) figures from the British Banking Association (BBA), also released this morning, showed that themortgage market did not pick up in January, but gross mortgageborrowing was 11pc down at £9.8bn on January 2014.
“The volume of transactions in London has slowed with a general election looming and the property market adjusting to the increases in stamp duty. With so much uncertainty, we are not expecting any growth in London values this year but for the first time since 2009 it is a buyer’s market,” said buying agent, Paul Pavlides from Prime Purchase.
News from high street lenders TSB, Barclays (LSE: BARC.L – news) and Lloyds, may suppress the market further as the three banks reduce acceptable affordability levels.
A note from TBS sent to mortgage brokers today read: “As part of our commitment to being transparent, we wanted to let you know that we’re introducing a loan to income cap of 4.5 times income on all applications, effective from today.”
However, Mr Rollings said that following a drop in first-time buyers, there are early signs that that young buyers could come back to the market in their droves.
“Stamp duty changes have meant a busy first two months of the year for this group of buyers. We thought it was going to be quiet in the run up to the election but we have more property under offer than any time in the last 18 months. In the sub £1.5m market it is extremely busy.”
A £300,000 studio in Earls Court has just gone under offer and a £350,000 one-bedroom flat in Richmond, he said.
Lending in Scotland and Wales all declined in the last three months of 2014, and Northern Ireland was the only region to record quarterly growth.
The number of loans to home-movers in Northern Ireland increased 7pc by volume and 12pc by value in the fourth quarter compared with the previous three months.
Buy-to-Let Booms as BOE Awaits Powers to Curb Mortgages
The Bank of England is seeking to regulate the U.K.’s booming rental home market that’s delivering annual returns of almost 12 percent and increasing risks for the economy. The government is making it wait.
Estate agent signs advertising properties “To Let” and ”Rent Me” stand outside residential buildings in the Roehampton district of London. Central bank officials asked for more powers to regulate buy-to-let lending in October, and the government said this month that nothing will happen until after May’s national election.
While regulators have tightened lending rules for home owners to curb runaway price growth and limit lenders’ risks, the government has held off on giving the central bank greater authority to regulate mortgagesto buy investment properties, as demand for rental homes is soaring, particularly in London.
“One of the things London is desperately short of is rental properties,” said Mark Clare, chief executive officer at Barratt Developments Plc, the U.K.’s second-biggest homebuilder by market value. “We need more buy-to-let rather than less and that’s something government has pushed.”
Central bank officials asked for more powers to regulate buy-to-let lending in October, and the government said this month that nothing will happen until after May’s national election. BOE officials are concerned that investors are fueling home-price inflation, forcing owner-occupiers to take on bigger loans and increasing default risks because about 66 percent of landlords, the most since 1987, only repay interest on their mortgages. They repay the principal when the property is sold.
Loans for investment properties surged 40 percent in the past six years to a record 188 billion pounds ($289 billion), according to the Council of Mortgage Lenders, while the amount owed by homeowners rose just 6 percent. About 60 percent of new homes in London are bought by investors to lease, according to data compiled by researcher Molior London Ltd.
Market ‘Distorted’
The number of landlords investing in property makes it more difficult for those seeking to buy a home of their own, Britain’s biggest property website Rightmove Plc said Feb. 16.
“The strong rise of buy-to-let in recent years has led to lots of new flats being built,” said Scott Corfe, head of macroeconomics at the Center for Economics and Business Research in London. “The property market has been distorted into building more of the types of properties that buy-to-let investors want, rather than what we actually need — which is more family homes.”
The government delayed the buy-to-let mortgage decision because it wants more evidence about how the market “may carry risks to financial stability,” according to a Feb. 2 filing. A consultation on the proposals, including limits on loan-to-value and debt-to-income ratios, will be held “early in the next parliament,” the filing said.
Financial Crisis
Buy-to-let lending surged ahead of the financial crisis. It rose more than 27 percent to 127.5 billion pounds in the year through March 2008, according to CML data. Values began falling the following month as the credit crunch took hold even as the amount owed by landlords continued to rise. The repossession rate for buy-to-let mortgages last year was 0.3 percent compared with 0.17 percent for home owners, despite landlords having lower arrears, according to CML.
“Risky mortgage lending has contributed significantly to financial stress in this country and elsewhere in the past and it’s sensible for the government and the BOE to look at it,” said Jonathan Portes, director of the National Institute of Economic and Social Research. “After the election, whichever government comes in they will have to go ahead with taking some decision on this.”
New Regulations
BOE Governor Mark Carney announced new regulations in June to slow price increases in the U.K. property market, which were running at an annual rate of 10 percent at the time, according to government data. The rules control how much banks can lend relative to a borrower’s income, and require lenders to refuse mortgages to homebuyers who fail a stress test that assumes a sharp increase in the benchmark interest rate.
The central bank should be ready to take further action to rein in riskiermortgage lending if stability risks emerge, the Organisation for Economic Cooperation and Development said Feb. 24. Among the BOE’s options are broadening rules to include buy-to-let properties, the Paris-based group said.
“Housing supply has not risen to meet demand,” the OECD said. “House prices have increased rapidly and may create risks to financial stability in the case of a downward adjustment.”
Meeting demand for housing is a key battleground in the national election as supply fails to meet demand by about 100,000 homes a year. That may prove problematic as pollsters are forecasting a so-called hung parliament, a deadlock last seen in 1974 that led to an unstable government reliant on opposition votes to pass laws.
Neck-and-Neck
Surveys from the most prolific polling company, YouGov Plc, over the past week have shown Prime Minister David Cameron’s Conservatives and the main opposition Labour Party neck-and-neck at support levels between 32 percent and 34 percent.
The Labour Party pledged to increase the annual number of homes constructed to 200,000 and the Conservative Party says it will build 100,000 homes for first-time buyers that will be sold at a 20 percent discount to market value.
Carney’s new rules helped cut the number of loans advanced to home buyers by 5 percent in the fourth quarter of last year, while there was a 3 percent decline in refinancing, according to data compiled by the CML. At the same time, 54,000 mortgages were made to landlords in the period, a 16 percent increase from a year earlier.
“The scale and nature of buy-to-let activity makes it a potential amplifier of housing and credit cycles,” the central bank said Feb. 4. “Any increase in buy-to-let lending in an upswing will add further pressure on house prices, which will likely prompt owner-occupiers to take on larger loans.”
Gross Yields
Investors are drawn to rental homes by gross yields of 5 percent, according to broker LSL Property Services Plc. Total return, which combines rental income and value gains, was 11.7 percent for landlords in England and Wales in the 12 months through January, according to LSL.
That compares with a total return of 7.7 percent from U.K. equities in the same period and 6.3 percent from junk bonds denominated in pounds, according to Bank of America Merill Lynch index data.
Landlords also get tax breaks on mortgage interest payments while homeowners do not, according to Corfe at the CEBR. There are also tax breaks for repair and maintenance costs for landlords, he said.
Amateur Landlords
The Bank of England is aware that more amateur landlords will enter the market in April when new rules allow pensioners to invest their retirement savings in property. Currently they must invest in an annuity — an annual income from a life insurer.
“The British affinity toward property ownership, combined with weak savings returns, will drive new growth in the buy-to let sector,” said Adam Challis, head of residential research at broker Jones Lang LaSalle Inc. in London. “However, with average pension pots of around 30,000 pounds, this will be the preserve of more affluent retirees.”
Buy-to-let lending climbed to almost 20 percent of the value of all newmortgage loans by early 2008 and fell to less than 10 percent by late 2009 as home prices slumped during the financial crisis, according to the BOE. Soaring U.K. home price values, especially in London where values are increasing 13.3 percent annually, have tempted landlords back.
Record Lending
The record 188 billion pounds owed by residential landlords at the end of 2014 compares with an all-time high of 1.3 trillion pounds in outstanding mortgages to home owners, according to data compiled by the Bank of England.
With demand for home loans showing signs of weakness, competition among banks is resulting in lower margins. There was a 14 percent decline in mortgage lending in January from the previous month. That’s leading many banks and building societies to sweeten their offers to buy-to-let borrowers, who are typically charged higher interest rates than homeowners.
The average margin charged for buy-to-let mortgages fell to 308 basis points more than benchmark rates in the third quarter of 2014, the latest data available, the central bank said this month. That compares with an average of 339 basis points for the year, it said.
Virgin Money last week began offering a three-year rental homemortgage with a 3.6 percent rate, compared with a 2.25 percent rate for homebuyers offered by the Post Office Ltd. That’s based on a fixed-rate loan at a 75 percent loan-to-value ratio.
There are signs that the days of cheap financing may be coming to an end. The BOE may have to increase its 0.5 percent benchmark rate sooner than the market expects because of the risk of accelerating inflation, Martin Weale, a member of the central bank’s monetary policy committee said Feb. 24.
“The biggest risk to the buy-to-let market is obviously rising interest rates, because landlords won’t be able to pass on higher interest charges to their customers,” said Richard Donnell, research director at property assessor Hometrack Ltd.
Mortgage-free households on the rise in England
More properties were owned outright than with a mortgage among households in England for the first time in 2013-14, figures show.
In 2013-14, some 48% of households made up of 25 to 34-year-olds rented their home from a private landlord.The data also shows that the younger generation are struggling to own.
Home ownership in England has seen significant shifts in the last decade
Of the 22.6 million households in England, 7.4 million owned their property outright, and 6.9 million had a mortgage, the English Housing Survey showed. The rest rented their homes.
This marked a shift from an equal level among owners a year earlier.
In 2013-14, some 48% of households made up of 25 to 34-year-olds rented their home from a private landlord.The data also shows that the younger generation are struggling to own.
This had risen from 45% a year earlier, and from 21% in 2003-04.
Over the same 10 years, owner occupation in this age group dropped from 59% to 36%.
Campbell Robb, chief executive of Shelter, said: “The shortage of affordable homes is leaving young adults with no choice but to remain stuck in their childhood bedrooms, or face decades paying out dead money to landlords.”
House price calculator
Paid off your mortgage? Five things to do with your money now
At last! You’re mortgage-free. But what should you do with the extra cash? Supercharge your finances, says High50’s Julian Knight, and diversify your shares, savings and investments instead.
Just because your outgoings are now well below your incomings, it doesn’t mean you have to spend to make up the difference.Spend and save
Hundreds of thousands of Britons do something rather special each year: they pay off their mortgage.
Years of sacrifice and hard work come to fruition when the letter drops through their front door telling them that their mortgage company is hightailing it out of their lives and there will be no more dreaded monthly repayments.
Years of sacrifice and hard work come to fruition when the letter drops through their front door telling them that their mortgage company is hightailing it out of their lives and there will be no more dreaded monthly repayments.
The mortgage-free years prior to retirement are a golden opportunity to set your finances on the right footing. But what to do with the extra cash you no longer have going out each month?
Just because your outgoings are now well below your incomings, it doesn’t mean you have to spend to make up the difference.Spend and save
Of course you deserve to enjoy some of the fruits of your hard work and perhaps earmark some money for that expensive holiday of a lifetime but do budget so that you can leave yourself a decent amount of money for your future.
Aim for 80 per cent of what your mortgage would have been.
1. Share investments
The further away you are from retirement the more risks you can take with your new-found extra cash. Risk doesn’t mean heading down to the bookmakers or flying to Las Vegas but looking at investments, which have a five or ten-year investment timeframe. This is considered enough time to smooth out the peaks and troughs of performance.
Share investments fit the bill. Not only do they offer the chance for capital growth over the medium and long-term but income as well, as individual companies often pay dividends.
This gives you the chance to enter a virtuous investment circle where you buy shares, earn income from them in the form of a dividend and then re-invest this income to buy more shares.
2. Pay more into your pension and enjoy the tax benefits
Putting more money into your pension may seem like the last thing you want to do having finally thrown off the financial shackles of your home loan but there are good tax reasons for so doing.
All contributions into a pension are free from tax so if you are a 40p income-tax payer, for every £10 you pay into a pension you will get £4 of tax relief.
Over time this tax relief really boosts the size of your pension and the more you put in, the more tax relief you enjoy.
What’s more, it is no longer the case that your pension is locked away until you retire. You can access your pension from age 55 and from next year you will be able to use your pot as you wish and no longer be compelled to buy an annuity.
3. Take on another mortgage, and opt for buy to let
I know this seems like madness but bear with me. Mortgages have never been cheaper and are undoubtedly the cheapest form of borrowing available at the moment. You could use the money to invest or to purchase a buy-to-let property.
You will be in a very good position to negotiate the best possible rate with the lender and if you invest wisely you should be able to comfortably beat the interest charged on the loan.
You need only have the mortgage for a few years while your buy to let or other investment grows in value and you enjoy the benefits of a regular investment income, then sell up and be mortgage-free again.
There are, of course, warnings that come with this route of action as your home is at risk if you don’t keep up repayments.
4. Get life and critical illness insurance
You may have been so committed to your mortgage payments that you have forgotten some key insurance policies, which you ought to have in place to insure yourself and your family’s future.
The most obvious protection policy you may now want to go for is life insurance, which will pay out should you die while the policy is active.
Another insurance, which is crucial but often overlooked, is critical illness. This will pay a big lump sum should you suffer a life-threatening condition such as cancer or a heart attack.
Insurances you can do without now include mortgage-protection insurance and possibly income protection.
5. Savings, shares and alternative investments
Having more money each month to save and invest gives you a better opportunity to diversify your investments.
In the past, with a mortgage dragging your finances down, you may only have had enough to put into a cash savings account. But now with more money you can start to introduce shares, bonds and even more exotic alternative investments such as wine into the mix.
Diversification of investments is a good thing as risk is spread and it makes it less likely you will suffer major losses.
The theory is that the more investment types you have the greater the chance that over-performers will make up for the underperformers, therefore smoothing out returns.
New jobs and new horizons at 50
Being mortgage-free means lower outgoings and this will allow you to spend a little more and to save harder. However, the benefits don’t stop there.
You could decide to cut back on work or go for that dream job that may have a lower salary but is something you have always wanted to do.
Whatever path you choose, being mortgage-free is a major opportunity to supercharge your finances and even redraw your life as you make your way through your fifth and sixth decade.
Đăng ký:
Bài đăng (Atom)
