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Mortgage market review November 2016

Mortgage market update for November 2016

Macro news and drivers

Mortgage lenders penalising borrowers with children  - According to price comparison website, one in six families have been offered a smaller mortgage because of childcare costs while some have even been turned down.

Mortgage lending shoots up 14%  - According the Council of Mortgage Lenders, homeowners borrowed £12.2 billion for house purchase, up 14% for the month and 11% from last year. They took out 66,000 loans, up 13% on July and 9% on August 2015.

Homebuyers return to the market following Brexit jitters  - The Royal Institute of Chartered Surveyors said 8% more chartered surveyors reported an increase in buyer enquiries during September, a marked improvement on June when a net balance of 34% of respondents reported a drop.

Annual house price growth slows to lowest rate since 2013  - Average annual house price growth has slowed to 5.8%, the lowest yearly growth rate since August 2013, according to the latest Halifax House Price Index.


Regulation and legislation

Government urged to scrap stamp duty to boost housing market  - One of the UK's leading estate agents is calling on the government to cut stamp duty in order to provide a boost for house buyers after new data revealed a post-Brexit slowdown in the property market.

Bank of England announces tougher buy-to-let lending rules  - The Bank's Prudential Regulation Authority confirmed it will introduce tougher underwriting standards and affordability assessments to make sure borrowers can cover the cost of their mortgage in the event of an interest rate rise.

FCA finds two out of five mortgage advice files unclear  - The Financial Conduct Authority found nearly 40 per cent of the mortgage advice files it has reviewed were so unclear it couldn't tell if the advice given was suitable or not.

Osborne's pension changes to push up house prices    - The report by the Office for Budget Responsibility found the net effect of the former Chancellor of the Exchequer's reforms - including pension freedoms, the secondary annuity market, restrictions on tax relief and the Help to Buy: Isa, - would initially be positive. By 2018-19 they were predicted to have a net positive effect of £2.3bn on the public finances but this would gradually tail off, turning negative in 2020-21 and reaching -£5bn by 2034-35.

FCA eyes buy-to-let mortgage crackdown    - The crack-down on buy-to-let could continue as the Financial Conduct Authority says it is looking at bringing in tougher standards. The FCA has said it may bring in similar rules to the Prudential Regulation Authority, which acted last week to stamp out relaxed underwriting standards.


Product developments and innovation

Prestige reduces rates and expands buy-to-let range  - Prestige Finance, which is part of OneSavings Bank, has reduced rates across its prime residential product range and expanded its buy-to-let offering.

Leeds extends mortgage term for lending into retirement -    Leeds Building Society is improving criteria for lending into retirement by increasing the maximum term of a mortgage from 25 years up to 40. Leeds Building Society also recently increased its maximum age for residential borrowers from 75 to 80.

Dudley bs produces 90% LTV exclusive for openwork   -Dudley Building Society has launched an exclusive two-year fixed rate mortgage specifically for Openwork members. The deal will be available through national specialist distributor, Solent Mortgage Services (SMS). The product has a 2.99 per cent rate fixed for two-years for up to 90 per cent loan-to-value (LTV).

Accord unveils fresh 90% LTV mortgages  - Accord has launched a range of mortgage deals and reduced its rates, in a bid to help borrowers and first time buyers with small deposits. The intermediary-only lender, which is part of the Yorkshire Building Society Group, has launched three 90 per cent loan-to-value mortgages.

Teachers launches shared ownership mortgage  - Teachers Building Society has launched a new 4.29 per cent three-year fixed rate shared ownership mortgage. This mortgage, available to teachers and education professionals in England and Wales as well as residents of Dorset, Hampshire and Wiltshire, is available up to 95 per cent loan-to-value (LTV).

Accord removes upfront mortgage application fee  - Accord Mortgages has announced it has removed its mortgage application processing fee, meaning borrowers will no longer be charged at the appoint of applying for a home loan.


Consumer trends

Over-55s own homes worth more than the annual GDP of Italy  - According to research commissioned by retirement income specialist Age Partnership, homeowners in England aged 55 and over currently own £1.5 trillion worth of property, £0.1 trillion more than Italy's annual GDP.

One in eight self-employed struggles to get a mortgage    - Almost one in eight (12%) of self-employed people have been rejected for a mortgage, according to research from the Nottingham Building Society. This is despite often earning more than in their previous full-time employed job. The Nottingham's study found that nearly half (48%) of the self-employed workers questioned earned about the same or more than in their previous job.


Experts corner

Base rate hits lenders where it hurts    - Lenders' profits are likely to diminish if the Bank of England base rate hits 0 per cent. A base rate cut will result in lenders losing out by reducing variable rates for existing mortgage holders whose contracts do not come with caveats that allow the provider not to pass on the base rate cut.


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