Property Alert 24th September 2014

Here we are again with some more news and views from ‘Mr Mortgages’,
Peter Faulkner at advisor@mortgage-market.co.uk…

Mortgage Market News

Many lenders have reduced their fixed interest rate mortgage products
and reduced their charges and fees. This is a response to low levels of
lending since the introduction of the MMR affordability rules coupled
with forensic underwriting.

Stories of first time buyers sitting through three hour interviews with
bank mortgage advisors are becoming common.  The focus has shifted
heavily to budget lifestyle spending commitments as well as analysing
the applicant’s bank statements to evidence what they spend their money
on to define levels of disposable income.

Some lenders are now asking for credit card statements as well as bank
statements to identify where the monthly spend goes.  Many lenders have
tightened their internal scoring systems resulting in more declines for
direct applicants.

By the by, mortgage brokers are now providing 56 per cent (up from 52
per cent last year) of mortgage business to lenders with brokers
carrying out the bulk of pre-assessment, regulated advice and
recommendations, packaging client information and providing
administration and client support.

Property – The Ripple Effect

We are seeing signs of the much delayed ripple effect in property
values. Average property prices over the last year have increased in
London by 19 per cent, for the UK as a whole the increase has been 12
per cent which translates to some regions seeing prices rise by 6 and 7
per cent although some locations have stood still or even declined.

BTL rents have increased by 5 per cent on average in many parts of
London with many landlords now looking to increase yields. It is always
a trade-off between having a good long term tenant and setting rents at
the market level.  However, rental demand is increasing and landlords
need to look at increasing rents to cover increased costs and falling
yields

Interest Rates – Where Next?

The Bank of England’s Monetary Policy Committee (MPC) provides forward
guidance on interest rates in their latest inflation report.  The Bank
of England’s Governor, Mark Carney and three members of the MPC,
clarified at a Parliamentary select committee meeting last Monday that
they do not expect interest rates to rise before February 2015 and that
when rate rises take place in the spring and summer of 2015, they will
be in small amounts with gradual increases over the following couple of
years and will eventually should rise back to the BoE historic average
norm of about 5 per cent. The Eurozone is extremely weak and this in
itself may delay interest rate rises as well as significant changes in
other factors, such as unemployment and inflation.

Thank you, Peter, at advisor@mortgage-market.co.uk. If you’d like to
chat to Peter, please do email.

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