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First-time buyers losing interest in city living

City living is losing its appeal among first-time buyers, with the vast majority now preferring more subdued locations, Trussle has found.

As it stands just 29% of first-time buyers plan to buy in a city, compared to 53% in a suburb.

Miles Robinson, head of mortgages at online mortgage broker Trussle, said: “The pandemic has increased the financial pressure many first-time buyers were already feeling, as well as creating a seismic shift in what people expect from their home.

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“As a result, financial pressures and rising house prices, alongside a desire for more outdoor space, means demand in more affordable rural locations is currently outpacing that for urban destinations.

“But lenders are starting to return to the market with higher LTV products, which could make more expensive homes in the city more accessible again.

“And, we may see renewed interest in city living once the vaccine has been rolled out and things begin to return to normality.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

“As such, only time will tell if the current lust for country properties is a long-term trend or more of a spontaneous response.”

Higher house prices in urban locations are likely to play a huge factor in this trend, with 65% saying it’s ‘impossible’ to get on the housing ladder.

The research found that the average budget for a first home was £174,266.

BY RYAN BEMBRIDGE

Source: Property Wire

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Rental Market Buoyant Except In London

Rents in London have fallen during the Coronavirus pandemic, property portal Zoopla has reported. However, London is the exception and rents risen in a buoyant rental market across the UK as a whole, it said.

‘Average rents in London have fallen by 5.2 per cent over the last 12 months, reaching levels last seen in 2014’, Zoopla found. It puts this down to ‘new working patterns and lack of tourism during pandemic’.

In contrast, rents increased outside London by 1.7 per cent and rental has increased by a fifth over last year – strong demand that is being driven by a squeeze on lending to potential first-time buyers, said Zoopla.

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‘At the same time, supply remains constrained with levels of investment in buy to let still reduced following the changes to Stamp Duty (the additional 3 per cent surcharge on second properties) and the wider tax regime introduced from 2016 onwards’.

Renters are showing increasing interest in larger properties, especially those that may have access to outside space.

‘The search for space, first seen in the sales market, is now being firmly replicated by renters. Zoopla’s top searches for rental properties include the terms gardens, parking, garages, balconies and pets, reflecting a need for outdoor space and freedom necessary to cope with lockdown. There is also evidence that while the market as a whole is moving more quickly, the market for rented houses is moving more quickly than that for rented flats, reflecting this desire for more space among renters’.

‘For most of the UK, the demand/supply gap is underpinning moderate levels of rental growth’, said Zoopla head of research Gráinne Gilmore.

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‘The split in the rental market caused by COVID-19 has now crystallised and we are seeing the two-speed market firmly entrenched.

‘We haven’t seen the exodus of students from cities and, as more people are staying in the rental market given the squeeze on mortgage lending, higher levels of demand will continue to underpin rents. At the same time however, muted earnings growth will start to limit the headroom for rental growth in some markets.

‘The search for additional space, both indoor and outdoor, within the rental sector is also set to continue as the country goes through additional periods of lockdown’

Source: Residential Landlord

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Criteria searches soar as property market gets back to business in June

Residential mortgage searches increased by 79% in June as brokers scoured the market for deals for furloughed workers and for products with temporary maximum LTV restrictions.

That’s according to the latest criteria activity tracker from Knowledge Bank which has provided an insight into borrower behaviour in the first full month after physical valuations and viewings resumed.

Overall, brokers’ searches were up to 68% in June as the market responded to eased restrictions following the Covid-19 lockdown.

But the residential market showed even greater pick up of searches, with a 79% increase – reflecting the demand in the market.

The terms brokers were searching for continued to follow the same pattern which has been dominant since the pandemic began.

Indeed, the main residential searches, Knowledge Bank revealed, included ‘Covid-19: Temporary Maximum LTV Restrictions’ and ‘Furloughed Workers’.

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What’s more, the ‘Temporary Maximum LTV’ term was also strongly represented in broker searches in the buy-to-let, second charge and bridging categories.

Matthew Corker, lender relationship manager at Knowledge Bank, said: “Lenders have been very active in June, withdrawing and then reintroducing higher-LTV products.

“Many have also adjusted their affordability and allowable income criteria, as details of the extension to the Government’s furlough scheme become clearer.

“It is no surprise to find that brokers are searching more frequently for these criteria. As demand returns to the market, lenders and brokers are having to move fast to stay ahead of the curve.”

Knowledge Bank has responded to this increase in demand by establishing a weekly Criteria Clinic, enabling brokers to discuss the issues and hot topics they are most concerned about with a panel of experts from a cross-section of lenders.

Top five searches performed by brokers on Knowledge Bank – June 2020 (source: Knowledge Bank)

RESIDENTIALBUY-TO-LETSECOND CHARGESEQUITY RELEASE
1COVID-19: Temporary Maximum LTV RestrictionsLending to Limited CompaniesMaximum LTV / Loan To ValueEarly Repayment Charges
2Help To Buy Equity Loan SchemeFirst-time landlordCOVID-19 : Temporary Maximum LTV RestrictionsProperty with an Annex / Outbuildings / Land / Acreage
3COVID-19: Furloughed WorkersRequirement to be a HomeownerCapital Raising for Debt ConsolidationTimber Framed Construction
4Self-employed – one year’s accountsMinimum Income – Interest-Only / Part-and-Part Single ApplicantSelf-employed – one year’s accountsFlexible Payments / Ad hoc
5Maximum Age at End of TermCOVID-19: Temporary Maximum LTV RestrictionsIncome Multiple used for Affordability AssessmentMinimum Property Value
SELF-BUILDBRIDGINGCOMMERCIAL
1Maximum LTV / Loan to ValueRegulated BridgingMaximum LTV for Commercial Investment
2Maximum LTC – Loan to CostMaximum LTVSemi-Commercial Properties
3Lend against LandCOVID-19: Temporary Maximum LTV RestrictionsMinimum Loan Amount
4Maximum Loan AmountMinimum LoanCommercial Owner Occupier
5 Barn ConversionMinimum Property ValueMixed-Use Properties / Part Commercial

By Kate Saines

Source: Mortgage Finance Gazette

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Stamp duty freeze leads to ‘busiest’ week for mortgage searches

The week following the stamp duty holiday announcement has been the busiest for mortgage searches all year, according to mortgage technology provider Twenty7Tec.

Yesterday (Tuesday 14 July) experienced the greatest number of searches in the year to date, highlighting how much of an impact the chancellor’s announcement to cut stamp duty has made on the market.

There was also a flurry of activity in the buy-to-let sector which had not been experienced since February. Twenty7Tec reported this week has been the busiest for buy-to-let searches, according to its platform’s data.

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Today marks exactly one week since chancellor Rishi Sunak announced he was freezing stamp duty on properties worth up to £500,000 until March 2021.

Phil Bailey, Sales Director at Twenty7Tec said: “Since the stamp duty announcement last week, the market has really hit its stride.

“The last seven days have been the busiest for mortgage searches all year and we’re handling increased volumes of searches each day. Yesterday was the busiest day of the year, closely followed by the day before. Yesterday’s residential mortgage searches were triple the volumes in lockdown.

“Buy-to-let has definitely pushed on and the past few days have been the busiest since the first couple of weeks in February.

“Our sense is that buy-to-let will increase further as the products are there for that part of the market and the risk profile of buy-to-let is still attractive to lenders.”

By Kate Saines

Source: Mortgage Finance Gazette