Lending to people with small deposits hit a post-credit crisis high in June but remained only a quarter of the level seen before the financial crisis struck, figures have revealed.
Around 10,898 mortgages were approved for people buying a home with a deposit of 15 per cent or less during June, accounting for a fifth of all house purchase loans.
The total was 52 per cent higher than the number of high loan-to-value (LTV) mortgages approved in June 2013, and the highest level since April 2008, according to chartered surveyor e.surv.
But despite the improvement the figure was still well down on the peak of 41,745 mortgages for house purchase that were approved for people with a deposit of 15 per cent of less in February 2007.
High LTV borrowing also accounted for around a third of all loans approved for people buying a property during thismonth.
Richard Sexton, director of e.surv, said: “A glut of high LTV deals has tempted borrowers back to the market, supporting a flood of first-time buyers over the last year.”
But referring to new rules introduced by the Bank of England limiting the amount of high loan-to-income business lenders can do, he warned: “The tides may be about to turn for borrowers.
“High LTV lending may start to tail off in the wake of new regulations.”
The total number of mortgages advanced to all borrowers buying a home fell for the sixth month in a row during June to 61,586, although the figure was still 4 per cent higher than a year earlier.
There were also signs that buyers are struggling to find affordable properties, with only 12,313 loans advanced for homes costing up to £125,000, 13 per cent less than in June 2013.
The situation was particularly acute in London, where the average first-time buyer borrowed 3.83 times their income, compared with 3.39 times across the UK as a whole.
Meanwhile, the Council of Mortgage Lenders said tough new affordability criteria introduced under the Mortgage Market Review had not had a “dramatic” impact on the market.
Paul Smee, director general of the CML, said: “With May lending figures, we get our first glimpse at the effect the Mortgage Market Review has had on lending trends and, at least so far, the impact appears subtle, rather than dramatic.
“First-time buyers and home movers continue to be key drivers in market growth and their activity does not seem to have been noticeably disrupted.
“There was no cliff edge, lenders and intermediaries had been methodically working towards applying MMR changes for months leading up to implementation and the figures appear to reflect this.”
The CML figures showed that there was little change in the income multiples borrowed by either first-time buyers or homemovers following the introduction of the new rules.
But Jonathan Harris, director of mortgage broker Anderson Harris, disagreed, saying it was still too early to say what impact the regulations had had on the market.
He said: “While some lenders were MMR-compliant ahead of the official launch at the end of April, using May data to assess the impact of the new rules is perhaps premature.
“People are still able to take out new mortgages and to remortgage, but it is taking longer and borrowers may find they have to compromise in terms of rates and loan-to-values.
“They may not always be able to get the cheapest rate or highest LTV, depending on their particular circumstances.”
The CML figures showed that the number of mortgages advanced to homemovers in May increased by 8 per cent compared with April to 31,100.
There was also a 9 per cent rise in the number of mortgages advanced to first time buyers at 26,800.
But the remortgage market remained subdued, with just 21,600 loans taken out, 17.9 per cent fewer than during the previous month.
Parents and grandparents can pool their resources to help young people buy a home following the launch of a ‘family mortgage’ today.
The new-style loan enables family members to combine their finances to reduce repayment costs for buyers, without having to handover the money as a gift.
The mortgage is being offered by the Family Building Society, which launched today.
Under the terms of the loan, dubbed the family mortgage by the society, other family members can provide security for the buyer’s mortgage by depositing their savings in an interest paying with the building society.
As long as the buyer has a 5 per cent deposit, the savings are used as a security to enable the borrower to qualify for a lower interest rate than would otherwise have been the case.
Families who are asset rich but cash poor are also able to use their own property as a security to help the younger generation get on to the housing ladder.
Under this option, parents or grandparents offer a charge over their own home as a security to the society, again enabling a borrower with just a 5 per cent deposit to qualify for a lower interest rate, reducing their monthly repayments.
A third option is for families to deposit their savings into a family offset account.
Instead of being paid interest on this money, it will be offset against the amount of money borrowed by the first-time buyer, reducing the amount of interest they have to pay.
The savings are still owned by the family member, although they cannot reclaim them for 10 years.
Families can use all three options in combination.
The society reviews the family mortgage after each three or five-year fixed rate term, and also after 10 years, to see if a property’s value has increased, meaning savings can be released back to family members or charges on a property could be removed.
The society will also meet a buyer’s share of the mortgage payments for up to six months if they lose their job through no fault of their own, subject to certain conditions.
Mark Bogard, chief executive of the Family Building Society, said: “Young adults even with high paying jobs are struggling to meet the cost of living, thus they need help to get on the property ladder.
“Our research shows that children would rather soldier on than take money out of their parents’ retirement pot.
“Our family mortgage gets buyers on the property ladder sooner and keeps family members in control of their money. And because it’s a formal arrangement everybody knows where they stand.”
The family mortgage is available direct from the society and through intermediaries.
The society is also offering a ‘low start’ mortgage to help people who have got divorced, or faced significant changes to their circumstances, get back on their feet financially.
The loan offers stepped repayments, beginning with interest-only payments and a rate of just 1.39 per cent for the first six months of the mortgage’s term.
With an abundance of tudor style homes on the market we’ve chosen our top 10 for sale.
1. Thurston End Hall is an example of a moated Tudor manor house and is believed to date from the late 15th Century.
Eight bed, Suffolk, £2.5m – Savills
2. The property has strong Tudor influences, including spectacular Inglenook fireplaces and exposed beams throughout.
Seven bed, Surrey, £2.8m – UK Sotheby’s
3. This impressive home comes with an equestrian centre that extends to 9.3 acres.
Five bed, Kent, £2.7m – My Online Estate Agent
4. A magnificent home believed to have originated more than 400 years ago and was likely to have been the home of a yeoman farmer.
Five bed, Macclesfield, £6.7m – Gascoigne Halman
5. Originally owned by the Brook Bond Tea company, Copsem Manor was then owned by a number of celebrities before becoming a much loved family home for the last 20 years.
Eight bed, Surrey, £3.7m – Savills
6. Stepping across the herringbone porch through an original oak door you are greeted a 16th Century staircase which sets the tone for the rest of the house.
Five bed, Hertfordshire, £7.5m – Savills
7. Wayborough Manor is a wonderful example of an early timber framed house which is recorded as having been built for William of Wey in around 1460.
Five bed, Kent, £899,950 – Jackson-Stops & Staff
8. The Tudor style elevations and tall chimneys redolent of the era of this remarkable residence add to its finesse and complement the grandeur of the interior styling.
Six bed, Cheshire, £1.9m – Savills
9. Originally built in the 1600’s this unique 4 bed still retains a wealth of period features such as stained glass windows and cast iron radiators.
Four bed, Orrell, £465,000 – Barron Shaw
10. This mock Tudor designed home was built in 1904 for Lady Jane Cunliffe Brooks. The architect George Bennet Mitchell was an Aberdonian renowned for introducing much Surrey half timbering to the area.
Five bed, Aberdeenshire, £890,000 – Strutt & Parker
If you’re looking to sell your property, but need a helping hand to show buyers its potential, architect Greg Toon has the solution. He is offering the winner of a monthly Zoopla competition the chance of a property makeover. Here, he unveils the results of the first competition – the makeover of a three bedroom cottage in Scunthorpe.
The before and after pictures…
- This design study aims to improve the layout of the existing accommodation to demonstrate the flexibility of the property and show how it could be adapted for a new owner’s needs.
- The existing house has three bedrooms, but the third bedroom is located on the ground floor, adjacent to the rear garden. Most buyers would normally prefer the living areas to be adjacent to the rear garden so that they can enjoy the views and get access to the outdoor space by opening up the doors.
- The proposed layout moves the third bedroom to the front of the house, freeing-up the rear room for a living space. Optionally, and as shown in the plans and artistic impression, the rear room could be increased in size to provide a larger living area. A vaulted ceiling with exposed trusses and skylights would ensure it is a dramatic space. At the end of this newly created living area, doors open to a West-facing patio area. The patio can be screened from the driveway with a box hedge or dwarf wall planter.
If you would like the chance to win a house makeover for the home you’re selling, send your name and Zoopla property listing to Zoopla’s website editor Myra Butterworth at firstname.lastname@example.org
- By inserting a beam and removing a section of wall, the kitchen can be extended in size, taking some of the space from the generous existing hallway. Rooflights in the kitchen roof slope would bring daylight into the deeper space. The dining room could be placed in the front room and left open to the kitchen. Off the kitchen, a utility/boot room can be created. Being near the garage, this could act as the secondary entrance to the house and is a way of removing noisy laundry facilities from the more open-plan family kitchen.
- The existing utility can be removed to give a more conventional front entrance, complete with coat storage.
- Upstairs, an inexpensive alteration can be made to form an en-suite for a master bedroom. Optionally, a separate W.C. could be installed off the landing.
- Externally, the house can be easily painted (or even rendered) to brighten it up.
- The double garage has potential to be converted to provide good-sized home office accommodation, either within the mezzanine or using half of the garage that faces the garden.
- If the existing kitchen and bathroom wing was built along with the rest of the house, then the proposed extension to the rear room would fall under permitted development as it projects less than 4m from the rear wall.
- The hipped roof to extended rear room will keep the height down so as to reduce the impact on the neighbouring property.
- In theory, planning permission is required for the proposed changes to the rear windows and for any new windows added. It should not be difficult to attain planning as there are no genuine overlooking concerns.
- A beam would be required to support the removed section of wall needed to expand the kitchen area. Further local support beams may be required dependent on assessment by an engineer.
- If the rear room is extended, the current structure could be partly re-used (subject to investigation). This would save costs.
- Additional structure would be simple strip foundations, cavity walls and beamed trusses with rod ties. The wide rear window or bi-fold door opening will need a beam above. Lintels could be used elsewhere.
- A structural engineer should be appointed to assess the implications.
- Internal re-configurations (inc. new kitchen) £25,000
- Extended rear room £20,000
Greg Toon is the founder of Potential etc…, an architectural design company that specializes in illustrating the potential of homes for sellers, buyers and owners.
Visit www.potentialetc.com if you would like to commission Greg to prepare a full design scheme for your property.
House prices rose at their fastest rate for four years during June but the market is showing signs of slowing, research revealed today.
The average cost of a home in England and Wales increased by 9.6 per cent, or nearly £23,500, during the year to the end of June to stand at a new record high of £268,637, according to LSL Property Services.
But during the month itself prices edged ahead by just 0.7 per cent, dropping to a gain of only 0.1 per cent if London and the South East are excluded.
Property values also fell infour of the five most expensive London boroughs, including Westminster and the City of London.
David Newnes, director of Reeds Rains and Your Move estate agents, owned by LSL Property Services, said: “Average house prices in England and Wales have climbed 9.6 per cent in the year to June, the highest annual rise in house prices experienced since July 2010.”
But he added: “There are also new signs that growth is beginning to slow as we move into summer, and following the changes brought about by the Mortgage Market Review implemented at the end of April.
“In London, where annual growth has reached 15.6 per cent, prices have begun to fall at the upper end of the market.”
Today’s figures are in line with ones reported by Halifax earlier in the week that showed house prices rose at their fastest annual rate for nearly seven years during June, but property values fell by 0.6 per cent during the month itself.
The Royal Institution of Chartered Surveyors also reported signs that the housing market was beginning to cool, with the rate at which new buyers were registering with estate agents falling for the seventh consecutive month.
At the same time, it reported an increase in the number of homes being put up for sale, helping to ease the mismatch between supply and demand.
RICS said tougher lending rules under the Mortgage Market Review were causing a slow down in property sales, while rhetoric from the Bank of England had also increased buyers’ caution.
LSL said it expected the annual rate at which house prices are growing to start to slow during the third quarter of the year, particularly as prices would be compared with the third quarter of 2013, which was a buoyant period for the property market.
The group estimates that a total of 73,750 homes changed hands June, 10.3 per cent more than in the same month of 2013.
But the increase is the lowest year-on-year change recorded in the past 12 months, with transactions running an average of 34 per cent higher than for the same month of the previous year up until May.
On a regional basis, annual house price growth remained strongest in London at 15.6 per cent, followed by the South East and South West at 7.5 per cent and 6.5 per cent respectively.
At the other end of the scale, prices rose by just 3.6 per cent in Wales during the past year, while they increased by 3.7 per cent in Yorkshire and the Humber and 4.1 per cent in the North West.