UK Mortgage & Property Related News
Buying a home can still be a smart move in today’s high-rate environment, of course, provided that the financials make sense for your budget. But given today’s elevated home buying costs, it’s crucial to gather all the information you need before making this substantial investment.
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The Financial Conduct Authority (FCA) has secured an order of £4m against an unauthorised mortgage broker firm and its associates who the regulator said, “exploited vulnerable consumers”.
The judgment found that the defendants arranged high interest, “unaffordable” bridging loans for people who were about to be evicted from their homes. In some cases, the defendants bought homes from the people facing repossession for less than valued, then rented the properties back to them.
It was found that the firm London Property Investments (LPI) arranged mortgages while NPI Holdings Limited (NPI) bought properties and rented them back to the sellers, both without regulatory authorisation. Daniel Stevens, the director of LPI and NPI, and his father, Tony Stevens, were also found liable.
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Mortgage payers and business owners have been warned that higherrates are here to STAY despite the interest rate cut from the Bank of England last week. Bank documents show policymakers expect that level to be about 3.5% in three years’ time, with mortgages staying around the 4.5 per cent and five per cent level.
Claire, a maternity support worker from Portsmouth, told the Guardian newspaper her family moved into their house in January 2022 on a 1.99% two-year fixed repayment mortgage, paying £1,042 a month. Since then their mortgage payments have risen by more than £500 a month to £1,596.90.
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People buying a house for the first time are spending about 37% of their take-home pay on mortgage payments, according to the Nationwide.
The figure is well above the long-term average of 30%, the building society said, making it tougher for new buyers to afford a house.
House price growth picked up in the year to July as wages rose, it added.
Prices increased by 2.1% over the year, the fastest pace since December 2022.
Some people were feeling more confident about getting a mortgage as their pay packets went up, Nationwide chief economist Robert Gardner said.
But relatively high mortgage rates and affordability issues also acted as a brake for prospective buyers.
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Last week’s Bank of England interest rate cut, the first since 2020, spelled good news for millions of homeowners and would-be buyers – but it has also given them lots to think about.
If you are looking to buy a home, what sort of mortgage do you go for, and is this going to push house prices even higher? And if your existing mortgage deal is about to end, should you grab another one right now, or hold fire in case lenders launch cheaper products?
The cut, from 5.25% to 5%, should translate into lower borrowing costs for homeowners with a base rate tracker mortgage, or whose monthly payments are linked to their lender’s standard variable rate (SVR).
However, almost 7m of the UK’s 8.4m existing residential mortgages are on a fixed rate, so most people won’t see any change. A chunk will, however, need to consider their options over the next few months because their current deal is coming to an end.
Here we round up some of the advice from mortgage brokers.
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PERSONAL assistant Aimee Shipp always wanted to own a home – and skipped University and getting a degree so she could start saving aged 18.
At just 26, the savvy saver bought a £228,000 flat in Harlow, Essex as she worked as a personal assistant.
In her first job, aged 18, she started saving for a house deposit.
She was being paid £32,000 a year, despite having no higher education qualifications.
By 20, this had risen to £35,000 and by 22 she was earning £38,000 a year as a PA.
Aimee said: “I didn’t want to go to university and get saddled with debt, I wanted to get a job and save to buy a home of my own, so that is exactly what I did.”
Last year, she finally decided she had saved enough money to put down a deposit on a home of her own, so started to search for apartments she could afford.
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The Bank of England has reported that the number of mortgage approvals for home buyers remained “broadly stable” in June, with 59,976 mortgages for house purchase approved, compared to 60,134 in May.
The Bank’s Money and Credit report stated: “Net mortgage approvals (that is, approvals net of cancellations) for house purchases, which is an indicator of future borrowing, remained broadly stable at 60,000 in June.”
Since August last year, the base rate has stayed at 5.25 percent.
However, with inflation hitting the two percent target level for the past two months, there are hopes that interest rates can start to be reduced, possibly as early as Thursday, easing the pressure on borrowers.
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Only one in eight potential first-time buyers can afford the average starter property in their area, new analysis has revealed.
High house prices, increasing living costs, insufficient savings, rising rents and mortgage rates have all combined to push home ownership out of reach for many young people, according to the study by the owner of Skipton Building Society and analysts at Oxford Economics.
It revealed almost four in every five potential first-time buyers have insufficient savings for the deposit needed to get onto the property ladder in their area.
The challenge is greatest for potential first-time buyer households in the bottom 25 per cent of earners – those earning £22,850 or less a year.
For these first-time buyer households, fewer than one in 100 can afford to take the first step onto the property ladder in their local area.
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Rightmove has thrown its weight behind the new Labour government’s bid to help first time buyers – and it wants it to go further.
In a statement over the weekend the portal said it welcomes proposals to help first-time buyers, including Labour’s initiative to give local first-time buyers the first chance to buy homes on developments. Its housebuilding targets and planning reforms should also positively impact those buying for the first time.
Rightmove cautions that its analysis suggests some limitations with a mortgage guarantee scheme, and it is only likely to be able to support a small number of first-time buyers. However, it says making it permanent would also at least give first-time buyers the confidence that it is an option for them.
A new first-time buyer study by the portal reveals that only 37% of homes for sale will be eligible for first-time buyer stamp duty relief in England when the existing thresholds revert from April 2025.
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As many as 320,000 UK adults have been pushed into poverty by soaring mortgage costs after the sharpest increase in interest rates since the 1980s, a leading thinktank has said.
Highlighting the damage caused by Britain’s exploding mortgage timebomb, the Institute for Fiscal Studies (IFS) said individuals who needed to renew their home loans or take out new ones in the past two years had experienced a sharp fall in their disposable income.
It said some households were paying thousands of pounds more in additional mortgage payments, in a development that was likely to have driven up poverty rates among mortgagors by 1.4 percentage points between December 2021 and December 2023.
It said this jump in relative poverty – defined as people living in households with income below 60% of the median – was the equivalent of 320,000 more adults falling below the breadline.
Millions of homeowners have faced a leap in borrowing costs after 14 consecutive increases in the Bank of England base rate from a record low of 0.1% in December 2021 to 5.25%, where it sits now, in its most aggressive assault on inflation for four decades.
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