Housing & mortgage round up: House prices unchanged, NewBuy off to a slow start


Housing & mortgage round upA packed week of housing news, with the Land Registry publishing their house price data for August.

In other news the Bank of England has published figures to show that mortgage availability has hit a five year high, whilst the full economic effect of the lack of first time buyer mortgages is revealed in new research.

Finally, the NewBuy Scheme’s slow start is confirmed.

House prices unchanged in August

Land Registry figures show that house prices were unchanged in August compared to July.

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The figures, which are always published a little later than other surveys, complete the main three house price surveys for August. Although the results are confusing, the Halifax House Price Index, showed a 0.4% drop in house prices in August, while the Nationwide Building Society reported a rise of 1.3%.

The Land Registry said that over the course of the past 12 month house prices actually increased by 0.7%, with the average house in England & Wales now worth £163,376. Unsurprisingly London saw the highest annual rise, with property prices increasing by 5% over the past 12 months.

Mortgage availability hits a five year high

Despite figures last week from the Council of Mortgage Lenders (CML), showing that mortgage approvals actually fell in August, new data from the Bank of England has indicated that the availability of secured credit has actually increased over the past quarter. In fact, the availability of mortgages is at a five year high.

However, the increase in available finance is mainly being targeted at borrowers with larger deposits and the Bank acknowledges that credit scoring, the process by which most lenders assess mortgage applications, has actually got stricter over the past three months.

Many experts believe that the stagnant housing market is partly caused by a lack of available mortgage finance. The government and the Bank have tried to address this problem by launching the Funding for Lending Scheme (FLS), giving banks access to cheaper wholesale finance, which can then be lent on to mortgage borrowers.

The Bank said that the “early impact” of the scheme had been to push interest rates down, but that it might not be enough to stop overall mortgage lending falling, although it does expect mortgages to become more available to borrowers with all sizes of deposit.

However, a bullish Treasury spokesperson said: “The FLS has got off to a flying start, with 13 banks and building societies already signed up. Combined they can access £60bn of funding in the scheme, and that is just the beginning,”

Lack of first time buyer mortgages costing the economy dear

New research has shown just how much damage is being caused to the economy, by the difficulty first time buyers are having getting onto the housing ladder.

We have written many times about the difficult time many first time buyers are having and the impact this has on the housing market. However, new research has shown just how much the wider economy is hurt by a lack of first time buyer activity.

Research by the British Retail Consortium and Genworth Financial, estimates that a lack of first time buyer activity has cost the economy £34 billion in retail sales. The report also states that lower sales have then had a knock on effect to jobs in the retail sector.

Stephen Robertson, Director General of the British Retail Consortium, said: “Home ownership and the availability of mortgage credit are crucial to macro-economic recovery, together with the three million jobs in the retail sector, the largest private sector employer in the UK. British Retail Consortium data demonstrate just how strongly house-buying drives the sales of furnishings and homewares.”

He continued: “Our latest figures show housing related retail sales are the worst in over a year, confirming that renewed weakness in the housing market is having a deep impact on high street spending levels, which in turn affects jobs in retailers and suppliers.

“If measures announced to support construction, by relaxing planning rules, boost the housing market recovery they will also help retail sector.”

However, property experts were quick to point out, that the measures Mr Robertson is calling for, would not help first time buyers, who are struggling due to a lack of mortgage options and the higher deposits needed. Research published earlier in September showed that first time buyers are now putting an average deposit of 19% down on their first property, which with the average UK property worth just of £160,000 is not easily saved.

Take up on the NewBuy Scheme increases…slowly

One of the government’s flagship schemes to help first time buyers, the NewBuy Scheme, seems to be slowly growing in popularity.

Most experts would agree that the NewBuy Scheme has had a slow start, with one builder, Redrow describing take up as “disappointing”. However, according to new figures from the Home Builders Federation (HBF), more than 1,500 people have now been accepted onto the scheme

Over 30 builders are now taking part in NewBuy, however only six mortgage lenders have signed up, with some coming in for criticism that the interest rates being charged are too high, especially when the loan is effectively guaranteed by the government.

The lenders taking part in the NewBuy Scheme are Aldermmore, Halifax, Santander, Natwest, Barclays and Nationwide.

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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