Housing & Mortgage round up: Is the housing market slowing?


Housing & mortgage round up_istockphotoEvidence has emerged this week that the housing market could be slowing, with the usual burst of activity associated with the onset of spring, turning into more of a damp squib.

We also take a look at rising rents and news that buy to let landlords, plan to take action against the Bank of Ireland, to stop them increasing the mortgage payments for thousands of borrowers.

Housing market slowing? Part 1

In a worrying sign that the housing market could be slowing down, new data from the British Bankers Association (BBA) has shown both net mortgage lending and mortgage approvals fell in March.

Despite the Funding for Lending Scheme (FLS), which is designed to boost mortgage lending figures from the BBA show net mortgage borrowing was down by 0.10% on the same time last year. The data also show gross mortgage lending was down on previous months at £7.6 billion.

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However, mortgage approvals rose slightly after falls at the start of the year, from a high in December.

David Dooks of the BBA, said: “The Funding for Lending Scheme has made the mortgage market more competitive, allowing smaller institutions to offer attractive rates. But nevertheless the main high street banks still provide 60 percent of new mortgage borrowing.

Dooks continued: “Mortgage approvals edged up back to levels of a year ago and the prospect of more first-time buyers entering the market during 2013 is likely to help mortgage chains in due course.”

“However, economic uncertainty and subdued confidence continues to determine borrowing behaviour, with households and businesses reducing borrowing and building up deposits where possible.”

Many housing experts are worried that whilst the FLS is making it easier for building societies to offer more competitive mortgage deals and grab a greater share of the market, it has not, as yet, led to a surge in mortgage approvals, which would possibly be the signal for a sustained recovery in the housing market.

Housing market slowing? Part 2

The number of house sales fell in March, compared to the same time last year, according to new data from HMRC (Her Majesty’s Revenue and Customs).

The HMRC figures show 81,140 houses were sold in March, down by 5,580 on the same time last year, although up slightly on previous months in 2013.

Regional variations as always are interesting, and it is clear from the HRMC figures that London and the South-East, propping up other less active areas.

Rents continue to rise

New research has shown rents rose in March, possibly spurred on by the lacklustre housing market seen over the past few weeks.

Figures from LSL Property Services showed that average rents rose by 0.5% in March to £735 per month; up 4.2% on the same time last year.

Housing experts believe that whilst first time buyers continue to find it hard to get onto the housing ladder, rents will continue to rise, as the need for quality rented accommodation continues to outstrip supply.

Landlords challenge Bank of Ireland buy to let rate rise

Bank of Ireland sparked anger amongst many landlords earlier this year when they unilaterally increased their tracker rate for buy to let mortgages; pushing up mortgage payments for thousands of borrowers.

The bank decided in February, to increase the differential charged on its buy to let tracker mortgages to 4.49% above the Bank of England base rate, currently 0.50%.

However, a group of landlords have now been given the go ahead to challenge the bank’s decision in a class action.

Justin Selig, a Law Department principle, who is leading the case, said: “It looks like the bank’s actions are open to challenge on a number of different fronts. What we need to do is work out how we are going to do it and get as many people involved as possible.”

Selig continued: “The Bank of Ireland is going to be using all the big legal firms. But I am not worried about that because we have got a good case and we have good people – we will bring in expert support.”

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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