Reeds Rains Property Blog

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Mortgage Monitor August 2014



House purchase approvals fall 5% in August

As holiday season causes a summer slowdown from July

  • Monthly house purchase approvals fall 4.6% from July to 63,485 in August
  • Higher LTV lending forming greatest proportion (18%) of house purchase approvals since 2008
  • Higher LTV lending growing 51% year-on-year with 11,300 higher LTV loans in August
  • North West and Yorkshire & Humber home to highest proportion of higher LTV loans – areas where Help to Buy is also needed most

House purchase approvals slipped 5% in August, as the mortgage market slowed down for summer, according to the latest Mortgage Monitor from e.surv, the UK’s largest chartered surveyor.

There were 63,485 house purchase approvals in August, 4.6% lower than 66,569 approvals in July. It was the second consecutive month in which house purchase approvals declined as the holiday season temporarily slowed the lending recovery. Since the start of June, monthly house purchase approvals have fallen 5.4%.

However, a recovery in monthly approvals in June suggests that the recent fall is down to the holiday season, rather than an impact of new regulation. MMR was introduced on 26thApril 2014, and after a slight fall in lending in its pilot month, house purchase approvals increased 8.4% between May and June.

On an annual basis, house purchase approvals increased by 0.3% annually, from 63,293 in August 2013.

Richard Sexton, director of e.surv chartered surveyors, explains: “The summer holiday season has temporarily slowed the mortgage market, as home-movers hang up their property search in exchange for buckets and spades.

But this is a seasonal stagnation rather than a sign of a more permanent decline. The new MMR regulations have been fully absorbed into the mortgage application process, the backlog of applications they temporarily caused has all been cleared away, and now the mortgage market is in full health moving forwards.

“As the seasons change and we move into autumn, we are already anticipating that mortgage approvals will bounce back upwards. Lenders are signalling a desire to pump up lending volume towards the tail end of the year, and there is still a whole host of buyers desperate to get onto the housing ladder, particularly at the bottom of the market.”

Read the full Mortgage Monitor release here

Ex professional football player Julian Dowe joins Reeds Rains to support local football club


Above: Brooklands Dragons JFC which Reeds Rains sponsors and Julian Dowe (centre back) and Branch Manager Phil Robinson

Reeds Rains estate agents has announced its support of the local football team, Brooklands Dragons JFC by officially sponsoring their new kit which it celebrated by welcoming ex professional footballer Julian Dowe back to the Club in Timperley where he gained valuable experience in the early stages of his career playing against them.

The sponsorship is part of Reeds Rains drive to support the local community and create greater links with it and saw this as a great opportunity to welcome Julian back to the league where he started his career.

Julian Dowe broke many goal scoring records as a teenager which led him to be signed up by Everton FC and from there went on to play for Manchester City who offered him a professional contract while he was still in school. His career developed further when, at the age of 16, made his debut for Wigan Athletic FC against Manchester United which saw him face Paul Ince and David Beckham. His success grew as he became the youngest British player to sign a professional contract in Spain when he joined CA Marbella as an 18 year old. 

Julian explains: “It feels great to come back to where I played when I was growing up. The Timperley and District Junior Football League which Brooklands Dragons JFC is part of are excellent at developing young players. During my time here I gained lots of valuable experience helping prepare me for my time playing professional football both here and abroad. It’s great that Reeds Rains has offered this support to the team, their role is vital to the growth of grassroots football.” Julian has also started a free online resource to help the grassroots game, it features contribution from some of the world’s top players and coaches.

Phil Robinson, branch manager for Reeds Rains in Sale adds: “We are delighted to be able to offer support to the local team and invite Julian along to share his experiences and inspire the young players as we launch the new kit. The team looks fantastic and as a proud resident in Sale and Timperley all my life I feel proud that we are able to support the Brooklands Dragons in this way.”  




First Time Buyer Tracker August 2014


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


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


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



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