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UK mortgage approvals jump as political uncertainty eases

Mortgage approvals have risen to their highest level since February 2016, data published by the Bank of England on Monday showed.

The central bank said there were 70,888 mortgage approvals for house purchase in January, a 4.4% improvement on December’s figure and the highest for 47 months. It was also comfortably above analyst expectations for around 68,000.

Remortgage rates also grew, by 3.9% to 52,100.

Net mortgage borrowing by households, which lags approvals, was £4.0bn, slightly below the £4.3bn six-month average. The annual growth rate for mortgage borrowing remained at 3.4%.

Howard Archer, chief economic advisor to the EY Item Club, said: “The data very much fuels the view that the housing market is currently benefiting markedly from increased confidence and reduced uncertainties following December’s general election.

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“A stream of recent data and surveys suggest that the housing market has shifted up a gear after a lacklustre 2019, with particular softness around the third quarter.

“Certainly there is compelling evidence that the housing market has benefited from increased optimism and reduced uncertainties following December’s decisive general election, as well as a greater near-term clarity on Brexit.

“We had been expecting the housing market to continue to benefit in the near term from reduced uncertainties, but it is possible that concerns and uncertainties over the coronavirus outbreak could have an impact.

“We currently expect house prices to 3% over 2020.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The effective interest rate on all new mortgages dropped to 1.85%, from 1.88% in December, remaining well below the effective rate on the outstanding stock. As a result, the refinancing tailwind to growth in household’s disposable incomes remains on track to strengthen modestly this year. Lower mortgage rates also have underpinned the recover in house purchase mortgage approvals in January.”

The Bank also reported on Monday that the annual growth rate of consumer credit – defined as credit used by consumers to buy goods and services – remained at 6.1% in January. That represented growth of £1.2bn, above both the average seen over the last six months and the consensus, both of which were £1.0bn. The Bank said the rate was “stabilising after the downward trend seen over past three years”.

By Abigail Townsend

Source: ShareCast

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More UK women investing in buy-to-let properties

The number of women investing in buy-to-let properties in the UK has increased slightly to almost half the total, a new study has found.

Women now account for 47% of the 2.5 million buy-to-let investors in the UK up from 46% the year before, narrowing the gender gap in the investment class, according to the research by London estate agents Ludlowthompson.

The number of female residential property landlords rose by 5% to 1.2 million for the 2016/17 tax year, up from 1.1 million the previous year, according to the latest available HMRC data.

The narrowing of the gender gap in buy-to-let investment reflects how property has become an increasingly popular investment among women Ludlowthompson said.

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The company cited research from Kings College London that suggests that women are generally less likely to make high-risk investments. The relatively transparent business model, regular pay-outs, and low price volatility associated with buy-to-let property as opposed to shares has contributed to the rise in popularity of the asset class among women.

The narrowing of the gender gap among buy-to-let investors stands in contrast to the gender split across other asset classes such as cryptocurrency where women represent just 8.5% of investments, and stocks and shares ISAs where women account for only 43%, owning 957,000 shares ISAs compared with 1.2 million men.

Stephen Ludlow, chairman of Ludlowthompson, said: “The buy-to-let sector has a reputation of providing stable, long-term returns. Whilst some investors have become distracted by more speculative investments, buy-to-let continues to build increasing interest amongst investors who value income and long-term growth.

“It may not be long before we see a 50/50 gender split amongst buy-to-let investors, which is significant given the much wider gaps in other asset classes, such as equities.”

By Kalila Sangster

Source: Yahoo News UK

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Mortgage approvals surge to four-year high: BoE

Mortgage purchase approvals rose by 4.4% between December and January to 70,900 – the highest figure seen since February 2016, according to the latest Money and Credit statistics from the Bank of England.

Approvals for remortgage also rose on the month, by 3.9%, to 52,100.

Net mortgage borrowing – which lags approvals – by households was £4.0 billion in January, slightly below the £4.3 billion average seen over the past six months.

Director of Benham and Reeves, Marc von Grundherr, said: “The highest rate of mortgage approvals in almost three years and particularly so early in the year is yet further proof, if it were ever needed, that buyers are returning in their droves following December’s election result.

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It is this huge influx of demand that has seen prices increase at such notable rates of late and as a result, the market is now in the best shape it’s been since the EU Referendum itself.

Not only are seeing performance exceed expectations but there is a very real chance of an interest rate cut on the horizon, which will further boost buyer sentiment, borrowing, and overall market performance.”

Vikki Jefferies, proposition director at Primis, commented: “With the support of a professional, borrowers will be better-informed on how to manage their finances in the long-run and are less likely to fall into a mortgage deal that could leave them financially worse off.

“Advisers are also a big help for clients whose circumstances change during their term, having the resources to be able to offer customers a better deal that aligns with their new financial situation.”

By ROZI JONES

Source: Financial Reporter

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Annual price growth at three year-high as supply lags demand – Zoopla

House prices across all English cities have risen above their 2007 pre-crisis peaks for the first time but Zoopla is warning sellers not to get over-excited when pricing their properties. Figures from the portal – based on Land Registry price paid data and mortgage valuations – found annual price growth among the UK’s largest cities last month hit a three-year high of 3.9%.

All cities, except for Aberdeen, where prices fell 4.3% annually, recorded annual house price inflation of at least 2% last month for the first time since February 2017.

The highest growth was in Edinburgh, up 5.9%, while Nottingham and Leicester each recorded growth rates of 5.3%.

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Zoopla highlighted that stock is also up 2.6% annually, but is lagging behind demand which is up 26%.

Stock levels in nine cities are lower than a year ago by as much as 6%, Zoopla said, with most of the shortages in areas where prices are rising fastest.

Richard Donnell, research and insight director at Zoopla, said: “It has taken 12 years for house prices in all English cities to return to their previous pre-crisis levels.

“Some cities returned to 2007 levels within four years, as the economy and job growth rebounded. In others, it has taken much longer as the mismatch between demand and supply has been less pronounced.

“An imbalance between supply and demand is supporting the current rate of house price growth – a trend we expect to remain in place over the first half of 2020.

“We do not expect a material acceleration in the rate of growth in the foreseeable future, as affordability pressures will limit the scale of price growth, especially across southern England.

“There is a risk that, in some markets, sellers may become unrealistic about the expected sales price for their home. This is more likely in London and southern England where the market has been weak, and supply remains constrained. Housing demand is up, but there remains a price sensitivity amongst buyers, especially in the highest value markets.”

By MARC SHOFFMAN

Source: Property Industry Eye

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Gap between property supply and demand widens

The number of house hunters registered per estate agent branch increased by 22% to 382 from December to January, NAEA Propertymark’s January Housing Report has found. However, the number of properties available per member branch fell from 41 to 38, meaning the gap between supply and demand has increased.

Mark Hayward, chief executive, NAEA Propertymark, said: “It’s positive to see the New Year has brought some much-needed confidence to the market, with a significant increase in demand from house hunters following the General Election result.

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“As the Spring Budget fast approaches, we hope to see housing as a priority for the new Chancellor.

“A clear strategy is needed to tackle key issues such as stamp duty costs, which needs to be addressed in its entirety to encourage more frequent moves, improve affordability and relax punitive financial tax on home movers.”

The number of house hunters is the highest figure seen since September 2019, when there were 387 prospective buyers registered.

The amount of properties available has fallen to its lowest level since June 2019, when there were 37.

BY RYAN BEMBRIDGE

Source: Property Wire

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Mortgage product numbers rise by 9.3%

The number of mortgage products available on the market has risen by 9.3% over the past 12 months to a record high of 14,437, according to the latest data from Mortgage Brain.

Within this increase of 1,233 products, remortgage deals saw the strongest growth, with product numbers increasing by 7.4% to a total of 9,718.

Despite the upheaval seen in the buy-to-let sector in recent years, the number of products for landlords to choose from has still grown by 4.5% since February 2019 to 4,263.

Product numbers rose across all LTV bands, with deals available at an LTV of 70% or more seeing the sharpest uplift.

There are 9,350 deals to choose from at this level, an increase of 15.1% since February 2019.

At the other end of the scale, the number of products available to borrowers at 90% LTV has grown by 3.2% over this time period.

Looking over a three-year period the rise in products is even more significant, with the total number of mortgage deals on the market jumping by 72.7%.

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This rise is most pronounced in buy-to-let, with product numbers rising by 2,007 (89%).

Mark Lofthouse, chief executive officer of Mortgage Brain, said: “Mortgage borrowers are the big beneficiaries of the heightened competition within the mortgage market now, with a greater level of choice than ever before.

“What’s more, this increase isn’t limited to a single area of the market, with products of all types and across all LTV bands seeing an uplift over the last year.

“The sheer number of deals to choose from demonstrates the value provided by mortgage brokers in helping their clients navigate these competitive waters.

“But they too need to think carefully about what technology they can use to help them sift through the many home loans lenders have on offer.”

By Jessica Nangle

Source: Mortgage Introducer

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Residential property sales jump up to hit a three-year high for January

HMRC has recorded the highest number of transactions for the month of January for three years.

The taxman’s provisional UK property transaction data for January, based on Stamp Duty returns, records 102,810 sales for the first month of the year on a seasonally adjusted basis.

This is up 5.2% annually and the highest level for the month since 102,880 were recorded in January 2017.

The figure is up 12.7% annually on a non-adjusted or ‘actual’ basis to 88,850.

Sales volumes were up annually across all regions, increasing 13.2% in Northern Ireland, 12.3% in Wales and 12.7% in both England and Scotland.

Stamp Duty returns must now be sent to HMRC 14 days after a property sale completes and the taxman takes a snapshot of the data two weeks into a month.

This means that many of these sales will have been completed around the time of the General Election in December, although some may have been through the exchange and completion process before then.

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HMRC has warned that its latest figures need to be treated with caution because of the element of estimation.

Commenting on the data, Andy Sommerville, director of conveyancing software provider Search Acumen, said: “The start of the year saw a slight uplift in the property market as the backlog of transactions that were put on hold at the end of 2019 start to be unleashed, given the improved political climate at the very end of last year.

“As the market picks up, we need to look at one of the chief impediments to the transaction process, namely the length and complexity of the conveyancing process.

“Smart solutions and better use of data can help. With the right technology, property lawyers can process more orders faster and with greater accuracy.

“We can’t just hope for better days. We need to capitalise on the technology available now and shake up the sector.”

By MARC SHOFFMAN

Source: Property Industry Eye

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Buy To Let Rental Yields Highest In The North

Buy to let rental yields have been shown to be highest in the North of England, according to a new buy to let index launched by Fleet Mortgages.

The new index found that buy to let rental yields in the north rose the most in the final quarter of 2019, as demand from prospective tenants continued to heavily outstrip supply in the region.

Buy to let rental yields in the north of England reached an average of 9.1 per cent in the fourth quarter of 2019, up from 6.5 per cent in the fourth quarter of 2018.

Landlords in Greater London also saw their buy to let rental yields grow over the same period, enjoying a raise of 0.3 per cent, from 4.8 per cent to 5.1 per cent, while property investors in the South West saw their buy to let rental yields remain steady at 5.5 per cent.

Overall yield growth for England and Wales as a whole rose 0.7 per cent, from 5.4 per cent to 6.1 per cent, according to the index.

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The only region where landlords suffered a fall in buy to let rental yields was the North West where they dropped by 0.1 per cent but continue to offer a healthy average return of 7.4 per cent.

Distribution director at Fleet Mortgages, Steve Cox, commented: ‘Clearly, the market has shifted over the past 18-24 months as landlords get to grips with the increased costs that come with private rental sector activity, in particular the phased-in changes to mortgage interest tax relief for individual landlords.

‘Landlords now tend to look differently at their properties, with many converting single-tenancy properties into multi-tenant ones in order to secure better yields.’

He concluded: ‘These higher yields are needed in order meet those growing tax liabilities, but to also offset the increased cost of acquiring tenants and regulation. Examples of these changes include more properties being converted into self-contained flats rather than keeping the property as a larger family home.’

Source: Residential Landlord

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HMRC: Housing transactions rise in January

Housing activity increased on both a yearly and monthly basis in January, HMRC statistics show.

In January 2020 there were 102,810 residential transactions on a seasonally adjusted basis, 5.2% more than the same month last year and 4.1% more than December 2019.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Transactions are always a better indicator of market activity than more volatile house prices. HMRC’s report is the latest in a series of recent surveys telling a familiar story – release of pent-up demand began even before the election, which we’ve noticed in our offices too.

“The increase in transaction numbers is particularly striking as they reflect sales which were agreed mainly in September and October. If they are like this now, numbers are set to be even stronger as we approach the peak spring-buying season.

“However, the strength of any recovery will probably depend on whether enough properties become available at realistic prices for buyers taking advantage of improved affordability.

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“The market remains price sensitive so buyers will not pay tomorrow’s prices today.”

Joseph Daniels, founder of offsite eco developer Project Etopia, said: “The UK is finally exhibiting some get-up-and-go in terms of sales volumes.

“This is the second month in a row that the market has chalked up annual growth on a seasonally adjusted basis, and the second month in a row that the total has smashed through the 100,000 mark.

“The rate of growth also remains impressive, coming in at 5.2% for January, following 6.8% year on year growth in December. On a non-seasonally adjusted basis the annual growth rate last month hit 12.7%.”

Daniels added: “This is great news long term for first-time buyers and the wider house building industry but it needs to be sustained.

“No flash-in-the-pan rise in sales volumes is going to fix the problem of low housing stock in Britain and these green shoots need to bloom into a lasting recovery.

“The level of transactions has been down the road to ruin over the past 10 years and had fallen annually for eight straight months prior to December on a seasonally adjusted basis, but at least they now seem to be back in the ascendency.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Mortgage approvals dip in January

Mortgage approvals dipped in January compared to a strong December, e.surv’s Mortgage Monitor has found.

There were 66,002 residential mortgages approved in the first month of the decade, down 1.8% from December.

Richard Sexton, director at e.surv, said: “While the market fell slightly following the December bump, rumours of a Bank of England base rate cut appear to have had little appreciable impact on the mortgage market, with a strong performance among several key buyer groups in January.

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“Existing homeowners benefited from low remortgage rates and were persuaded to switch to a new deal, while new buyers also swooped to seal low interest rates for their first purchase.

“The new Chancellor is due to present the government’s Spring Budget in March – the first opportunity for the Johnson government to lay out its spending plans.

“Homeowners, lenders, housebuilders, and anyone else with a stake in the UK housing market, will be watching with interest.”

Remortgage activity was strong, with small deposit-borrowers increasing its market share from 25.5% to 26.7%.

Sexton added: “January saw an increase in mortgage approvals for small deposit buyers – typically an indication that more first-time buyers have made their first step onto the property ladder.”

Source: Property Wire