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Mortgage market review October 2017

Mortgage market update for October 2017

MACRO NEWS AND DRIVERS

UK interest rate stay at 0.25% but Bank of England hints rise is looming
On Thursday, Threadneedle Street left interest rates at their record low of 0.25% amid fears over Brexit, but dropped a heavy hint that the first increase in the cost of borrowing for a decade may come sooner than expected if the economy continues to strengthen.
https://www.theguardian.com/business/2017/sep/14/uk-interest-rates-bank-of-england-mpc-inflation

Growth at the headline level, but regional house price picture remains mixed
There is an increasingly mixed picture across the UK housing market, according to the August 2017, UK Residential Market Survey. Although the headline level shows a return to growth, sentiment is less positive in prime central London and to a lesser extent the wider South East, alongside the North and East Anglia.
http://www.rics.org/uk/news/news-insight/press-releases/growth-at-the-headline-level-but-regional-house-price-picture-remains-mixed/

Research reveals major changes in British housing affordability
The gap between the least and most affordable parts of Britain has almost doubled since the start of the economic downturn, new Yorkshire Building Society research shows. However, homes in 54% of local authority areas – including Edinburgh, Birmingham, Peterborough, Leeds and Harrogate - are more affordable now than they were before the financial crash.
http://www.ybs.co.uk/media-centre/housing-availability.html

Number of buy-to-let deals at highest in nearly 10 years
Landlords may have had it tough in the last few years, what with the stamp duty surcharge, tighter affordability rules and tax relief changes, and that's before we even get to the new regulations set to hit the market at the end of the month. But that doesn't seem to be deterring providers to any extent, with the number of buy-to-let mortgages available at a post crisis-high rates at fresh lows.
https://moneyfacts.co.uk/news/buy-to-let/best-buy-to-let-mortgages/

REGULATION AND LEGISLATION

LANDLORD NUMBERS FALL AS BUY-TO-LET REGULATION BITES 
While the number of landlords has fallen over the last two years there has been a rise in the supply of homes to rent, meaning landlords are expanding their portfolios. Since 2015 the supply of rented homes has increased from 4.9 million in 2015 to 5.1 million. Over the same time, landlord numbers have dropped by 154,000 to 3.56 million.
https://www.whatmortgage.co.uk/news/landlord-numbers-fall-buy-let-regulation-bite/ 

GOVERNMENT ACTS ON HOUSING STRATEGY - The government has launched a consultation on proposals to streamline the planning process and ensure more new homes are built in areas where the need for them is greatest. Under the new proposals, assessing local housing need will be standardised, the government said. This will replace the current, "fragmented system", which it blamed for delays and higher up costs for local authorities.

https://www.ftadviser.com/mortgages/2017/09/14/government-acts-on-housing-strategy/

PRODUCT DEVELOPMENTS AND INNOVATION

Yorkshire Building Society has reduced its two-year fixed rate mortgage
This deal is for all who wish to borrow from £25,001 up to £5 million at 75% loan-to-value. A fee of £995 is payable, all of which can be added to the advance of the mortgage. An incentive package of free valuation and £250 cashback is available.
https://moneyfacts.co.uk/product-news/articles/moneyfacts-weekly-product-news---14092017/

First Direct halves mortgage fees and tweaks rates
First Direct has halved mortgage fees across its product range and dropped rates on its fee-free deals. The lender’s fees have been reduced from £1,450 to £725 in response to consumer demand but rates have been raised by up to 0.2 percentage points. First Direct’s revamped range includes two-year fixes at 1.24 per cent to 60 per cent LTV and 1.34 per cent to 75 per cent LTV.
https://www.ftadviser.com/mortgages/2017/09/11/first-direct-halves-mortgage-fees-and-tweaks-rates/

Foundation outlines portfolio landlord approach
Foundation has pledged to keep changes to a minimum as it outlined its approach to underwriting for portfolio landlords. It will apply a minimum aggregate rental cover ratio of 125 per cent, stressed at an interest rate of 5.5 per cent.
https://www.mortgagestrategy.co.uk/foundation-home-loans-confirms-portfolio-landlord-commitment/

HSBC scraps mortgage valuation fees
The change, which comes into effect from Monday, 11 September, will lead to savings of £173 for property values between £150,001 and £200,000, £227 for property values between £250,001 and £300,000, and £281 for property values between £400,001 and £500,000.
https://www.ftadviser.com/mortgages/2017/09/11/hsbc-scraps-mortgage-valuation-fees/

Skipton relaunches three-year fixed rates
Skipton has relaunched its range of three-year fixed rate products in response to rising demand for longer-term options.
https://www.ftadviser.com/mortgages/2017/09/14/skipton-relaunches-three-year-fixed-rates/

CONSUMER TRENDS

Remortgaging strengthens in July
UK Finance data shows that lending for house purchases in July was lower than in the preceding month but higher than a year earlier. On a seasonally adjusted basis, lending to first-time buyers and home movers declined modestly in value, although the number of loans was unchanged. The value and number of people remortgaging increased, and there was a smaller increase in both the value and volume of buy-to-let lending.
https://www.ukfinance.org.uk/remortgaging-strengthens-in-july/

Mortgage affordability gap between sexes narrows
The gap between mortgage affordability for men and women is at its smallest since the financial crisis, figures from eMoov have shown. Rising salaries for women mean the gap between affordability compared to their male counterparts stands at 12 per cent – down from 17 per cent in 2009, according to eMoov.
https://www.ftadviser.com/mortgages/2017/09/15/mortgage-affordability-gap-between-sexes-narrows/

Mortgage for a lifetime: interest-only mortgages to last into retirement
Older borrowers could continue paying their mortgages until they die or move into care, under a new proposal by the city watchdog. The Financial Conduct Authority (FCA) has launched a consultation to consider introducing retirement interest-only loans. These mortgages would see borrowers paying the interest on their mortgages without repaying the loan, and would last until death or a move into a care home.
http://www.which.co.uk/news/2017/09/mortgaged-for-a-lifetime-interest-only-mortgages-to-last-into-retirement/

Nearly 4 million homeowners over-55 plan to downsize
But for downsizers the convenience of having a smaller home is more important than rasing cash. Downsizers expect to make an average of £112,000 by selling up. Although a shortage of suitable homes to move to, fees and rising property prices are seen as the main barriers to downsizing.
https://www.pru.co.uk/pdf/press-centre/nearly-4million-plan-to-downsize.pdf?gsasro=2&gsatot=4&gsaq=DOWNSIZING

The Bank of Mum and Dad: the UK's most lenient lender? 
One in five parents have taken money from their pension, or stopped contributing to it, to help their children financially. Nearly six out of 10 parents who have loaned money to children or grandchildren have written off all or some of it. And three in four have not set any repayment conditions or plans for the money they have loaned.
https://www.pru.co.uk/press-centre/the-bank-of-mum-and-dad/?gsasro=1&gsatot=8&gsaq=MUM%20AND%20DAD

EXPERTS CORNER

Ten years from the crunch, vigilance is still key
Record low interest rates have led to a worrying upsurge in credit card debt and unsecured loans, with consumer lending levels now exceeding £200bn for the first time since the crisis. Within this context, a recent report by Moneyfacts for Reuters has revealed that the number of ‘adverse credit’ mortgage packages available on the market has doubled in recent years. In other words, the re-emergence of ‘sub-prime’ mortgage lending represents an inevitable reflection of prevailing market conditions as well as tightening mainstream loan criteria.
https://www.mortgagestrategy.co.uk/opinion-ten-years-crunch-vigilance-still-key/

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