News Review: Property
Muddle of statistics hasn’t put lenders off So whilst these distractions
by Nigel Stockton, financial services director, Countrywide
an abundance of market surveys, statistics and research always seems to appear over the summer months and this June has been no different. the consumer confidence statistics have been all over the place. there have been quite
a few reports out, and as it’s increasingly clear that confidence is one of the main forces affecting the property market. interestingly, the earlier ones present reasonably
encouraging
figures - in fact aren’t some almost too encouraging? the later ones are showing
the true picture – take a good look at the may consumer spending statistics. the nationwide for example claims it saw month on month consumer confidence figures rise the highest in one month in over five years. Yet with most people
getting very small pay increases and with consumer Price inflation at 4.5%, there is increasing evidence of belt- tightening by consumers who have less money to spend than they did at the start of the year. i think everyone’s wary of
calling a quick recovery – all the statistics i’ve seen have been carefully buffered with a reminder to consider the impact of the warm weather, copious bank holidays, the royal wedding and other distractions that took place during april/may when looking at the figures.
certainly cheered the public up a bit, they have skewed recent statistics and the most recent look none too optimistic with consumer debt increasing and spending declining. a few specifics - the
Building Societies association property tracker found some latecomers are finally realising that their luck is in if they can get finance. they reported a fall in the number of people that think it’s not a good time to buy (21%, from 29% in march). However, the concerns
remain the same - 62% said raising a deposit was holding them back, whilst 53% had concerns about being able to obtain a big enough mortgage. Legal & general’s latest research was similar – one in 4 borrowers thinks their income is to low to obtain a mortgage which means as an industry we have a lot of work to do.
House prices in terms of prices, yet again,
it depends on which one you trust. nationwide casts a more positive picture than Halifax, with year-on-year prices at -1.2% compared to -4.2%. Both showed very slight increases m-o-m, in line with flat predications. Looking at historic data,
it couldn’t be more different than nationwide’s may year- on-year stats from 2009 (-11.3%) and 2010 (+9.8%). neither is exactly sparkling and outside of certain postcodes in central London, which is much more global, the market is one of 5/10% discounts on house price
6 mortgage introducer JULY 2011
leading to sale. Houses are still selling
though although we are looking at probably a slightly lower level of transactions – than the 560,000 we saw in 2010. this means for estate agents the fourth year of around half the usual 1.2m transaction run rate. this has led to
widespread reorganising and restructuring.
indeed, for
the first time, we now have industry analysts and experts looking extremely closely at this long run rate and wondering if 900,000 to 1m is the new norm. more importantly for
us brokers though are surveys about consumers’ relationships with products. i saw an interesting article that said 15% have never switched their mortgage lender and 14% have never switched their home insurer. it will suit some consumers
to shop around – surprisingly with the majority of people now thinking that rate rises are still far off, we are seeing a substantial volume of applications for fixed rate mortgages. Last month 83% of
countrywide’s applications were for fixed rate products - in may 2010, the figure was 65%, so lenders are really stepping up their game to chase higher volumes and attract those thinking about budgeting for both purchase and remortgaging.
Lending Lenders have been working to the half year so we have seen the influx of sales from Bm Solutions and Santander. obviously needing to get
more share and manage portfolio loan to value. there have also been some
attractive and exclusive offers launched by the smaller lenders – Precise mortgages has gone for short-term bridging. i also don’t dispute their prediction of a £20bn long term average for the buy-to-let sector (including their bridging and short-term financing). Kensington have their new
fixed rate summer range and we’ve welcomed Kentish Building Society to the buy-to-let market. another building society, the coventry has brought in a five year fixed rate 90%LtV for first- time buyers which has ousted nationwide which was very strong in that space. Like the rest of the industry,
it is encouraging to see product availability slowly improving – we only need a good 95% for first-time buyers and some higher LtVs for new build flats and apartments and we’ll be almost there.
First buy the FirstBuy initiative is now really getting underway with the first homes due for sale in September. the £500m scheme where the government and builders put up a 20% equity loan with the individual putting in just 5% deposit is a great way to move the new build market. 75%LtV loans will be available from the Halifax and nationwide to begin with. it is now up to all brokers,
particularly those with land and new homes arms, to embrace the scheme and move things on. i know my teams at countrywide are
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