News Review: Property
New build needs LTV boost to promote growth on the subject of new by
Nigel Stockton, financial services director,
Countrywide
it feels like we’re experiencing a subdued market this month but people are making money by both managing cost and maximising protection and general insurance opportunities. in terms of house prices,
both Halifax and nationwide reported small falls in house prices this month with Halifax claiming the average property is now worth 3.7% less than in april last year and nationwide being more generous with a -1.3% year on year difference. there are significant regional variations contained therein. it was good to see the north West growing again and London remains a completely different proposition to the rest of the country.
Hopefully with the good
weather continuing, more days worked, slightly falling house prices and greater choice of mortgage products combined will fuel greater buyer activity for Q2 - i think all estate agents will benefit. However, to boost activity in the whole housing market, lenders need to remove their discrimination against new homes. By extending lower loan to
values to new build against second hand homes, lenders have created the single most important issue facing this market and the issue of most concern to the builders and developers.
homes, we do have exciting news. in addition to the exclusive strategic agreement with cB richard ellis, countrywide has launched a new financial services proposition for the new build market. the developer/new build market is a sector that we believe will grow much faster than the rest of the market and as market leaders, we’re in discussions with a number of lenders to provide competitive products for this market. Watch this space.
Activity the residential market has remained relatively flat over the last weeks and continues to roll along in its new normal state. the only exception is that we are beginning to see product availability continuing to improve; whether we see buyers take advantage of these mortgages is yet to be determined. it seems barely a week goes
by without another lender announcing it’s offering a range of increasingly attractive deals. recent research has found there are currently nearly 12,000 products on the market, double the amount of last year. However, it’s a shame lending liquidity and funding hasn’t improved to the same degree as all this means is that the same lending volume is deployed across more products. there are some small encouraging signs in terms of range and it’s good that the nationwide has linked a savings product to its 95% LtV product. Whilst it is very disappointing that brokers
8 mortgage introducer JUNE 2011
can’t use this, it is good that lenders are considering the size of deposit issue for first- time buyers.
“By extending lower loan to values to new build against second hand homes, lenders have created the single most important issue facing this market”
Mortgages on to general mortgage market health. Boosted by seasonality, the council of mortgage Lenders did report an increase in gross mortgage lending in march with £11.3bn of transactions, an increase of 21% from February but still down year on year. indeed the monthly figures remain positive but what remains of concern is that lending remains down year-on-year though mortgage lending in 2010 was only £136bn. remortgaging is slightly
higher year-on-year but it’s still small whilst the base rate remains at 0.5%. roger Bootle at capital economics has suggested we’ve three more years at this level so we could be waiting a while for a wholesale shift away from the 50% of consumers now
on Standard Variable rate. time will tell no doubt. thinking about the stats
that do fly around, i have to point out that whilst it will be interesting to see the reports into the activity in the market in april from the Bank of england and cmL, they are unlikely to provide a true reflection of what is happening out there. Heavily affected by the multiple bank holidays and only 18 trading days, i think it is fair to say april was a wash out. may is much more likely to be the month which will present a clearer picture of where the market is and the sentiment of the consumer. Last month i mentioned
that buy-to-let product availability is probably the highest it’s been since the credit crunch and that slowly seems to be drawing small scale buy-to-let investors back into the market. our own countrywide
Q1 rental review revealed that 40% of all landlords have small portfolios of 1-3 properties, whilst northern rock and the mortgage Works have recently launched some further deals and aldermore has also made some changes. coventry, through its
godiva arm, announced recently that they’d be offering a buy-to-let product up to 65% LtV with a three- year fixed rate at 4.99% with no early repayment penalties and fees of just £250. this seems to be a step in the right direction though generally the rental market is crying out for more investors as demand continues to seriously outstrip supply.
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