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Mortgage market review - January 2016

Mortgage market update for January 2016

Macro news and drivers

House price rises accelerate in December
The rate of increase in average house prices leapt to 0.8 per cent in December, according to figures from Nationwide. It marks a steep increase from last month, when prices average prices climbed just 0.1 per cent.       

Govt to directly comission building of 13,000 new homes
The Government has kick-started its affordable homes programme by announcing the fast-track building of thousands of houses on publicly-owned land.       

Equity release boom predicted for next two years
Independent research conducted on the firm's behalf in November with 106 advisers specialising in retirement planning, found 65 per cent anticipate an increase in client enquiries relating to equity release to fund at least part of their retirement.       

Flooding risk is cripling the value of homes
According to third party mortgage administrator HML, properties classified as at high risk from flooding in the North West and Yorkshire and Humber regions of England increased in value half as fast between 2005 and 2014 as those at no flagged risk (17% compared to 9%).        


Regulation and legislation

Pressure builds on lenders to review maximum age criteria
Pressure is building on lenders to review their maximum age limits after two firms this week loosened their lending into retirement criteria.       

FOS rulings tell lenders to extend interest-only terms indefinitely
The Financial Ombudsman Service has told mortgage lenders in at least two cases to extend interest-only terms indefinitely for older borrowers.       

Chancellor says base rate should increase this year
The chancellor has warned the base rate is likely to increase this year but added it would be "wholly inappropriate" for him to pressure the Bank of England's governor Mark Carney.       

Product developments and innovation
Leeds to launch help to buy lonson range
Leeds Building Society has pledged to launch a range of Help to Buy London mortgages when the Government scheme goes live next month.       

Kensington announces rebrand
Specialist mortgage lender Kensington Group is to rebrand as Northview Group in an effort to bring together its offerings and offer a real alternative to high street lenders, the group's chief executive Amany Attia has announced.       


Consumer trends

Borrowers increasing taking out fixed rates
The proportion of loans taken out at fixed rates is increasing as borrowers look to lock in before base rates rise. Figures published jointly by the Bank of England and the FCA today show 80.7 per cent of gross advances in Q3 were fixed rates. This is up from 78.9 per cent in the previous quarter.       

Remortgage applications up 98% over six months
The remortgage market has remained "extremely strong", according to figures from Accord, which showed the number of borrowers renewing their mortgage doubled year-on-year in the six months to 30 November.       

Number of first-time buyers remains buoyant
The number of first-time buyers is estimated to have totalled 310,000 in 2015, according to the annual Halifax First-Time Buyer Review.       

Tax changes will force one in 10 landlords to sell
The recent tax measures announced by the government in a bid to dampen the buy-to-let market will cause one out of every 10 landlords to sell up, according to new research from the Council of Mortgage Lenders.       


Experts corner

Sally Laker: it's time for lifestyle mortgages
It appears that 60 is the new 50 and 50 is the new 40. In fact, there is an increasing population redefining non-retirement because of their aspirations.       

Mortgage market faces make or break 2016
L&G-Lending figures have been gently improving on the back of growing nationwide demand for housing, according to Legal & General Mortgage Club's director, but continued increases in house prices are threatening to strangle the market by making homeownership less affordable.        

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