Month: July 2019

Help to Buy continues to grow and could be extended beyond 2023

The number of homes bought through the Government’s flagship Help to Buy scheme increased by 9% in the 12 months to March 2019 with the figures also rising for first time buyers.

The data published by the Ministry of Housing, Communities and Local Government (MHCLG) show that 52,404 home sales were completed under the scheme during the 12 month period, the first time it has reached over 50,000 in a year.

Some 43,248 of these homes were bought by first time buyers using the Help to Buy scheme, a rise of 11% year on year, dispelling the myth that it does not help those taking their first step on the housing market.

In London there were 6,115 purchases using Help to Buy, up 30% year on year and first time buyers made up 95% of sales in the capital, some 5,838 homes.

The average price of properties bought through the scheme across England reached £300,487, up 4% from £288,462 at the same point in 2018.

Since it was launched in April 2013 some 221,405 homes have been bought using the scheme with 81% of them going to first time buyers. The mean purchase price of a property bought under the scheme since the start was £260,218, with buyers using a mean equity loan of £56,257.

Help to Buy offers buyers who have a deposit of 5% an interest free Government loan of up to 40% of the purchase price of new build homes in London and 20% in the rest of the country.

Now it could be extended beyond its current end date of 2023. The newly appointed Secretary of State for Housing, Robert Jenrick, said it will be considered. ‘This is a new administration, a new Chancellor, I think all options are on the table. I intend to have further discussions with Sajid Javid in the weeks and months to come,’ he said.

 

PropertyWire

26^th July 2019

 

 

Mortgages: switch now to cut your payments

Homeowners could save £200 a month thanks to competitive rates and higher prices, says lender

Rupert Jones 

The Guardian

Sat 20 Jul 2019 07.00 BST Last modified on Mon 22 Jul 2019 10.58 BST

More than £26bn worth of mortgage deals are due to mature in October, the largest monthly volume of the year, according to new figures released this week.

So if one of those thousands of home loans is yours, you might want to start thinking about looking for a new deal now – particularly as you may be able to make a chunky saving on your monthly payments.

Yorkshire building society – which came up with the figure after analysing market data – says some homeowners whose deals are coming to an end this autumn could save about £200 a month by remortgaging.

That is partly as a result of the current competitive mortgage rates, but also reflects the rise in house prices across much of the UK during the last few years.

Mark Harris at mortgage broker SPF Private Clients says: “Those coming off five-year fixes will find that rates are now considerably cheaper, which should mean you can make a significant saving on your monthly payments.”

He adds: “You may also find that your property has appreciated in value, meaning you qualify for a lower, cheaper, loan-to-value [LTV] band.”

Official Land Registry data shows that the average UK house price in October 2014 was £191,855, and had risen to £229,431 by May this year (the latest month for which figures are available) – an increase of just under 20%.

The Yorkshire says a homeowner who initially borrowed 85% of a £200,000 property in October 2014 at a market-average five-year fixed rate of 4.25% could benefit from a lower LTV of 65% and take advantage of the society’s two-year fix priced at 1.54%, which would save £201 a month in repayments. (However, this deal does involve paying a £1,495 product fee).

If you want to take out a five-year fix, decent rates now available for those remortgaging include:

• 1.77%from Skipton building society, where you can borrow up to 60% of the property’s value, with a £1,995 product fee
• 1.94%from Platform up to 60% LTV with no product fee
• 1.83%from Barclays up to 75% LTV with a £999 product fee

Often with remortgages, the lender will throw in a free valuation and/or free legal services.

Harris says if your mortgage deal is coming to an end, be prepared. “Speak to a mortgage broker a few months beforehand, though if you have a broker, they should be getting in touch with you. If you are looking for extra cash for home improvements or debt consolidation, you should mention this so it can be factored into the sums.”

People need to make sure they consider all the options available. “Your existing lender may be in touch offering another deal for you to slip on to, but make sure you compare this with what else is on the market rather than assuming it is the best option for you,” he adds.

Nick Morrey at broker firm John Charcol says remortgaging to a new lender is likely to be the cheapest option, since the likelihood of your existing lender offering you a product that is also the cheapest of all that are out there is slim. However, the latter route will be quicker than a remortgage, as it will not involve any underwriting or legal work.

“If your current product expires in October, you have approximately three months to tee up a remortgage, should that be the best option. Given that it takes on average up to two weeks to get an offer of advance from the new lender, and four weeks for the legal work to be done, this should be enough time to have everything in place to go the day after your current deal ends, he adds. “Considerable savings can be made compared to the deals available this time in 2014.”

According to Harris, if you have savings earning next to nothing in interest but you want to hang on to them rather than paying down the mortgage, it may be worth considering an offset home loan. These mortgages link your savings, and in some instances your current account, to your home loan.

“This will enable you to reduce the interest you pay while still retaining access to your savings in case of emergency.”

Meanwhile, Kevin Roberts, a director at Legal & General Mortgage Club, says a competitive mortgage market and slower house price growth are helping more first-time buyers make home ownership a reality.

However, he points out that HSBC found that people now expect to be on average 39 years old before they buy their first home. “There are clearly still challenges facing people trying to take their first step, particularly if they don’t have the support of a Bank of Mum and Dad.”

Banks are approving more loans, rates are low and there’s even an option where you don’t need to borrow

Marc Shoffman

July 6 2019, 12:01am, The Times

• Housing market
• Banking
• Economics
• London

 

First-time buyer mortgage approvals are on the rise, but many people are still struggling to get on to the property ladder because of demands for high deposits and wages.

Lenders approved 7.8 per cent more mortgages for first-time buyers in April compared with the same month last year, according to UK Finance, the industry trade body.

The average interest rate on a typical 90 per cent loan-to-value (LTV) two-year fixed rate mortgage is 2.65 per cent, compared with 2.73 per cent in July 2018, according to Moneyfacts, a data company. The average rate on a 95 per cent LTV mortgage over the same period has fallen from 4.04 per cent to 3.25 per cent.

Five-year fixed rates have also fallen. The average five-year fixed rate mortgage at 90 per cent LTV is 3.02 per cent, compared with 3.2 per cent this time last year, while 95 per cent LTV deals have dropped from 4.37 per cent to 3.64 per cent. “For those who can afford it, there is a plentiful supply of mortgage deals on the market that have been tailored to suit the needs of first-time buyers,” says Rachel Springall of Moneyfacts.

Deposit differences
Mortgage rates may be low, but raising a deposit can still be difficult for first-time buyers. There are still big regional variations in house price inflation, which affects requirements and the size of deposit needed. Research by Zoopla, a property portal, found that the average deposit first-time buyers need to purchase a property in one of the UK’s main cities is £38,418, but can range from £18,449 in Liverpool to £119,000 in London.

New mortgage borrowers are benefiting from falling prices in the south, according to Zoopla, particularly in London where prices fell 0.4 per cent in the 12 months to May.

This drop means the average annual income required to buy a home has also fallen to £84,000 in London, which Zoopla says is the lowest in four years. In contrast, rising prices in cities such as Manchester and Leicester have pushed the average income needed to buy up by 19 per cent and 20 per cent respectively. Richard Donnell, research director at Zoopla, says: “While affordability in London has improved, first-time buyers will still need to earn more than three times the minimum income required to buy in Liverpool.”

Is now a good time to buy?
Mortgage brokers insist the market is ripe for first-time buyers despite uncertainties such as Brexit.

Joshua Gerstler, director of the Orchard Practice Financial Services, an adviser, says: “We always think that it is difficult for first-time buyers and that people had it much easier ten years ago. Then a decade goes by and they realise they were lucky to buy their first property when they did.

“If you are buying a home for the long term, Brexit should not have any influence on your decision.” Jane King from Ash-Ridge Private Finance, a mortgage adviser, says: “With interest rates low, lenders wanting to lend and a slight relaxation of criteria in the past year or two means now would be a good time to buy, especially with prices falling in some parts of the UK.”

Best buys
NatWest is offering the lowest rate on the market for a two-year fix at 1.38 per cent with a £995 fee, but you will need a 40 per cent deposit. Skipton Building Society offers a market-leading five-year fixed rate of 1.77 per cent with a £1,995 fee also at 60 per cent LTV. Yorkshire Building Society offers a 90 per cent LTV two-year fixed rate at 1.79 per cent with a £1,495 fee.

Some lenders are offering zero- deposit deals. Barclays relaunched its Family Springboard mortgage in May, which lets homebuyers borrow deposit-free at 2.95 per cent over five years as long as a family member or friend puts 10 per cent of the property value into a savings account as security.

First-time buyers can also get on the ladder through the government’s shared-ownership scheme, where you take out a mortgage for a share in the property that you own (usually between 25 and 75 per cent) and pay rent on the rest. Another option is the Help to Buy equity loan scheme, which provides a 20 per cent government loan (40 per cent in London) to those with a 5 per cent deposit to put towards the purchase of a new- build property.

The government has confirmed this week that the scheme will run until at least 2021.

King says that first-time buyers can get good deals with a 10 per cent deposit. “Don’t just look at the headline rate. Buyers should also consider added fees and charges and whether these are refundable if the sale falls through.”

She adds: “They should also check specifically that the lender will agree a loan for the type of property that they want to buy.”

 

 

Cheaper mortgage rates for new buy-to-let landlords

The week Barclays joined the slew of lenders cutting rates on buy-to-let mortgages.

Buy-to-let mortgage rates are tumbling as lenders unveil cheap deals in a bid to keep landlords in the market.

Figures released by Mortgage Brain, a platform used by brokers, show the average 40%-deposit tracker mortgage is 3% cheaper than it was three months ago, and a 30%-deposit tracker deal is 2% cheaper than in March. This means a landlord taking out a £150,000 mortgage would save £234 a year with a 40% deposit and £144 a year with a 30% deposit.

On Thursday, Barclays joined the slew of lenders cutting rates, including a reduction from 1.59% to 1.55% on its two-year fixed-rate deal to landlords with a 40% deposit. It also cut its 1.88% five-year fix to 1.83% with a minimum 25% deposit.

This followed moves by Halifax on Tuesday, which cut buy-to-let rates on some deals by 0.45 percentage points, and by Nationwide, which trimmed rates on its broker-only products.

Over the past two years, landlords have had to adjust to stricter lending criteria, as well as the phasing out of tax relief on mortgage interest payments by April 2020.

“The buy-to-let market has taken a real hit — there simply is not as much interest from landlords as lenders have been used to over the years,” said Aaron Strutt of broker Trinity Financial .

Lenders have been targeting the buy-to-let remortgage market to drum up some business and, incredibly, they keep cutting rates to tempt landlords in.”

There are also a record number of deals available to new landlords, a sign that lenders are targeting first-timers into the rental market.

There are 1,405 first-time buy-to-let mortgages, up from 645 in 2014, according to Moneyfacts, the price comparison website. The average rate for a two-year fix has plummeted from 4.01% in 2014 to 2.97% this month.

“Entering buy-to-let hasn’t been without its hurdles,” said Rachel Springall of Moneyfacts. “Rules designed to tighten lending don’t seem to have shaken up attitudes to attract first-time landlords.”

The Sunday Times

July 7 2019 12.01am

 

 

Why income protection is important in your 20s and 30s

It’s easy to dismiss income protection as something you’ll need later in life when age-related illnesses and conditions become more prevalent. However, recent statistics from healthcare and protection insurer, The Exeter, show an increase in the number of people claiming for income protection in their 30s.

Income protection not only protects you and your family if a physical condition means you can’t work, but it also pays out if you suffer with mental ill health. In 2017, mental health was the most common cause of claim on income protection policies in the UK, according to the Association of British Insurers.

Big life events are often a trigger for people to think about their cover.

Here, Peter Hamilton, head of retail protection at Zurich, reveals why you should consider income protection and other types of cover as you reach major life milestones.

Buying a house

It goes without saying that anybody buying a house should protect their home and the ability to make monthly mortgage payments against the risk of being unable to work.

Income protection cover provides monthly replacement income if somebody is unable to work because of long term illness or injury while a critical illness policy would provide a one off lump sum payment if a customer is diagnosed with a number of illnesses covered by the policy.

As well as the financial benefits of cover, most income protection policies provide speedy access to treatments such as counselling or physiotherapy to help people recover and ideally get back to work.  Critical illness policies also usually offer additional support services including access to counselling and advice on anything from sourcing childcare to money management.

This is especially important where people have no savings to act as a buffer to help with life’s ups and downs.

A recent Zurich report showed that despite more than half of UK adults having had unplanned leave from work including sickness or injury, they had no financial provision in place in case it happened again.  One in eight admitted they would need to sell their home if they lost their income, one in six reported having no disposable income and a quarter had no savings.

It’s also worth noting that there is still a misconception out there that renters don’t need protection but ultimately, if people are unable to work through illness or injury, the bills still need to be paid if tenants want to remain in their homes.

Getting married

Tying the knot is another trigger for investing in some sort of protection cover and the same goes for couples choosing to cohabit as married.

It’s important to think about it where partners are dependent on each other for splitting their outgoings. If one were to be hit by unexpected illness, having protection in place could mean the difference between staying in their home or having to sell up and/or move.  In the worst case scenario, if one half of the partnership were to die, having life insurance would lessen the blow – at least financially – for the remaining partner.

Interestingly, Zurich analysis has shown that more than 2.4 million cohabiting families across the UK (or 73 per cent) – the fastest growing family type in the country – do not have life insurance, potentially leaving their relatives open to financial problems once they pass away.  This compares to 56 per cent of married couples.

Having a child

Each year, we pay out millions of pounds in claims to customers and their families whose lives have been turned upside down by illness and worse still, by the loss of loved ones.  Income protection and critical illness can help to provide financial support for those affected by illness or injury, while life insurance means that financial support is in place for children and any dependents left behind.

Some critical illness policies also include children’s cover as an additional feature and will pay out up to around £25k if they are affected by a range of illnesses covered by the policy.  This can help families with any financial impact such as having to take time off work or help pay towards treatments or any changes that have to be made to the home.

Written by:Joanna Faith at YourMoney.com

17/06/2019

Joanna is an award-winning journalist with more than ten years’ investment and personal finance experience. She is editor of YourMoney.com.