Reeds Rains Property Blog

Property News from Reeds Rains

First Time Buyer Tracker August 2014

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First-time-buyers hit seven year high in July

  • First-time buyer sales climb to 30,000 in July – highest since August 2007
  • Average deposit falls 10% in a year to £26,642 – equivalent to drop of £3,000
  • But average mortgage rates creeping upwards, reaching 4.19% in July
  • Mortgage repayments growing as proportion of income as a result

The number of first-time buyer sales rose to a seven year high in July, according to the latest First Time Buyer Tracker from Reeds Rains, part of LSL Property Services.

There were 30,000 first-time buyer sales in July, a quarter more than 24,100 a year before. It was the highest number of monthly first-time buyers since August 2007.

Data from estate agency chain Reeds Rains also reveals the average first-time buyer deposit fell 10% year-on-year from £29,609 twelve months ago to £26,642 in June 2014 – a drop of almost £3,000 in a year.

The average deposit fell as a proportion of average first-time buyer income as a result. Twelve months ago, the average deposit represented 82.6% of a first-time buyer’s income. In July 2014, that had fallen to 72%. The average first-time buyer income stood at £37,000 in July compared to £35,843 a year ago.

Over the same period, the average first-time buyer LTV has risen from 79.5% to 82.9%, helped by the increase in higher LTV lending facilitated by Help to Buy.

David Newnes, director of estate agent Reeds Rains, part of LSL Property Services group, said: “The first-time buyer market is still active, even as the wider property market is starting to show signs of cooling down. As the economic recovery gathers momentum, more buyers are finding themselves in a position where they can afford to own their own home.

“A whole generation of young buyers were trapped on the side-lines of the property market as the economy recovered from the recession, struggling to save for a deposit whilst inflation remained stubbornly high, savings rates were stuck at a historic low, and real wages fell. But the recent increase in high LTV lending options – enabled by Help to Buy – has allowed them a shot at getting on the ladder at long last, and the number of first-time buyers has climbed to a seven year high.

“Any stalling of the mortgage market caused by the introduction of MMR has mostly worked its way through the system. Lending is operating on full steam ahead once again, although the end to end process has tightened and elongated.” 

Read the full First Time Buyer Tracker here

Mortgage Monitor July 2014

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Best July for house purchase lending in 7 Years

Mortgage market recovering from introduction of MMR 

  • 66,279 house purchase approvals in July as market rebounds after MMR
  • High LTV lending rises 52% year-on-year to 11,533 approvals
  • Stock of first-time buyer properties decreasing – 13% fewer approvals on properties up to value of £125,000 than a year ago


Last month saw the strongest July for house purchase lending since the financial crisis, according to the latest Mortgage Monitor from e.surv, the UK’s largest chartered surveyor.

There were 66,279 house purchase approvals in July, 7.5% higher than the 61,651 approvals in July 2013. It was the strongest July for house purchase lending since 2007, when there were 112,291.

On a monthly basis, house purchase approvals topped 66,000 for the second consecutive month, suggesting the mortgage market is adjusting to the introduction of Mortgage Market Review (MMR) regulations. Monthly mortgage approvals were 6.9% higher compared to 62,007 in May – the first full month in which lenders had to be fully compliant with the new MMR regulations (introduced on 26th April 2014).

Richard Sexton, director of e.surv chartered surveyors, explains: “After a period of adjustment, the mortgage market has navigated around the regulatory speed-bumps and the lending recovery is firmly back on course. Training staff, implementing the new rules and putting in place longer advisory processes caused a slight slowdown in lending in April and May. But lending levels have bounced back, and the bottleneck of approvals stuck in the system has cleared.

“Not only that, the prospect of an interest rate rise is creeping ever closer, and is encouraging more borrowers to lock into cheap fixed-rate deals while they can – which is also pumping up lending volume.”

Read the full Mortgage Monitor release here

All You Need to Know about MMR

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In April all lenders were required to change the way that they assessed residential mortgages.  Historically lenders had used simple multiples of the applicant’s income to dictate how much they would lend and although underwriting had become more complex with other factors taken into account there was still a focus on the “top line” of applicants income.

 On the 26th April this year, all that changed and lenders were required to look at the customer’s ability to make the payments, not just at the current pay rate but also at a notional figure taking into account the fact that rates are likely to rise in the short to medium term.

At the time there was a great deal of scaremongering that went on, thankfully, whilst the scrutiny that lenders do apply to potential mortgage applicants has risen most of the scare stories have proven unfounded.

What has become clear however is that consumers still don’t really understand how the changes apply to them.  A recent survey by TSB showed that only 51% of aspiring homeowners had even heard of the Mortgage Market Review (MMR), which by consequence means that almost half of people looking for a house don’t understand, or in some cases even know about, the changes.

MMR is primarily designed to ensure that people only borrow what they can reasonably afford to repay so it is encouraging to read in the same report, that 41% of those who were aware felt that the rules would ensure this.

As with most things getting professional advice is always a great starting point; borrowers have to remember that this is almost certainly going to be their largest purchase and for most people is their single largest outgoing each month, so getting good advice, listening to that and acting on it is a sound idea.

There are a number of things that can be done in preparation for that meeting and we always advise our customers to have taken time to prepare a few basics before coming in to see an adviser;

·         Think about your expenses after you have moved, these will likely to be different to where you currently live and certainly will be significantly different for those who are still living with parents.

·         Document these expenses and look at what is left over to pay a mortgage and the associated protection policies.

·         Start saving as early as possible, even if it isn’t a huge amount each month

·         If you have had financial difficulties in the past get a copy of your credit report. This won’t necessarily stop you getting a mortgage but may mean that an adviser has to look at different option.  Non disclosure of any historic financial problems is viewed very badly by lenders so be very upfront about the problems and the reasons for them

·         Check that you are on the electoral role, if a lender can’t find you, they are unlikely to want to lend you money.

By John R Hargreaves, Financial Services Director, Reeds Rains Estate Agents

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

An administration fee of £499 will be payable when you sign the professional fee agreement upon mortgage application.

Reeds Rains features on hit TV programme Phil Spencer: Secret Agent

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Left to right - Phil Spencer: Secret Agent with Reeds Rains Waterlooville Branch Manager Martin Archbold

Reeds Rains in Waterlooville are delighted to feature on the TV programme Phil Spencer: Secret Agent where they have successfully sold a property where other agents had been struggling. The three bedroom terraced house had been on the market for 6 months before Reeds Rains found the right buyer and completed the sale on the property for £179,995.

In the TV programme, Phil Spencer features the house and acts as the sellers "secret agent", viewing the property without them present and preparing his own alternative set of sales particulars, entitled "The Brutal Truth", designed to show why the property is not selling. The owners then have a week to act on Phil's suggestions before hosting an open day for buyers.

Waterlooville Branch Manager Martin Archbold comments: “We are delighted to be featured on this programme as it is a real testament to the professional way Reeds Rains delivers proficient customer service, specifically tailored to what the customer wants to achieve. This is one of the reasons we are seeing lots of buyers, sellers, landlords and tenants come to us for advice. We worked with Phil on arranging the open day and provided potential buyers to view the property, all who were keen and interested in making an offer. We were thrilled to sell the property which had been on the market for six months before it came to us.”

If you would like to find out how Reeds Rains in Waterlooville can help you buy or sell your property then visit the branch website or call 02392 254321 (*) for more information.

(*)Calls may be recorded for training and/or monitoring purposes.

Buy-to-let index July 2014

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Rent rises creep above inflation for first time in over a year

  • Annual rent rises increase to 2.0%, fastest since September – but still only 0.1% after inflation 
  • Rents return to levels last seen in November 2013, standing at £753 per month in July 2014 
  • Tenant finances improve with 7.3% of rent in arrears, down from 7.8% in June and 8.1% last July 
  • Landlords see total returns moderate, down to 10.3% per annum as property price rises cool 

 Rents have risen in real terms for the first time in fourteen months, according to the latest Buy-to-Let Index from LSL Property Services plc, which owns the UK’s largest lettings agent network, including national chain Reeds Rains. 

The average residential rent across England and Wales is now 2.0% higher than in July 2013, currently standing at £753 per month. This is the same absolute level as in November 2013, and is up from an average of £738 per month in July 2013. 

The average residential rent across England and Wales is now 2.0% higher than in July 2013, currently standing at £753 per month. This is the same absolute level as in November 2013, and is up from an average of £738 per month in July 2013. 

David Newnes, director of estate agents Reeds Rains, part of LSL Property Services, comments: “As the summer turns to early autumn, the rental market is approaching its busiest period – yet rent rises remain modest. 

“Tenants looking to rent a new property this month still need to budget the same as they would have in November. At a time when the UK is facing a serious shortage of homes, and with purchase prices rising steadily, that is an immense achievement for the private rented sector. 

“Rents have tracked inflation for many years – and as of July remain down 0.2% in real terms since the start of 2010. This is testament to serious improvements in the supply of new homes to let, thanks to investment by landlords. If that investment keeps flowing, and the right incentives for new landlords remain, this positive trend should continue.”

Read the full buy-to-let index here.

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