Housing & mortgage round up: Demand for houses, mortgage lending and rents all rise


Housing & mortgage round upNo house price surveys to report this week, but there is still plenty of housing and mortgage news to catch up on as the housing market shows a few tentative positive signs.

First time buyers continue to be in the news as rents rise, whilst a new survey unveils the cost of moving away from the city to a market town.

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Demand for houses and mortgages rises

There was good news for the housing market this week, as a Royal Institution of Chartered Surveyors (RICS) survey found a “considerable rebound” in interest from prospective homebuyers.

The RICS survey comes in the same week as figures from the Council of Mortgage Lenders (CML) showed a jump in mortgage lending of 13% over the last three months.

The CML data shows that 146,500 mortgages were advanced in the three months to the end of September, despite a slump towards the end of the summer, when lending to first time buyers fell by around 14%.

Some housing experts believe that the RICs figures are an indication that confidence amongst homebuyers is starting to return, whilst the CML figures are possibly an indication that mortgages are becoming more freely available.

The increase in mortgage lending may, in part, be down to the government’s Funding for Lending Scheme (FLS), which has provided the 30 lenders, with access to cheaper wholesale finance, to be passed on to borrowers, in the form of lower interest rates and easier access to finance.

Reacting to the figures, Paul Smee, Director General of the CML, said: “An increase in house purchase approvals indicated by the Bank in September suggests that we may see a return to growth in coming months.”

Whilst Ian Perry, of RICS said: “The number of potential buyers going out and viewing property saw a welcome boost. Those who are in a position to buy decided to get out there and see what is available.”

Average rents continue to rise

The average rent paid by tenants in England and Wales rose to a new high in October, causing further pain for those people unable to get onto the housing ladder due to restrictive lending criteria and the size of deposit needed.

The figures, from LSL Property Services, show that the average monthly rent in England and Wales rose to £744 in October, up 0.4% on the previous month and 3.4% on the same time last year.

Although a record level and the seventh month in a row that prices have risen, the pace of the increase has slowed, as the rental market moves to a traditionally quieter period.

There are also marked regional differences, with London seeing the largest increase of 0.9% in October, whilst the East Midlands saw a drop of 1.8%.
The housing charity, Shelter, said that the increase was “bad news for reluctant renters” who are unable to buy a home.

David Newnes, a Director of LSL, said: “A combination of improved buyer activity and a seasonal slowdown has taken some of the heat out of the rental market as it enters the traditionally quieter final months of the year.”

He continued: “However, despite the deceleration, the fact that monthly rents rose by twice the rate seen a year ago points to the underlying strength of tenant demand.”

Nearly 50% of first time buyers using housing schemes

With record high rents making it hard to save for a deposit, and mortgage lenders continuing to impose tight lending criteria, it is little wonder that so many first time buyers have to turn to affordable housing schemes.

New figures from Lloyds TSB have shown that 46% of first time buyers are using schemes such as shared ownership or shared equity to help them get onto the housing ladder.

Shared ownership schemes are available to first time buyers with an income of less than £60,000 per year. The schemes work by allowing the borrower to buy between 25% and 75% of the value of the property, whilst paying rent on the balance. Many borrowers go on to buy further equity in their property until it is owned outright.

Despite the increase in the uptake of these types of scheme, the survey found a lack of awareness amongst some would-be first time buyers, with 40% of those questioned unaware of such schemes in their local area.

Stephen Noakes, director of mortgages at Lloyds TSB, said: “Affordable housing schemes play a key part in helping first-time buyers onto the property ladder, and our research shows that almost half of them would now consider signing up to buy their first home. However, many more may be unaware of how these schemes can help them onto the property ladder, or indeed the availability of them in their local area.”

Want to move from the city? It’s going to cost you

New research has shown just how expensive it is to move to one of the UK’s market towns.

Market towns are an ideal compromise for people fed up of living in the city, but not yet ready to move to the countryside, however making the move comes at a price.

Figures, again from Lloyds TSB, show that a market town home will cost £22,616, or 11%, more than the average property. Although the difference can be even greater; properties in Beaconsfield, Buckinghamshire, for example, cost 163% more than those in the surrounding area, with the average property worth over £800,000.

The demand for market town homes has risen over the past decade with the price differential doubling compared to 10 years ago.

Nitesh Patel, Housing Economist at Lloyds TSB, said: “Home buyers are attracted to the high quality of life, architecture, history, setting and community spirit typically associated with market towns and are accordingly prepared to pay a premium to live in them. Close to two-thirds of market towns have higher house prices than other areas in their county.”

Nitesh continued: “Market towns are often particularly desirable for those looking to move out of urban areas and into more idyllic surroundings without sacrificing many of the valued amenities they currently enjoy.”

Our mortgage adviser, Linda Wood, is here to help you. If you would like advice on your options or you are affected by any of the stories in this week’s housing round up please call  Linda today on 0115 933 8433, alternatively enquire online or email linda.wood@investmentsense.co.uk

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