Housing & mortgage round up: House prices and help for first time buyers

A mixed bag of housing and mortgage news this week.

Two house prices surveys show different results, whilst Barclays launch a new mortgage product aimed at first time buyers and another lender pulls back from the interest-only mortgage market.

UK homes work nearly £6 trillion

Research from Zoopla has shown the total value of homes in the UK has now reached £5.96 trillion and is back to 2009 levels.

The research also showed that £57 billion was added to the value of UK properties during 2012, a figure at odds with the house prices surveys from the Halifax and Nationwide, which showed falls in property values of 0.30% and 1% respectively during the past 12 months.

According to Zoopla London accounted for £42 billion of the total rise in house prices in 2012, whilst properties in Sheffield, Doncaster and Stoke on Trent fell in value by £286 million, £160 million and £149 million respectively.

The figures also showed, that over the past decade, properties in England have risen in value by an average of 43%, although homes in Scotland have seen far stronger growth of 84%.

Lawrence Hall of Zoopla, said: “Even with the worst economic downturn in living memory over the past few years, the value of Britain’s housing stock has grown a staggering amount over the last 10 years.”

“It’s hard to see if we will experience the same levels of year-on-year growth witnessed in the early noughties, but with overall values beginning to creep back up, homeowners should be feeling a little more confident.”

Despite the figures, most housing experts of predicting further small falls in house prices during 2013, with only the estate agent Right Move, suggesting they will rise.

Halifax house price survey shows December rise

The latest house price figures from the Halifax show a rise of 1.3% in December, although they are still down by 0.30% over the past 12 months, according to the UK’s largest mortgage lender.

The Halifax also said that the price of the average home in England and Wales was now £163,845; which remains broadly in line with the other major house price surveys from the Nationwide Building Society and the Land Registry.

Whilst the main surveys are generally showing small falls in house prices over the past 12 months, the Halifax’s Housing Market Confidence tracker shows that 38% of people believe house prices will rise during 2013, whilst only 18% think they will fall.

This is at odds with most housing experts are predicting a small fall over the next 12 months; only time will tell who is right.

New mortgage product to help first time buyers

Barclays has launched a new mortgage product aimed at parents who want to help their first time buyer children to get on the housing ladder.

The parents of first time buyers must put 10% of the purchase price into a Barclays savings account, whilst the child must find a deposit of 5%. Whilst the parent’s contribution has to be locked away in the savings account for three years, it will remain in their own name and won’t have to be handed over to their children, as is the case with some mortgage products.

Barclays will pay the parents interest at a rate of 1.5% above bank base rate, currently 0.5%, and will allow the savings to be withdrawn after three years, providing all mortgage payments have been kept up to date.

The Barclays Springboard mortgage will offer first time buyers a three year fixed rate, followed by a lifetime tracker once this has come to an end.
Mortgage experts welcomed the move by Barclays, especially because the parental contribution is relatively small compared to similar schemes, the savings will remain under the parent’s control and can be accessed after three years.

Virgin pull to reduce interest-only lending

Virgin announced this week that they will stop offering interest-only mortgages to some borrowers.

Interest-only mortgages, where no capital is repaid on a monthly basis, have been the subject of increased scrutiny from the FSA over recent months. Whilst new rules, to be introduced from 2014, have seen many lenders stop offering this type of mortgage, despite some groups, particularly high earners and the self-employed finding them very useful.

Unlike many lenders Virgin has not withdrawn completely from the interest-only mortgage market, although it has confirmed that it will only allow people borrowing more than £300,000 to have such an arrangement.

Pete Ball, product and commercial director at Virgin Money, said: “While some lenders have chosen to withdraw from interest-only lending completely over recent months, we believe that it remains an important part of the mortgage market for customers who can demonstrate confidence in repaying their loan at the end of its term through a clear and evidenced repayment plan.

“We have updated our lending policy, although there are no changes for existing Virgin Money customers, who can continue their mortgage under their current arrangements.”

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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