Nationwide triples minimum deposit for UK first-time buyers

Mortgage lender sets 15% level to help protect customers from negative equity

Source: https://i.guim.co.uk/img/media/16b2a7addd19922c30621bdf4
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One of Britain’s biggest mortgage lenders, Nationwide, is to triple the minimum deposit that first-time buyers must put down as it braces itself for falling house prices and the possible return of negative equity.

Nationwide said from Thursday it will withdraw all its new loan deals where the first-time buyer only puts up a 5% deposit and set a new minimum deposit of 15%.

The rise represents a dramatic increase in the amount that buyers will have to save to buy the average home. According to Nationwide’s house price index, the average UK house price is £218,902 – which means a buyer will have to stump up a minimum deposit of at least £32,835 compared with £10,945 before.

Nationwide said it was making the move to protect new customers from being trapped in negative equity. That happens when a borrower takes out a mortgage with a small deposit, only to find that as house prices fall, the mortgage becomes more than the value of the property.

Henry Jordan, the director of mortgages at Nationwide, said: “As a responsible lender, Nationwide needs to ensure borrowers can afford mortgage payments and are, as much as possible, protected against the potential for negative equity, should house prices decrease … Our priority at this time must be to help members keep their homes.”

Nationwide’s decision to cap its maximum loan-to-value (LTV) at 85% comes only weeks after its data revealed a plunge in house prices across the UK in the wake of the coronavirus pandemic.

It said that in the month to May house prices fell by 1.7%, the biggest monthly fall since February 2009, when Britain was in the grip of the financial crisis.

First-time buyers hoping that other lenders will give them a low-deposit mortgage are likely to be disappointed. Nationwide’s move follows a string of market withdrawals by smaller lenders last week.

The tiny Saffron building society remains one of the few lenders that will still offer a 95% LTV – but the broker Chris Sykes of Private Finance said: “In honesty, I wouldn’t be surprised if these are gone by the end of the week as they will be absolutely inundated with applications.”

The Nationwide announcement will be a major blow to England’s property market just as it has begun to pull out of the Covid-19 lockdown.

A month ago the housing market in England was given the green light to reopen after seven weeks of lockdown. However, property professionals warn that if first-time buyers cannot get mortgages big enough to buy homes, then the property market will stall and prices will fall.

Economists are sharply divided about how far house prices will be affected by the coronavirus. The Centre for Economics and Business Research predicted in May that 2020 prices would be down by 13% “as a lack of transactions, high uncertainty, and falling incomes take their toll”. However, the estate agent Savills said the hit to the market could be more like 7.5% and a third of valuation surveyors are predicting that price falls could be limited to 4% or less.

Nationwide said the 15% minimum deposit would apply to all new house purchase, remortgage and first-time buyer applicants.

Buyers who can put up a 40% deposit will benefit from a small drop in its fixed rates, which will fall by 0.1% to 1.09% on a two-year deal or 1.4% on a five-year fix.

https://www.theguardian.com/business/2020/jun/17/nationwide-triples-minimum-deposit-for-uk-first-time-buyers CMP=share_btn_fb&fbclid=IwAR1Gh85VmF4LKYL4DeeVLiA3OPGH4NY3RNZWXaMhlgAREhV_w3BqmCBdls8

House prices:lockdown leads to sharpest monthly fall in value since financial crisis

BY JONATHAN PRYNN

House prices fell at their fastest rate last month since the depths of the financial crisis more than a decade ago, a survey reveals today.

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The average cost of a home in the UK dipped by 1.7 per cent in May, knocking just over £4,000 from its value, according to lender Nationwide.

It was the biggest monthly fall since February 2009 when the market was reeling from the collapse of Wall Street bank Lehman Brothers.

The annual rate of increase has dropped from 3.7 per cent to 1.8 per cent, bringing the revival in the property market since the election in December to a juddering a halt.

The dip covered a month that started in full lockdown, with only a tiny handful of sales being carried out. However agents have reported a surge in activity since the Government allowed the property market to reopen on May 13.

David Westgate, chief executive at agency Andrews Property Group, said: “May was the ultimate month of two halves. No activity at all in the first half and a frantic hive of activity in the second as transactions resumed.

“It will be 2021 before the property market finally gets into its stride again but for now the level of transactions post-lockdown has been staggering.”

Tomer Aboody, director of property lender MT Finance, said: “Banks are eager to lend, with liquidity extremely high. Interest rates are at an all-time low and agents are reporting a positive uptick in applicants registering.”

Guy Gittins, managing director of agency Chestertons, said: “A 1.7 per cent drop in prices in a month is dramatic but not as steep as many had expected and prices still remain nearly two per cent higher than this time last year.”

https://www.homesandproperty.co.uk/property-news/house-prices-fall-monthly-lockdown-a138606.html

Government urged to extend Stamp Duty relief to last-time buyers

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BY MARC SHOFFMAN

A new report suggests the Stamp Duty exemption should be extended to last-time buyers.

Research by the Cass Business School and the Centre for the Study of Financial Innovation, said elderly people should be encouraged to downsize, but warned the lack of age-friendly housing in the UK limits the options for millions who are open to moving but decide to stay.

The report, titled Too Little, Too Late? Housing for an ageing population, found that under-occupation is concentrated among the elderly population – those aged over 65 – where people tend to live in couples or alone.

It claims there are more than 15m surplus bedrooms in the UK, which could rise to 20m by 2040 if no action is taken.

The report recommends a Stamp Duty exemption for ‘last-time’ buyers – similar to the relief offered to first-tine buyers – worth up to £300,000 to encourage older home owners to downsize and free up housing stock.

The Government should promote the benefits of downsizing and incentivise people to do so before social care is needed, according to the report.

It also calls for local authorities and developers to plan for retirement housing.

Professor Les Mayhew, author of the report, said: “If more family homes were freed up by downsizing, the benefits would cascade down the housing ladder because it would enable families to ‘upsize’, allowing more first-time buyers on to the bottom rung.

“More efficient use of the existing stock would reduce pressure to ‘just build more’ as a solution to the UK’s housing shortage.

“The demand is out there as baby boomers seek to redeploy housing equity into smaller, more convenient homes with independent living and easy access to services. This would also reduce pressure on local authority spending through transfer to care homes and allow more efficient delivery of social care to individuals.”

Commenting on the report, Nigel Wilson, chief executive of Legal & General, which is helping fund more retirement housing, said: “Our housing stock needs to work for everybody.

“People of all ages need more supply of housing and better choices.

“We know there is strong demand for the right sort of housing for later life living, with great design, supportive communities and good access to friends, family and facilities.

“Housing policy now needs to catch up with the demands and opportunities of our ageing demographic: getting this right has benefits for everyone.”

Amy Wray, owner and managing director of Yorkshire-based agent Applegate Properties, said: “Whilst many last-time buyers may not actually require a reduction in Stamp Duty to make their move possible – as many have equity in their property – the passing of this exemption alone would raise huge awareness in the UK surrounding the amount of current empty bedrooms. Additionally, it would encourage many home owners to re-think their position once their families have flown the nest.

“Creating an awareness around ‘downsizing to support growing families’, would greatly motivate thousands of potential sellers to make the move sooner, rather than feeling an emotional responsibility to ‘cope’ with their now oversized family home.

“So many home owners have never even considered that they are contributing to the shocking statistic of there being 15m empty bedrooms.

“Therefore, such awareness could make for a huge shift in the mindset of all purchasers, making downsizing earlier the ‘new normal.’

“Good quality, over-55s retirement housing – with 24-hour wardens, maintained gardens, lifts and optional social areas – are hugely popular, so much so that we have a waiting list if any of these homes become available.”

https://propertyindustryeye.com/government-urged-to-extend-stamp-duty-relief-to-last-time-buyers/

Corona Fallout: Renters admit they’re less likely to own a home now

By Graham Norwood

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Research by insurance firm Aviva suggests private tenants are now more pessimistic about being able to buy their own home.

In December, six months ago, the firm found that 68 per cent of non homeowners hoped to buy a property in future: now that figures is just 52 per cent. 

In line with this, the number of under-25s hoping to get on the property ladder in the next five years has decreased from 35 per cent in December to 27 per cent today. 

The number of households - renting and owning - looking to trade up to a bigger property has also fallen from 10 to eight per cent, suggesting the current housing market is causing people to put plans on hold.

The Aviva study also reveals that lockdown has accelerated the way people use online services and video technology. 

Prior to the Covid-19 outbreak, 30 per cent of UK residents aged 55+ used video calls. This has now risen to 38 per cent of this age group.

The number of internet-enabled devices per UK household has increased from 10.3 in December to 11.6 now.

An Aviva spokesman says: “As the lockdown begins to ease, its legacy is likely to continue as new behaviours become the norm. 

If people make significant changes at home - whether this means buying new technology, making substantial property improvements, or even changing one’s living arrangements – it’s important that people keep their home insurer informed so they have the appropriate cover in place.”

https://www.lettingagenttoday.co.uk/breaking-news/2020/5/corona-fallout-renters-admit-theyre-less-likely-to-own-a-home-now

Property market is bouncing back

BY 
RYAN BEMBRIDGE

Source: https://www.widgetfinancial.com/images/headers/
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The Property website www.localsurveyorsdirect.co.uk has seen a sharp increase in activity in the UK housing market in the past fortnight following the slump due to the lockdown.

Since lockdown restrictions were implemented in the UK in March 2020, more than 450,000 people were unable to progress their plans to move house.

JJ Heath-Caldwell, managing director of the business, said: “After a very buoyant start to the year, in mid-March to mid-April the number of enquiries quickly dropped by 80% with the lowest activity recorded on the 14 April.

“Since then, the activity has been steadily rising and is now around 57% down (instead of 80% down). This is still low but we are seeing steady progress in response to some of the government’s initiatives to get the property market moving again.

“Across our sites, we have seen a strong increase in activity, which is promising after everything was closed during the lockdown period.

“My expectation is that the number of enquiries will continue to rise as we go through this year. We won’t see the levels that we saw back in January and February, but things are definitely looking up.”

https://www.propertywire.com/news/property-market-is-bouncing-back/

UK mortgage payment holiday extended by three months

Treasury also extends ban on home repossessions to 31 October amid Covid-19 crisis

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The government has extended its mortgage payment holiday scheme by three months.

More than 1.8 million homeowners have taken a three-month mortgage holiday since the scheme was announced in March to help borrowers in financial difficulty because of the coronavirus crisis, according to Treasury figures. It was due to expire at the end of June but has now been extended by a further three months, while the deadline for applying for an extension has been shifted to 31 October.

“We’re doing everything we can to help people with their finances at this difficult time and that includes making sure people get the support they need with their mortgages,” said John Glen, the economic secretary to the Treasury. “That’s why we’re working with the banks and lenders to extend payment holidays if people need them.”

The government said that while homeowners who had taken a mortgage holiday should restart marking payments if they could, it was extending the scheme to help those still struggling with the impact of the coronavirus.

“Everyone’s circumstances will be different, so when homeowners can pay some or all of their mortgage, they should work with their lender on a plan,” Glen said. “But if they are still struggling, I want them to know that help is there.”

https://www.theguardian.com/money/2020/may/22/uk-mortgage-payment-holiday-extended-by-three-months-covid-19

Government urged to ‘help people meet their rent payments’

By: Marc Da Silva

The government last week announced that homeowners struggling to pay their mortgage due to coronavirus will be able to extend their mortgage payment holiday for a further three months, or reduce payments, but more needs to be done to help people living in private rented accomodation. 

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While the mortgage payment holiday extension has been welcomed by many experts, the industry is still waiting to hear if any fresh proposals will be put forward to help private renters facing financial difficulty due to the coronavirus pandemic. 

Joanna Elson, chief executive of the Money Advice Trust,  a charity which runs the National Debtline advice service, said: “People in private rented accommodation are among the most exposed to financial difficulty in the wake of the outbreak, and the government should listen to calls to help people meet their rent payments by increasing the Local Housing Allowance rate to cover 50% of average market rents.” 

Many landlords have been flexible with their tenants, discussing managing rental payments, and helping them find sources of financial support and advice. 

According to a survey of more than 4,500 private landlords by the National Residential Landlords Association (NRLA), 90% of landlords who had received a request for support from a tenant had responded positively. 

This has included offering tenants a rent reduction or deferral, a rent free period, early release from a tenancy or a refund on service charges included in rents for homes of multiple occupation.

Ben Beadle, chief executive of the NRLA, commented: “The vast majority of landlords are doing everything possible to support tenants through difficult times.” 

https://www.landlordtoday.co.uk/breaking-news/2020/5/government-urged-to-help-people-meet-their-rent-payments