HSBC launches Britain's first fixed-rate mortgage below 1%

Customers lock in for two years at 0.99% interest, but they need a deposit of 35%, in deal described as new benchmark

HSBC has launched Britain’s first fixed-rate mortgage with an interest rate below 1%, as competition among lenders hots up and the cost of borrowing for banks and building societies falls to new lows.

The bank is offering customers the chance to lock in for two years at an interest rate of 0.99%, but they need a deposit of at least 35% and will pay a product fee of £1,499. 

David Hollingworth, of mortgage brokers London and Country, described the rate as “absolutely ridiculously low … It sets a new benchmark for two-year fixed rates.” He said the fee was “big, but not the biggest” and that repayments on a £150,000 mortgage would be £565 a month.

The deal is the cheapest fixed rate on the market, and the lowest ever recorded by the financial information firm Moneyfacts. It matches HSBC’s previous lowest rate, a 0.99% discount deal it offered in 2014, but undercuts Yorkshire building society’s current market-leading fixed rate of 1.14%. That loan has a slightly lower fee of £1,345.

Rachel Springall, finance expert at Moneyfacts, said: “As with any deal, applicants should always work out the true cost of the mortgage to decide whether it’s right for them.”

Hollingworth said the rate on the deal was one percentage point below the cheapest five-year fixed-rate, a 1.99% mortgage also offered by HSBC. “You have to weigh that up against the longer-term security of the five-year deal. Two years comes around pretty quickly, but for some people that suits them just fine,” he said.

Funds for the loan would be limited, so it was unlikely to be around for a long time, he added.

The launch comes as Moneyfacts data shows that rates on two-year fixed-rate mortgages have risen since May, from an average of 2.56% to 2.58%. However, five- and 10-year deals have fallen to all-time lows of 3.16% and 3.46% respectively.

Although the Bank of England base rate has remained unchanged since March 2009, mortgage rates have fallen in recent years as the cost of funding the loans has dropped. The recent dip in long-term fixed-rate deals has been driven by investors seeking a haven for their cash in the run-up to the EU referendum on Thursday. Concerns about a Brexit vote have driven money into government bonds, driving yields on them down to record lows.

The maximum available to borrowers who take out HSBC’s new mortgage is £500,000.

https://www.theguardian.com/money/2016/jun/21/hsbc-fixed-rate-mortgage-below-1-per-cent-interest-rate

Significant rise in number of retired people that are renting

There has been a sharp increase in the volume of people residing in private rented accommodation in retirement across much of the UK since 2012, new figures show.

The latest survey from the National Landlords Association (NLA) reveals that the number of retired private renters has increased by more than 200,000, or 13%, in the last four years, reflecting the fact that more people are turning to the private rented sector.

A breakdown of the data reveals that just 3% of the retired private renting population live in London, despite the fact that 17% of the nation’s retired population reside in private rented accommodation across the South East – the area with the highest proportion across the UK.

There are close to four times as many retired renters living in the North West at 15% compared to the North East at 4% and twice as many retirees rent property in the West Midlands at 8% compared to the East Midlands at 4%.

However, only 9% of landlords said that they currently let to retirees, down from 19% in 2012.

The findings from the research indicate that it could may soon become harder for those approaching retirement to find suitable rented accommodation in the future due to the general supply-demand imbalance in the market, according to Carolyn Uphill, chairman of the NLA.

She said: “More and more people are turning to private rented housing at every stage of their lives, including in retirement. Landlords appreciate the stability and assurances often provided by older households, but are finding it increasingly difficult to build businesses around the needs of potentially vulnerable tenants.

“Successive cuts to the welfare budget, uncertainty about pension provisions, and the devastating impact of the Government’s tax changes are likely to mean that private landlords will soon be unable provide homes in high cost areas like Central London for anyone without a well-paying job,’ she pointed out.

“As the proportion of retired renters continues to grow there’s a real worry that homes won’t be available in the private sector, forcing people to look further afield, leaving communities they have known and contributed to for decades.”

https://www.landlordtoday.co.uk/breaking-news/2016/6/significant-rise-in-number-of-retired-people-that-are-renting

London Property : Prices Rise 432% In Two Decades

Property prices per square metre have risen by 432 per cent in Greater London over the past two decades. This compares to a national average increase of 251 per cent, or £2,216 per square mile according to data that was conducted by Halifax.

In addition, Land Registry data indicates Greater London has gone past the £600,000 milestone for the first time.

Moreover, property investment firm London Central Portfolio [LCP] have said that this new London average price (£600,076 to be precise) is 14 per cent higher than a year ago. This has been linked to low mortgage rates and the falling cost of stamp duty on properties costing less than £937,000.

Landlord hit with £25k fine for safety failings

The owner of a house in Colindale, north London, let out to tenants in a dangerous condition has been fined £25,000.

Habib Khan, of Charlton Road, Harlesden, is the latest in a string of landlords to be taken to court by Barnet Council which has brought prosecutions totalling more than £220,000 in court costs and fines this year alone, as part of wider efforts to clampdown on unlicensed landlords.

Khan, who received around £20,000 a year in rent from the property on Varley Parade in Colindale, was convicted in his absence at Willesden Magistrates Court for putting the lives of the tenants at risk because the property was so unsafe.

The council’s environmental health officers said that the five bedroom house did not have smoke detectors or flame-resistant doors nor did it have a gas safety certificate or electrical test certificate.

A council spokesman said: “The consequences of a fire could have been catastrophic. Mr Khan’s only response to the investigation was to evict two tenants so the house was no longer covered by licensing arrangements.”

Last month, Willesden magistrates handed out fines totalling £120,000 to the owners of a property comprising ten studio flats in Golders Green after it was found the lives of up to 20 tenants were at risk.

The property, on Golders Green Road, had been under a prohibition notice preventing it from being let - but tenants were still being charged around £1,150 per calendar month.

A council spokesman said: “Following a complaint from a tenant of one of the dwellings, our environmental health team found the accommodation to be in a very poor condition and badly managed.

“They found that very serious harm would have been likely if a fire had started at the property – with 10 to 20 people potentially losing their lives.

“The magistrates said the tenants’ financial situation had left them vulnerable.”

https://www.landlordtoday.co.uk/breaking-news/2016/6/landlords-hit-with-25k-for-safety-failings

When should you stop saving towards a home and buy?

 First-time buyers can buy three years sooner with a smaller deposit (but it costs them more) 

An average couple, working full-time, can step onto the property ladder three years sooner by taking out a larger loan, new research claims

Similarly, a single buyer can buy eight years sooner

But buyers will pay a price as higher mortgage payments mean they will have £2,300 a year less to spend on themselves

Borrowing more also costs more over the life of the loan

By Myra Butterworth

Knowing how much to save as a deposit is a conundrum that many first-time buyers face.

Should they save as much as possible in a bid to secure a lower mortgage rate (and consequently a lower mortgage payment every month) or approach a lender as soon as they have a minimum 5 per cent deposit and pay a higher rate?

New research from estate agents Hamptons International claims to have the answer.

An average couple, working full-time, can step onto the property ladder three years sooner if they choose a 95% mortgage compared to 85% deal, the latest research claims

In its latest analysis - called the Ability to Buy index - it suggests that an average couple, working full-time, can step onto the property ladder three years sooner, and a single buyer eight years sooner by taking out a larger loan.

If getting onto the housing ladder as soon as possible is your priority, then taking out a higher loan-to-value mortgage may be worth considering.

However, it is worth noting that these same borrowers will pay a price as higher mortgage payments mean they will have £2,300 a year less to spend on themselves as a result, according to the research.

It compared the length of time that it took first-time buyers to save for a 5 per cent deposit against the length of time it took to save for a 15 per cent deposit.

It found that an average couple who work full time can save a 5 per cent deposit in two years, cutting more than three years off the time needed to save a 15 per cent deposit.

At the same time, it takes a single first-time buyer six years to save for a 5 per cent deposit, almost 15 per cent off the time needed to save for a 15 per cent deposit.

In London, a typical working couple can step onto the property ladder 34 years sooner by choosing a larger loan

The difference is even great in London where house prices are higher than the nationwide average.

The Hamptons International research found that the amount of time it takes to save for a 95 per cent mortgage compared to an 85 per cent deal for a property in the capital is reduced by 34 years for a single first-time buyer and by seven years for a working couple.

However, the additional mortgage costs will leave borrowers in London with a year less to spend on themselves.

The research also highlighted how borrowing more also costs more over the life of the loan.

For an average £162,000 first home, reducing the deposit from 15 per cent to 5 per cent adds an extra £190 to the monthly mortgage bill. 

This adds up to additional £57,000 over the term of the mortgage. 

Fionnuala Earley, director of residential research at Hamptons International said:

'The Help to Buy Mortgage Guarantee scheme, which was introduced on 1 April 2013, opened the door for banks to sell more high LTV mortgages, a trend which has continued, even outside of the scheme. 

'This has been a blessing for many buyers who have been unable to buy a home due to the high deposit barrier.

'Many will see the smaller deposit requirement as the quickest route to homeownership, and rightly so, as an average first-time buyer couple can save a deposit in just two years. However, there is no such thing as a free lunch and the trade-off is in paying for the finance.

'There is certainly a trade-off that buyers need to think carefully about – especially in the face of changing house prices. Is the short-term time gain worth the longer term financing cost?'

http://www.dailymail.co.uk/property/article-3635409/First-time-buyers-buy-three-years-sooner-smaller-deposit.html?ITO=1490&ns_mchannel=rss&ns_campaign=1490&utm_source=twitterfeed&utm_medium=twitter

Landlord mortgages plummet by 85% after stamp duty changes

Surcharge on second homes that came into effect in April led to fewer buy-to-let loans, figures show.

The number of mortgages taken out by landlords buying new properties plummeted by 85% in April, following the introduction of a new stamp duty rate on second homes.

Figure from the Council of Mortgage Lenders (CML) showed 4,200 buy-to-let loans were taken out for purchases during the month, worth £600m.

Borrowing by landlords purchasing properties spiked in March as investors tried to complete deals before new rules on stamp duty came into effect on 1 April. Since that date, buyers of any kind of residential property other than their main home have had to pay a three percentage point surcharge.

The CML’s data shows that there were 28,700 loans for buy-to-let purchases in March. The figures show a 51% year-on-year fall in activity, from 8,600 loans in April 2015, suggesting that landlords brought forward activity to beat the new tax rate.

The value of buy-to-let purchases loans was also down by 50% year-on-year and by 86% month-on-month.

Paul Smee, director general of the CML, said: “There is a sense of calm after the storm this month, as lending eased back, following thesignificant rises in activity in March as borrowers looked to beat the second property stamp duty deadline.

“We expect the market to take several months to return to its previous levels after the lending surge.”

The CML said the numbers of first-time buyers and movers taking out mortgages had also fallen over the month, although first-time buyer loans were up on April 2015’s figure.

Some 25,100 first-time buyer mortgages were advanced during the month, a fall of 9.1% on March’s figure, but up 6.8% on the previous April. Movers took out 22,200 loans, a 46% drop on March and 15% below April 2015.

In total, owner-occupiers borrowed £8.1bn for house purchases, down 40% month-on-month and 4% year-on-year.

“The stamp duty change on second properties that came into effect on 1 April resulted in activity across the market being brought forward into March causing an expected slowdown in April’s lending figures in the aftermath,” the CML said.

Howard Archer said the slowdown in lending “clearly reflected a marked waning of interest from the buy-to-let and second home sectors” following the rush to beat April’s stamp duty increase, but may also reflected “heightened concerns” over the economic outlooks.

“The strong suspicion is that housing market activity will be pressurised in the immediate term by a combination of weakened interest from the buy-to-let and second home sectors as well as heightened concerns and uncertainties over the UK economic outlook, particularly in the run-up to June’s referendum on EU membership,” he said.

“Consequently, house prices are likely to be soft for the next few months.”

https://www.theguardian.com/money/2016/jun/15/landlord-mortgages-plummet-by-85-after-stamp-duty-changes

Rental arrears fall as tenants get their finances back on track

Rental arrears fell by 4% in the first three months of the year as an improved employment market boosted tenant finances, according to letting agents Your Move and Reeds Rains’ Tenant Arrears Tracker.

Research from the agents found that 86,200 tenants across the UK are more than two months behind in their rent, down from 89,300 in the previous quarter.

Eviction orders also fell 3% in the first quarter.

In the first quarter of 2016 there were 26,230 court orders made for eviction as a result of possession claims by landlords in the county courts, down from 26,964 in the last three months of 2015.

This finally represents some good news for landlords, after being hit with extra Stamp Duty charges and clampdowns on tax concessions, who themselves are now less likely to fall behind on their mortgage repayments, according to the research, with the first quarter seeing only 9,300 cases of buy-to-let mortgage arrears of more than three months, down 9.7% on the last quarter.

Adrian Gill, director of estate agents Your Move and Reeds Rains, said: “Fewer tenants in serious arrears reflect the health of the jobs market.

“With an extra 44,000 jobs created in the first quarter of this year, thousands of tenants have been able to get their finances back on track and pay down late rent.

“Serious rent arrears peaked in the third quarter of 2012, when 124,800 households owed more than two months’ rent – and when unemployment in the UK stood at 7.9%.

“Since then a boom in employment has been responsible for lifting many of the most precarious tenant households out of serious rent arrears and on to a more sustainable course. The direction of travel looks very positive.”

http://www.propertyindustryeye.com/rental-arrears/