Gross mortgage lending increases by 21% in May

CMLlogosmallThe Council of Mortgage Lenders estimates that total gross mortgage lending in May increased to £14.7 billion, representing a rise of 21% from £12.2 billion in April and 17% higher than the total of £12.6 billion in May 2012.

This is the highest monthly estimate for gross mortgage lending since October 2008.

Commenting on market conditions in this month’s Market Commentary, CML chief economist Bob Pannell observes: “The imminent change of guard at the Bank of England takes place against the backdrop of a modestly improving UK economy, albeit one that appears to rest upon a pick-up in consumer spending and a recovering housing market.

“Funding conditions, helped by the funding for lending scheme, continue to look favourable and are supporting more competitive mortgage pricing and availability and a gradual resumption of lenders’ risk appetite.

“While the direction of travel is clear and fits well with the more positive housing surveys from RICS and others, our forward estimate does imply somewhat stronger house purchase activity than we had been expecting. This may reflect a degree of pent up sales following the extended spell of poor weather earlier this year”.

Source: Council of Mortgage Lenders

Housing market ‘at three-year high’, says RICS

rics_logo-300x150Activity in the UK housing market has hit a three-year high, surveyors report, supporting hopes of a revival that would help the economic recovery.

Chartered surveyors reported selling an average of 17.4 homes over the three months to March, the highest number since March 2010. Confidence has been slowly returning to the UK housing market since the end of 2012 and transactions have also risen for three consecutive months.

Surveyors also said demand improved, as a net balance of 11pc reported rises in enquiries from new buyers, compared with those who reported a fall. This marked the strongest reading since October, after a subdued start to the year. Researchers speculated this could be due to the improving affordability of mortgages.

Peter Bolton King, director at RICS, said: “A buoyant, healthy property market is central to economic recovery and, while these are still very much early signs, it is encouraging that sales are beginning to pick up. The increase in potential buyers getting out there and viewing property is particularly encouraging.”

The Government’s Funding for Lending scheme, launched last August to give banks access to cheap finance, has been cited by lenders as a factor pushing down on bank funding costs and helping to reduce interest rates for customers.

The are concerns in some quarters that the Chancellor risks supporting a “bubble” in prices through his Help to Buy push, which will massively expand the mortgage guarantee and shared equity schemes available to would-be buyers.

Looking ahead, respondents are optimistic that the recent increase in transactions is set to continue. A net balance of 19% more surveyors expect sales to rise further over the coming three months. Moreover, price expectations indicators for both the next three and twelve months have been in positive territory for the last four months.

Source: Royal Institution of Chartered Surveyors (RICS)

UK house prices set to soar – CEBR

Boards smlMillions of British homeowners were given a timely boost last night as it was forecast average house prices are set to rocket by £45,000 over the next five years, according to a report in Britain’s Daily Express newspaper.

The report says: As the UK economy stutters back into life the outlook looks bright for those owning or aspiring to own their own home with yearly increases of £9,000.

And in a double boost, mortgage rates have hit record lows as the high street feels the effects of action to breathe life into a previously stagnating housing market.

The positive picture comes in a top-level report by the respected Centre for Economics and Business Research. Experts said the average UK home would be worth £267,000 by 2018 – up from today’s £222,000.

“By 2018, we expect the typical UK home will cost £267,000 – over 20% more than this year.”

The boom equates to a £25-a-day – or £750-a-month – increase in value and proves action is working to drag the housing market out of the doldrums.

The news quickly follows Chancellor George Osborne’s budget “to get Britain moving again”, which contained a raft of measures to help people get a foot on the property ladder.

Last night economist and report author Daniel Solomon said: “By 2018, we expect the typical UK home will cost £267,000 – over 20% more than this year.

“Gradual wage and population increases will be the fundamental drivers of this medium-term trend. We expect the Chancellor’s new Help to Buy scheme will push up house prices before it raises housing supply.

“We predict the scheme’s effects will be quite modest, but it could support the construction of roughly 5,000 new homes in 2015. This supply boost could provide a welcome route on to the housing ladder for a small number of aspiring homeowners.”

News of a resurgence in Britain’s housing market comes after the Council of Mortgage Lenders reported home loans had got off to their best start since 2008, when the market was at its pre-crisis peak.

Buyers can now pick up some of the lowest rates in history, with one building society offering a two-year fixed rate at a staggering 1.74 per cent.

Lacklustre wage growth, recapitalisation by domestic banks and the deepening Eurozone crisis are expected to subdue house price growth this year.

But next year, the CEBR expects house prices to be 2.3 per cent higher than they were in 2007.

Experts said the predicted strengthening economy will lead to rising wages, while population growth is projected to outpace housing supply increases.

It is these two crucial factors that will lead to accelerating house price growth. By 2018, the CEBR forecasts a typical UK home will cost £267,000, as house prices rise by 4.6 per cent over that year.

Incredibly, in five year’s time UK house prices will be 20.4 per cent higher than they currently are.

Last night independent financial expert Stephen Bacic urged Britain’s army of first-time buyers to take the plunge and invest in bricks and mortar.

He said: “There is a lot of pent-up demand out there but credit is getting easier to obtain. I don’t believe there is ever a bad time to buy a house – people have absolutely nothing to gain by waiting to get on the property ladder. Now is as a good a time as ever.”

Click here to read to full Daily Express report.

UK house prices rise 0.5% in January

The price of a typical home rose by 0.5% in January, but was unchanged compared with January 2012, according to the latest data from Nationwide.

The typical UK home is now worth £162,245.

Robert Gardner, Nationwide’s Chief Economist, said: “UK house prices increased by 0.5% in January, though prices were unchanged compared with January 2012.

“While activity in the housing market remains muted by historic standards, there have been tentative signs of a pick-up in activity in recent months.

“The Funding for Lending Scheme has achieved some success in bringing down mortgage rates, with some signs of a pick-up in lending activity.

“Hopefully, the momentum will continue to build in the months ahead, though much will depend on whether the wider economic environment improves. Progress is likely to be relatively slow on that front if recent trends are any guide, with the UK economy shrinking for the fourth time in five quarters in Q4 2012.”

Richard Gordon of UKPI commented on the figures: “2013 has certainly got off to a positive start. There is generally more optimism around and activity levels are higher.

“Whether this will be sustained through out the year will remain to be seen and will largely depend on wider economic factors. But it is clear the demand is there and now it seems for many is the willingness and ability to commit to a purchase.”

Source: Nationwide

Brighter growth outlook for UK economy

A more positive outlook for the UK economy for the rest of the year has been predicted by the CBI.

The economy will see growth resume in the second half of 2012, with faster GDP growth during 2013. The CBI expects GDP growth in 2012 will be 0.6%, slightly down from its forecast in February of 0.9%.

This is a direct consequence of the preliminary ONS figure for quarter one. Despite this, growth prospects remain broadly unchanged for the latter half of the year and, in 2013, the CBI forecasts GDP growth to be 2.0%.

Quarter-on-quarter growth is expected to be flat in the second quarter of 2012 (0%), affected by the impact of the additional bank holiday for the Diamond Jubilee.

However, there will be an improvement in the second half of the year (0.7%, 0.5%), reflecting an improving global economy and an expected easing in inflationary pressures, plus a slight boost from the Olympics and a bounce back from the second quarter.

While inflation is expected to be somewhat higher than previously thought throughout 2012, in part due to recent oil price rises, it should continue on a downward trend and come close to hitting the Bank of England’s target in the spring of 2013.

Household spending will remain subdued, with weak wage growth and unemployment rising to a peak of 2.86 million in the first quarter of 2013, but prospects should improve next year as inflation continues to fall further and disposable incomes begin to recover.

As recent surveys have indicated, uncertainty over demand is easing and, as a result, there will be a modest rise in business investment, growing at around 4% in 2012 and 5% next year.

Exports are forecast to see a small rise this year (1.5%), affected by lower levels of economic activity in the euro zone area, but are expected to increase by around 6% in 2013, as the global economic outlook strengthens.

CBI Director-General John Cridland said: “Despite the disappointing GDP estimate for the first quarter from the ONS, we still think the UK economy will grow in 2012, with faster growth next year.

“Optimism among businesses has been increasing since the turn of the year, with manufacturing demand holding up. And that is beginning to translate into more jobs and investment.

“That said, the global economy continues to pose a number of significant challenges. Concerns over euro zone stability are on the rise again, oil prices remain high and confidence among businesses and households are still fragile.

“We have always said that the path back to sustainable economic growth will be a long and difficult one, with many bumps along the way. To re-balance our economy towards exports and investment will take time and patience.”

With the economy slightly weaker than believed at the time of the March budget, public sector borrowing is expected to be some £6-8billion higher than forecast by the OBR, at £128.2billion in 2012/13 and £104.1billion in 2013/14.

Interest rates are expected to remain unchanged throughout most of the forecast period, with a rise expected in the final quarter of 2013.

Ian McCafferty, CBI Chief Economic Adviser, said: “Over the winter, the economy has been bumping along the bottom, and with the distortions from an extra bank holiday in the second quarter, is likely to stay that way until summer. Nevertheless, business surveys suggest that underlying conditions are starting to improve, and that we should see more momentum in the second half of the year.

“Although inflation has been higher than expected, we believe that it should continue to fall towards the Bank’s target of 2% by the spring of next year. This will help lift some of the squeeze on household incomes and boost business confidence.”

Strong property market performance in Q1 2012

The UK property market had a strong start to the year, with asking prices increasing by £3104 in the past three months to March, according to the latest House Price, Affordability and Rental Index from

Asking prices have increased 1.8% since the start of 2012, bringing the average asking price of a property in the UK to £221,387, up from £217,483 at the end of 2011.

This positive start to the year follows a less impressive final quarter of 2011, where prices fell consecutively between September and December, wiping £2369 (1.1%) from the average asking price of a UK home.

Eight of the 11 UK regions recorded an asking price rise during Q1 2012, with London increasing the most, by 5.4%.

Samantha Baden, property analyst at, said: “We always expect prices to tail off at the end of the year as the market quietens down, but a healthy recovery during Q1 of the following year shouldn’t be taken for granted.

“Given the current economic climate, asking price rises could be interpreted as part of a gradual return of confidence to our fragile property market. However, for many first-time buyers and would-be home movers it’s the affordability issue which remains key as they decide their next property move.”

Key facts:

  • UK sales asking prices increased by 1% (£2201) in the past month, rising from £219,186 in February to £221,387 in March.
  • This is the largest increase in a single month since April 2009.
  • Asking prices are currently 1.3% higher than in March 2011.
  • Asking prices are now at their highest level since June 2008.
  • Asking prices were driven by a 1.2% monthly increase for houses which now stand at an average £242,574.
  • Asking prices for flats increased 0.6%, or £1045, to an average of £177,690.
  • Asking prices rose in every single UK mainland region in March, with the greatest increases in London (1.4%).
  • Of ten cities tracked outside the capital, the greatest increases were in Birmingham, where asking prices rose 1.2% to £151,243 (up £1849).

Source: Propertytalk Live!


Budget 2012 – Chancellor cuts 50p top tax rate

British Chancellor George Osborne has announced that the Government is to reduce the controversial 50p top rate of income tax to 45p from April 2013.

But his Budget has taken a swipe at the wealthy in a series of other tax and anti-avoidance measures.

Justifying the end of the 50p top rate of income tax paid on earnings over £150,000, Osborne said it damaged competitiveness and had only raised a third of the £3billion expected.

Instead, five times as much would be raised from the very rich by other policies in the Budget.

New “anti avoidance” tax rules would tackle the “morally repugnant” practice of people not paying the tax that they should.

Most notable of these is the plan for a staggering 15% stamp duty charge levied on people who buy expensive homes using offshore companies.

Individuals buying property costing more than £2million will also pay a new rate of 7%, up from the current 5%.

At the other end of the scale, the threshold at which income tax is paid – £8105 from next month – will rise to £9205 in 2013.

Osborne’s outlook for the economy in general saw the growth forecast for 2012 rise marginally from 0.7% to 0.8%.

He also said the Government was “on course” to eliminate the structural deficit by 2016-7.

And, while the UK was expected to avoid a “technical recession” the euro zone and oil prices remained a threat.

Unemployment is expected to peak this year at 8.7% before falling.

Osborne said it was a “Budget that rewards work”.

“Britain is going to earn its way in the world,” he said. “There is no other road to recovery.”

Source: Investor Today

More Britons expect house prices to rise than fall in 2012

Nearly a third of Britons think that house prices will rise rather than fall in 2012, according to the latest Halifax Housing Market Confidence tracker.

29% of Britons forecast that house prices across the UK will increase over the next twelve months, more than the 22% that predict a price decline over the same period.  As a consequence, the headline House Price Outlook balance has moved into positive territory with an overall balance score of +7 percentage points (29% minus 22%).

This represents a marked improvement compared with the negative reading of -2 (28% expecting a rise minus 30% expecting a fall) recorded in October’s survey.

However, the outlook for the housing market remains subdued. The majority think that any house price movement over the next twelve months will be relatively small with around two-thirds (65%) expecting any movement to be between +5% and -5%.

Eight of the eleven UK regions tracked recorded a positive headline House Price Outlook balance (i.e. indicating that more people expect house prices to rise rather than fall). This contrasts sharply with October’s tracker when just three regions had a positive headline balance.

Londoners have the most optimistic outlook for the housing market with an overall net balance of +21, followed by the East Midlands (+18) and Yorkshire and Humber (+14). At the other end of the spectrum, the North East has the most negative outlook for house prices (-3).

Martin Ellis, housing economist at Halifax, commented: “The modest improvement in consumer confidence in the outlook for house prices reflects the resilience of the UK housing market over recent months in the face of a weak economic recovery and the deterioration in the outlook for both the UK and global economies.

“Looking forward, we currently expect broad stability in house prices in 2012, although there remains much ambiguity around this given the considerable uncertainty regarding the prospects for the UK economy.”


UK house prices rose by 0.6% in January

UK house prices increased by 0.6% in January, according to the latest survey from the Halifax.

The change means that the average cost of a house was £160,907 last month, the bank said. House prices are 1.8% lower than a year ago, according to the Halifax’s measure.

The bank said prospects for the housing market over the coming months depended on whether the debt crisis in the eurozone would affect the UK economy.

“If the UK can avoid a prolonged recession, we expect broad stability in house prices in 2012,” said Martin Ellis, Halifax’s housing economist.

The Halifax, now part of Lloyds Banking Group, said that the price of the average home in the UK was very similar to the average value in the middle of 2011, mainly due to the low level of interest rates, the lender said.

House prices in the three months to January fell by 0.9% when compared with the previous three months, the Halifax said. This three-month on three-month comparison is often thought to be a better measure of underlying conditions in the market.

Last week, the latest survey from the Nationwide building society valued the average home at £162,228. It said that prices fell by 0.2% in January compared with December.

The Nationwide said the annual rise in house prices in January was 0.6%, notably different to the 1.8% fall recorded by the Halifax.

However, the year-on-year comparison is calculated slightly differently by the two lenders. The Halifax compares the previous three months with the same three months a year earlier to give a smoother comparison, rather than a direct comparison of the equivalent months.

Confidence in UK housing market stable despite economic gloom

The 14th quarterly Property Tracker survey from the Building Societies Association shows that consumer confidence in the housing market remains remarkably stable, if far from booming, despite the gloomy outlook for the economy.

Consumer sentiment is a key indicator of future activity in the property market and provides an early snapshot of potential activity in 2012. A cross section of 2,069 adults across England, Wales and Scotland were asked for their views and intentions about home purchase in early December by YouGov plc.

Q: Is now the right time to buy a home? : 44% felt that now was a good time to buy compared to 25% who did not.  This is a slight improvement on March 2011 when 41% were positive about buying in the current market and 29% were negative.

Q: Do you intend to buy a property in 2012? : Overall, 12% of respondents intend to buy next year whereas 63% said that they had no need or desire to move in 2012 and 17% said that they would not be in a position to move.  Only 8% were put off moving for some reason such as the outlook for jobs or the size of deposit required.

Q: What are the barriers to buying a home? : Challenges remain in realising intentions to buy. The most common barriers cited by respondents are: raising the deposit to buy a property (64%), obtaining a large enough mortgage (57%), and unsurprisingly in the current environment, fears over job security (54%).  Far fewer see the potential for future house price falls as a barrier (21%).

Q: What do you think will happen to house prices in the next year? : Views are mixed with 33% overall expecting prices to rise compared to 28% who believe that they will fall and 20% who see them staying the same.

Commenting on the results, BSA Head of Mortgage Policy, Paul Broadhead said: “Although there has been a stream of gloomy economic news recently, and the uncertainty about the Eurozone has increased dramatically, consumers’ views on the housing market remain remarkably solid. Many people believe that it is currently a good time to buy, and about one in eight (12%) will be looking to enter the market or move in 2012, especially in London where 21% intend to buy.

“Government policy announcements such as the new build indemnity scheme indicate how important the housing market is to the UK economy, so the fact that confidence is not weakening is reassuring. More is in the pipeline to help break down the barriers to home ownership, although this must always be tempered with a responsible approach to lending as home ownership is not always the most appropriate choice for everyone.

“So far this year building societies and other mutual lenders have supported those who have wanted to buy property, with gross lending by mutuals up 15% year on year, while across the rest of the market mortgage lending is slightly down.”

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