Housing & Mortgage Round up: Halifax report sharp fall in house prices as Buy to Let booms


Housing & mortgage round upAnother busy week in the housing and mortgage market.

The Halifax has reported that house prices fell sharply last month, echoing surveys last week from the Nationwide and Land Registry.

However it seems that repossessions have stabilised, at least for the time being and the Buy to Let sector is booming.

House prices fall sharply

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Figures released by the Halifax this week show that house prices dropped sharply in April, following the end of the Stamp Duty holiday for first time buyers.

According to the UK’s largest lender, house prices fell by 2.4% last month, reducing the average value of a house in the UK to £159,883; 0.5% lower than this time last year.

The figures from the Halifax come after both the Nationwide and the Land Registry reported falls in house prices in April and March respectively.

However it wasn’t all bad news, the Halifax’s Housing Economist, Martin Ellis, said: “Prices in the three months to April were 0.3% higher than in the previous quarter, marking the first rise in this measure for seven months.”

He continued: “The ending of the Stamp Duty holiday for first-time buyers in late March appears to have boosted home sales early this year as buyers strove to beat the deadline, and has probably contributed to the volatility in house prices in the last few months.”

Home repossession levels stable

The levels of home repossessions seems to have stabilised, according to new figures from the Council of Mortgage Lenders (CML).
9,600 homes in the UK were repossessed in the first three months of 2012, almost identical to the same time last year, although up slightly on the previous quarter, which is to be expected due to the seasonality of the figures.

A total of 36,200 homes were repossessed in 2011, the CML had previously predicted that 45,000 homes would suffer the same fate in 2012; it has now said it might revise this figure downwards.

Repossessions take place when mortgage borrowers cannot make their monthly mortgage payments and fall substantially in arrears, however it seems that lower interest rates and a more conciliatory attitude from lenders has helped to stabilise the number of repossessions.

CML Director General, Paul Smee, said: “Anyone worried about their mortgage should be assured that lenders will try to help them get back on track, as long as this is a realistic prospect.”

“Repossession really is a last resort, as the numbers show.”

Some housing experts have warned that with recent rises in the Standard Variable Rates (SVR) of many lenders, the poor economic climate and with interest rates bound to rise at some point repossessions could start to rise again.

Sellers hold firm on asking prices

A survey by Zoopla, based on properties it has for sale on its website, has shown that home buyers will find it harder to get a bargain as sellers hold firm on their asking prices.

34% of properties for sale have had their price reduced, down from 37% in February, with the average reduction being 7.5%, equivalent to £19,012 off the asking price.

Experts have expressed surprise, having previously been concerned that the end of the Stamp Duty holiday would mean sellers having to reduce asking prices further to get a deal agreed.

Boom in Buy to let mortgages

Despite other problems in the mortgage market, with Standard Variable Rates rising, lenders pulling out of offering Interest Only mortgages and ongoing tight lending criteria, it seems that the Buy to let mortgage market is booming.

The value of Buy to Let mortgages taken out by landlords in the first quarter of 2012 has increased by around a third compared to the same time last year.

According to figures from the Council of Mortgage Lenders (CML) 32,300 Buy to Let mortgages were taken out in the first three months of 2012, with £3.7 billion borrowed by Buy to Let investors.

The Buy to Let market continues to grow, it now represents 12.8% of all outstanding mortgages according to the CML. Properly experts say that the rise in Buy to Let lending is down the state of the market, with house prices having fallen, and tight mortgage lending criteria making it harder for first time buyers to get on the housing ladder and therefore needing to rent.

Despite the increase in Buy to Let borrowing landlords need higher deposits than they did at the height of the housing boom. The average Buy to Let mortgage now requires a 25% deposit, compared to the 15% needed in 2007.

Our mortgage adviser, Linda Wood, is here to help you. If you would like advice on your options, including Buy to Let mortgages,  call  Linda today on 0115 933 8433, alternatively enquire online or email linda.wood@investmentsense.co.uk

Your property may be repossessed if you do not keep up repayments on your mortgage.

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