House Prices Fears From Supply Of Properties For Sale
Miles Shipside, of Rightmove, said: “Not all properties marketed have to sell or stay on the market, with a percentage being withdrawn if they fail to find a buyer. There is still a clear imbalance between supply left on the market and demand even taking this into account. Demand is restricted by mortgage availability and potential buyers economic circumstances.”
However, sellers are refusing to lower their asking prices, boosting them by 3.1 per cent this month to an average of £230,000, according to survey. The number of forced sellers and repossessions are the key factor that drives down prices, and to date lenders have shown considerable forbearance in how they manage arrears and are wary of flooding some markets by putting lots of repossessions up for sale. However, there will be individual circumstances, especially in the country’s unemployment black spots, where sellers have to sell. The tactics are to price below the other properties on the market.
Good News for First Time Buyers as House Builder Offers 95% Deals
Taylor Wimpey has negotiated an exclusive mortgage guarantee scheme, paving the way for 95% mortgages for first-time buyers.
The Take5 deal, with Melton Mowbray Building Society and Saffron Building Society, is being offered initially in three regions – the East Midlands, East Anglia and East London.
The new mortgages have interest rates of between 5.49% and 5.99%.
Pete Redfern, group chief executive at Taylor Wimpey, said: “We have been working hard to secure this mortgage deal which we believe will make all the difference to those who aspire to own their own home but find it difficult to save for the large deposits needed. Discussions are at an advanced stage with other lenders to support this initiative as part of a range of practical and workable solutions to get more first-time buyers moving.”
John Eastgate, Saffron’s sales and marketing director, said: “With rental prices and the cost of living rising, many prospective first-time buyers are simply not able to save the substantial deposits required of many current mortgages. We know that there are many potential borrowers who are capable of supporting a mortgage but are ‘frozen out’ of the market by the large deposits required. Affordability remains a core priority particularly given the potential for rising interest rates. “
Barratt Homes have a different offering through their Head Start deal. This offers First Time Buyers a 15% loan over 10 years at less than 6% interest. You find 5%, Head Start lends you 15% and then you top up with an 80% mortgage.
Mortgage Lending In Plummet
New deals all sound good but the reality is in the overall picture. Gross mortgage lending fell 13% to an estimated £9.2bn in January from £10.6bn in December, the Council of Mortgage Lenders has reported.
The Bank of England’s inflation report noted that the UK banks face a significant funding challenge over the next couple of years. This implies that, even in the unlikely event of a marked upturn in mortgage demand, the level of activity in the mortgage market can be expected to remain tight.
These figures highlight how important the private rental sector is going to be over the next few years. Until the mortgage market opens fully to first-time buyers it will continue to stagnate, leaving hundreds of thousands of people pouring into the rental sector.
The market is being driven by the behaviour of lenders and many are compelled to consolidate their balance sheets rather than lend.
But the figures don’t tell the whole tale. Approvals are actually up for the most expensive properties. Wealthy buyers are using large deposits and aren’t restricted by the availability of mortgage finance like the rest of the market.