Mortgage shock comes for UK homebuyers. Borrowers who opted for popular two-year fixed rate deals during the pandemic, when relief on stamp duty encouraged many to purchase property, thus facing a 25% rise in mortgage costs as those rates mature.
Over a million people in households already spending more than a fifth of their income on mortgage repayments are immediately exposed to further rate rises, with lower-income households and older borrowers particularly exposed to variable rates — Institute for Fiscal Studies (IFS).
Remortgage searches hit record high as product choice dips. The busiest day ever for remortgage searches fell in August 2022 for eight of the 31 days in the month. Also, searches for remortgages outstripped searches for purchase mortgages. However, the number of products available dropped by more than 10%, the lowest level of availability since July 2021. — Twenty7tec.
40% of adults save less than £100 a month and 14% are unable to save anything. 81% of respondents reported changing their spending habits because of the cost-of-living crisis, with 44% worried about keeping up with rent or mortgage repayments. — The Exeter.
Brokers see surge in landlords looking to sell off their properties ahead of the new EPC rules, due to be introduced in 2025. In a rising rate climate that’s squeezing margins, at a time when the property prices remain high.
New build properties selling for significantly below the asking price, with a typical discount of around 14%. This equates to around £64,000 off the average new build asking price of £458,452.
Mortgage sector could play a bigger role to help home-energy efficiency, following a recent study by property experts Cornerstone Tax. The study found that 45% of homeowners are put off due to the costs involved and 22% found it impossible because of planning restrictions. — Ben Thompson, MAB.
Homebuyer enquiries, sales, and new instructions all fell in August compared to July. New buyer enquiries dropped at the steepest rate since the early stages of the pandemic, and sales were down for the fifth consecutive month, reflecting the economic downturn and rising rates. —Royal Institution of Chartered Surveyors (RICS).
Homebuying predicted to fall at the highest rate seen in a decade over the next 12 months. Lack of housing stock available is supporting prices, which continue to rise, even if the pace of growth has cooled over the recent months. They are expected to level off. — Royal Institution of Chartered Surveyors (RICS).
Average time to buy a home up 23% since 2019, at 153 days compared to 124 days before the pandemic. The length of time filling out forms, such as property title deeds, energy performance certificates (EPCs), local authority searches, transaction and conveyancing forms is a particular aggravation for homeowners. — Smoove.
Mortgage market is better prepared to weather the coming storm, say experts. Stricter lending controls, better triaging of financially stressed customers, greater digitisation, fall in interest only and self-certification mortgages were cited as factors.
Remortgages lead to 11% fall in disposable income. This leaves the average consumer with around one-quarter of their net income, after refinancing due to the cost-of-living crises and rising interest rates. Remortgage activity grew year-on-year, but product transfer business fell away in Q2, suggesting borrowers are shopping around more. — UK Finance.
New challenger 'StreamBank' enters the market, offering bridging and development finance to property professionals using the MV Core Banking platform.
Landlord numbers continue to grow, climbing by 2.4% since 2016-17 to an estimated figure of almost 2.6 million, despite government policies and restrictions impacting the private rented sector. — Total Landlord Insurance.
Value of mortgages in arrears, falls to lowest level on record in Q2 totalling £13.2bn, which is a 0.7% drop on Q1 and a 7.2% annual decline. It is also the lowest value since the central bank began its records in 2007. — (Bank of England) BoE.
Over 40% struggling to keep up with mortgage payments. Workers in the HR industry affected the most. — Uswitch.com.
Restricted mortgage borrower budgets hit the urge to move home, particularly among upsizers, second-home buyers and investors. Although those looking to downsize, relocate or live in regional parts of the UK remain positive. — Savills.
Online mortgage searches rise rapidly from 17% using this approach for their first loan, doubling to 34% when thinking about their next mortgage. However, concerns were raised with sharing data such as salary, spending and ID — Contact State.
Highest stock levels in 15 months, as buyer and seller sentiment show resilience. Some 73% of the active property buyers and 79% of sellers in August were confident that they would undertake a property transaction within the next three months — OnTheMarket Property Sentiment Index.
The number of sales agreed dips or stays static for the third consecutive month. This is a sign that the market may be cooling. — TwentyCi
A third of prospective first-time buyers postpone purchase plans by 20-months on an average, due to the cost of living crisis and average deposits rising to £43,500. — Aldermore.
Defaults set to rise as higher living costs pressure household finances. The household debt is high by historical standards at just under £2 trillion in Q1, equivalent to around 124.5% of total household income. However, this is below the 2008 peak of 146% at the time of the financial crisis — Bank of England (BOE).
Interest rates hikes are making repayments unaffordable for 33% of mortgage customers, rising to 48% of younger mortgage customers (18 to 34 year olds). 42% said that they are considering switching to a different mortgage provider, offering a longer fixed-term mortgage. —Butterfield Mortgages.
Quarter of borrowers unable to afford their mortgage if interest rates hit 5%. The survey found that more than a third of respondents interested in buying a new home, were very or somewhat likely to opt for a 50-year mortgage if it improves their affordability. — Anthony Ward Thomas.
Mortgage-backed buyers fuel 71% of property purchases with 630,688 of the 919,936 homes sold in the last year (representing £177.4bn of a total £251bn), facilitated by mortgage borrowing. — Revolution Brokers.
Average FTB mortgage payments up 37% since January, rising from an average of £812 to £1,112. This rise is due to 0.5% increase in bank base rate to 2.25% in September. — Rightmove.
Government to unveil plans to 'unlock homeownership' for new generation this autumn, by increasing housing supply, enabling planning reforms and increasing the disposal of surplus government land to build new homes. — Treasury’s 2022 growth plan.
Mixed industry reaction to Chancellor’s stamp duty cuts, whereby there is no stamp duty to pay on the first £250,000 of any property’s value (up from £125,000), and for First Time Buyers (FTBs) the zero-rate threshold will increase to £425,000 (up from £300,000) with relief available for £625,000 (up from £500,000). Stamp duty will also be eradicated for purchases of land and buildings for commercial or new residential development. Whilst some believe this may help stimulate the economy, re-balance purchase and remortgages, thus making it easier and make it easier for FTBs. Others believe that this could further fuel property prices, affecting affordability as well as creating bottlenecks in the industry.
First-time mortgage repayments hit 40% of salary, the highest level since 2012 as house prices keep rising. Repayments on homes are set to go up, from an average of £1,057 for first-time owners to £1,114, as lenders pass on the latest 0.5% base rate increase. — Rightmove.
Estimated 5.2million adults take additional job based on a survey by Royal London. The latest ONS data shows around 1.2 million UK workers have second jobs but suggests that the number has been rising over the past two years.
Starmer pledges homeownership will hit 70% under Labour Government, with a new mortgage guarantee scheme to help first time buyers to get on the property ladder.
Former Bank of England chief calls for emergency 1.5% interest rate rise stating that the “secret is to go early and go big, and that the investors have started to lose confidence in the Government”.
"We're going to see more vulnerable customers in the next 12 to 18 months" with the need for mortgage protection for first-time buyers becoming more important, because of the increased chance of short-term income shocks. — Rich Horner, MetLife.
Buying power drops 28%, raising property market risks if rates reach 5% by the end of the year. This will likely result in some borrowers putting off their purchase or seeking a more modest property, assuming they can find a lender prepared to finance at the levels required.
Rents hit record £1,250 in September, as demand remains high amid tight supply. This is 1.8% higher than August, and up 13.2% on last year —Goodlord.
Average mortgage cost is up by as much as 34% since December with the average monthly cost of a two-year fixed mortgage up by £284 per month to £1,098. The average three-year product £274 is more expensive when it comes to the average repayment, costing £1,075. — Octane Capital.
