Northfields

Calling All First Time Buyers – Get Your Mortgages Now!

The Bank of England has stated that first time buyers may be able to take advantage of the growing number of available mortgages in the first three months of 2012.

More Mortgages Available
Its latest Trends in Lending report The Bank of England stated that "lenders expect the availability of secured credit to households to increase slightly in 2012 Q1, with the rise concentrated on borrowers with high LTV [loan-to-value] ratios".  The greater amount of finance would help many people who are continuing to rent make their first steps onto the property ladder.  HSBC, alone has pledged to lend £3 billion to first-time buyers.

Less Deposit Required
Granted, that many of the mortgages on offer will focus on people with large deposits, but there are growing numbers of higher Loan to Value (LTV) mortgages being offered. 

Moneyfacts, the financial data provider has said that although lower LTV mortgages are making something of a comeback, there are not enough deals available to meet the demand.

The number of mortgage products available for residential purchases has increased from 2,527 to 3,180 in the past 12 months.  90% and 95% loans have made a noticeable resurgence.  However, many mortgage deals tend to be around for just 27 days before becoming fully subscribed, compared with a historic average of 30 days.

95% Mortgages
Moneyfacts found 49 mortgages available at 95% loan-to-value (LTV).  This figure is more than double the 24 mortgage products on offer in January 2011, and gigantic increase from the mere three products you would have been offered in April 2009.

90% Mortgages
There are also 280 deals on offer at 90% LTV.  This number shows a rise from the 199 mortgage products on the market in January a year ago and a staggering improvement on the 72 mortgages available in April 2009.

Why First Time Buyers Shouldn’t Wait to Buy

1.  End of the Stamp Duty Holiday - The higher number of lenders willing to lend to first time buyers as well as the low-deposit deals on offer might tempt first time buyers to get the property transactions underway,  but add to that the end of the current stamp duty holiday and there should be plenty of motivation to get first time buyers viewing properties.  As of the March 24th, first time buyers who make a property purchase up to the value of £250,000 will be spared the expense of stamp duty.  That is a saving of up to £2,500.

2. Concerns that Lenders May Further Tighten Lending Criteria– With the weak economy, particularly considering fears created by the crisis in Eurozone countries, there is a concern that banks and building societies may further tighten their criteria as 2012 progresses.  So, it is best to take advantage as a first time buyer of a period when lenders are focused on lending to you, before conditions change.

Currently, there is the biggest choice of mortgages for those with 40% deposits, with 393 mortgage products found by Moneyfacts.  This figure is up from 271 deals in January 2011 and 280 in April 2009.

"First-time buyers are always going to struggle to find an often unrealistic 40% deposit, so thankfully we are seeing the 90% and 95% LTVs start to return to the market," Moneyfacts spokeswoman Sylvia Waycot was quoted as saying in the Guardian. But she adds: "A lot of providers still prefer the assurance of a proven track record, which is shown by some of the incentives offered to those remortgaging such as free legal fees, free valuations or cashback.

"Despite an increasing number of mortgages appearing on the market, they are only around for an average of 27 days before being fully subscribed, which just goes to show there are still not enough mortgage deals around to satisfy demand."

Moneyfacts acknowledges that the improved figures remain a "far cry" from the choice available before the financial crisis, with nearly 12,000 deals offered in 2007.  However, these figures call to mind the conversation one of our Northfields Sales Managers had with a vendor at the beginning of the credit crunch.  Our Sales Manager explained that the number of mortgage products had dropped and quoted him a three digit number that would have disappointed most people.  Surprisingly, he laughed.  He said that when he had bought his property just after World War II there had been 3 mortgages available – total.  In light of that, with 3,180 mortgages available today, we are 1000 times better off.

If you want to take advantage of the increasing number of first time buyer mortgages available before they become over-subscribed, contact Northfields and we can refer you to an independent mortgage advisor who can look at all the mortgages available and find the best deal for you.  Remember that independent advisors will often have access to deals that won’t be available from high street banks.  Don’t leave it too late, call us on 0208 840 6666 or e-mail at sales@northfields.co.uk to be referred for your free, no obligation mortgage consultation.

Rightmove Reports Record Number of People Searching for Property

In the first 10 days of 2012, property portal Rightmove reported record levels of people searching for property.  Searches were up by 27% on figures for the same period of 2011, equating to 44 million property searches on Rightmove alone.  These figures don’t take into account other property search websites such as FindaProperty.com, Globrix or Zoopla.   

Does this mean the market will pick up?

The high levels of searches being done by potential buyers does not necessarily translate to those potential buyers becoming proceedable buyers.  While buyer interest is strong, it is more likely that property searchers are intensely researching the market.  Potential buyers are scouring property portals for many purposes including seeing what they could afford, how much they might be able to sell their own property for or to simply find to that one-in-a-million property that offers the best combination of value, potential, location or the “wow” factor.  In many cases, online house-hunters are looking through properties for a combination of all these reasons. 

Although many of these buyers will be constrained by the lack of mortgage availability, the surge in buyer interest does show there is a pent-up demand for many to move.

As the Rightmove report also comments:
“It also emphasises the fact that, were a larger number of mortgages available to the market, the interest, confidence and necessity to buy would lift the current muted sales transaction numbers from the virtual subsistence level of the last three years.”

Not enough properties on the market

Despite the fact that the number of searches for properties for sale is at a high, Rightmove has also recorded the lowest level of new supply per estate agency branch ever recorded by the property portal– an average of less than one new listing per branch per week.

That means there are more people searching for far fewer properties.

Miles Shipside, director of Rightmove shared his thoughts on the current market outlook: “Old records are being shattered as search activity is up by a staggering 27% on this time last year. Potential buyers and sellers are looking more often and researching more thoroughly. In areas where there is a lot of property up for sale, buyers are looking hard for properties that tempt them with something really special in terms of value, potential, location or quality of finish. If it doesn’t shout ‘special’ then they are unlikely to overpay for the privilege of buying an average property in these mortgage-constrained times. In locations where there is little stock for sale, they appear to have become online junkies, ready to pounce on fresh property coming to market to see if it will satisfy their housing need. This search-addiction is in part caused by each estate agency branches currently listing an average of less than one new property per week, an all-time low and around half of pre-credit crunch levels. The market is stuck in a low transaction volume pit that will be hard to escape from without the mortgage funding to satisfy what appears to be strong pent-up demand.”
 
Less Property Already on the Market

The shortage of property has also been compounded by the fact that there were fewer properties already available for sale during the same period in 2011.  According to Rightmove, the average level of unsold stock per estate agency branch sits at 66.  This figure is the lowest recorded by Rightmove since February 2010.
Rightmove states that the 36,433 properties coming to market this month across the country means that the average will sit at less than one new listing per estate agency branch per week. This number of new instructions represents half of pre-credit crunch levels.

Why the shortage of new property?

In a Catch-22 situation, sellers are being deterred by lack of choice of property for them to trade up to, lack of confidence in the market and the lack of readily available finance. 

How Will Property Prices Be Affected?

Rightmove reported in its last House Price Index that prices will be very much dependent on local conditions, referring to “micro-markets” which would dictate price.  Where demand is high, in areas with a good school catchment area for example, the shortage of property being offered for sale will buoy up new sellers’ asking prices in those locations.
January is often the beginning of the lead-up to a traditionally busy spring period for sales.  This period often sees a slight rise in prices.  Rightmove has already collected evidence of this with an increase of 1.4% in the first week of 2012.   Rightmove cautions that this upswing is obscured within the overall monthly price fall of 0.8%. In spite of the challenging market, year-on-year asking prices remain virtually unchanged, up by a nominal 0.4%, though with RPI running at 5.2% this represents a fall in real terms.

The Mico-Market Means You Need Expert Help

Shipside explains how micro-market conditions will affect sales: “The increased market fragmentation caused by the credit crunch means that success in selling now requires a very careful and complex micro-market analysis, rather than a wishful price-punt to see what happens. There can be hotspots and blackspots by property type within the same geographic location depending on local buyer confidence, demographics and their ability to obtain a mortgage, so doing your research and taking expert advice are critical. There will be upwards price pressure where the local market is short of a type or style of stock. In these areas, getting your property onto the market soon could be to a seller’s advantage given the strong upsurge in property search activity.”

If you want to take advantage of the record numbers of people searching for property, get your property on the market now.  Start by getting some free, no obligation expert local advice from Northfields, your multi award-winning agent.  Call  Northfields now to arrange your free valuation on 0208 840 6666 or request your property valuation online by clicking the link.

British Attitudes Towards Renting Rather Than Owning Changing

For the past few decades the vast majority of British people have aspired to be home owners, seeing bricks and mortar as the best investment and a symbol of independence.  But a recent report published by FindaProperty.com, one of the property websites that Northfields advertises its properties through, revealed that recently attitudes towards renting seem to have shifted.  Britons seem to have relaxed their attitudes towards long term tenancy.

Even as recently as April 2011, Northfields reported that 9 out of 10 tenants did not want to become lifelong tenants, as are many of our continental European counterparts.

However, Findaproperty.com's recent research seems to suggest that this attitude may have changed.  With Britain's rental market over-taxed with demand, it looks as though more and more people may be long-term, if not lifelong tenants. This new research found that when over a thousand young home movers were asked about their property plans half said "they didn’t expect to own their first home until they are into their 40s and 38% said owning a home ‘wasn’t critical’ to them".  26% of those who responded to the survey said they had ‘no issue’ with the prospect of renting long-term.  It seems from this survey that the state of the economy has shifted priorities quite significantly in quite a short space of time.

With fewer people able to save up the deposit required by mortgage lenders, more and more people are continuing to rent.  This delay in moving up the property ladder has driven rents across the UK up as more people were seeking rental properties.  According to FindaProperty.com, the average rent in the UK now stands at £880 a month, the highest price for renting a property ever recorded by the property website.

The rental rise is not the only change in the rental market - properties are also snapped up more quickly.  FindaProperty.com has noted that the time between a new property being listed for rent on the website and being successfully let has reduced by 10% over the past three months alone.

Government statistics back up the data of how many more people are renting.  Home owner-occupation has dropped from 14.8m (71%) in 2005 to 14.5m (67%) in 2009-10.

FindaProperty also points out the irony of the situation, stating that with rising rents it is now more expensive to rent than it is to buy. While mortgage companies may be demanding higher deposits that many find difficult to amass in order to secure a mortgage, once a mortgage is granted, mortgage payments are made more affordable by the low interest rates currently available. 

Choosing whether to rent or buy property is largely down to personal circumstance.  Northfields can help find the right property for you whether you are looking to find the perfect property to rent in West London or whether you need to find just the right property to buy in London.  Call us on 0208 840 6666 or register your details online and we'll let you know when a new property becomes available that might be the perfect fit for you. 

First Time Buyers Expected to Be at Pre-Credit Crunch Levels in London in 2012

Rightmove released its Consumer Confidence Survey just before Christmas.  This report surveys the public and takes the temperature of would-be house buyers in a bid to guage what state the market might be in in the near future.

The latest report from Rightmove contained some dire news for the rest of London, but some extremely exciting news for Londoners.

The over-riding thrust of the Rightmove report was that "First-time buyers are to remain on the ‘endangered list’ in 2012".  Of the respondents who said that they had an intention to buy in the next 12 months only 23% fell into the first time buyer category.  This figure is down from 26% a year ago, meaning that first-time buyers will remain an endangered species in 2012. 

It is believed that for the market to thrive, 40% of all buyers should in fact be first time buyers.  These percentages keep the market moving and buoyant.

Certainly, if you were hoping to sell your first home and make your first move up the property ladder, this news would be quite unwelcome.  But here is where the figures get really interesting.

In London, the percentage of people intending to buy their first home was 41.9%.  This is slightly over the required number to keep the property market moving and far outpaces the rest of the country.

Who are the first time buyers in 2012?

The average age of those who plan to make their first property purchase was reported at 32 years of age.  However, there are many in the 35 plus age bracket who still find themselves renting without much prospect of moving on.  

A whopping 56% of the surveyed first time buyers are expecting to have a £20,000 or more deposit for a
property.

How Do You Attract a First Time Buyer?

According to Rightmove's survey 61% of would-be first-time buyers think property prices in their local area are above what they consider to be fair and reasonable.  So it stands to reason, that pricing your property competitively will make your property stand out from the crowd and will mean that you will be able to achieve a quicker sale and move on to bigger and better things.

Striking a Balance

Of course, if you are looking to sell your first home so that you can trade up, you want to strike a balance between achieving a quick sale and getting the most you can for your property.  Here's how to do it:

1.  Arm yourself with a bit of research.  What price would make your property stand out in a crowded market place?  Search property listings for properties similar to yours.  Try and think like a buyer.  Would you want to view the property listed at £249,950, below the £250K stamp duty level?  Or would you rather view the property that is £255,000?  Also remember that most property websites allow you to search for properties within a certain price range, so if you keep your price within that price range, rather than just exceeding it, you will get more hits, therefore more viewing, and more offers.

Search the properties Northfields currently has for sale to get an idea of what properties and prices you might be competing with. 

2.  Use an expert.  Not everyone sees estate agents as being your friendly local property expert, but that is exactly what they can be.  Remember that estate agents want to sell your property quickly and for the best price we can achieve ,just like you do.  However, not all agents are created equal, so make sure to choose an agent who is backed by regulatory bodies such as the Property Ombudsman and the National Association of Estate Agents (NAEA).  Agents, like Northfields, who belong to such industry organisations are voluntarily part of the membership and are expected to fulfil certain standards of professionalism which will give you more peace of mind.  Also look for award winning agents, who will have been recognised as the best in the business by property experts.  Again, Northfields is constantly striving to be the best in the business and is regularly recognised with awards.

Valuations are free from Northfields and there is no obligation, so you can take advantage of our expertise and award winning knowledge to find the right balance between a quick sale and getting the best price possible.  

Arrange your free, no obligation valuation now by calling Northfields on 0208 840 6666 or click the link to request your free property valuation online.  

Planning on Buying Property in 2012? What You Need to Know

On theBest of Ealing website, Northfields shared some tips for selling your property in 2012. Based on some predictions from property website Rightmove.co.uk, 2012 looks set to be a year of what Rightmove is calling “micro-markets”, meaning that house prices will be dependent on the very specific conditions in your local area.

Because of these micro-market conditions, sellers are advised by Rightmove to depend on the local expertise of a trusted estate agent and to be aware of the current status of the property market in their area in order to  get their property sold. 

Like sellers, buyers will need to be aware that micro-markets will mean that conditions and prices will vary widely depending on the type of property and area where their house hunt in centred.  Buyers may find that they have very little choice of properties, or an over-abundance of choice. Some properties may be listed at bargain prices while others may seem over-priced.  For example, a family house in a very sought after school catchment area may fetch a higher asking price and may also get snapped up very quickly, while other properties have to be priced just right to even attract a viewing. 

Miles Shipside, CEO if Rightmove explains the current market: “It is clear that in these turbulent times the UK housing market is made up of many fragmented micro-markets that are performing very differently. Those that are involved in buying or selling next year need to understand their local market dynamics to help them deliver the right recipe for success. That will include gauging under- or over-supply of property types, buyer demographics and mortgage profiling, unemployment concerns and exposure to public sector cuts or the likelihood of external investment”.

Housing shortage

One thing buyers may want to keep in mind that currently, the UK is experiencing a real shortage of housing.  Fewer new homes are being built, but the population keeps rising.
Of course, the government has put in plans to ease the difficulty and red tape involved in getting planning permission as well as set in motion a plan to insure lenders against loss in order to get them lending more. However, neither of these plans have really been put into effect yet and so it remains to be seen if they will be effective in kick-starting the market. 

Added to that, if the Eurozone economy worsens and causes widespread unemployment, we may see more European workers immigrating here to look for work.  This may put even more pressure on the dwindling housing supply, especially in London..

So with so much demand and very little supply Righmove is predicting that house prices may not fall.  It is estimated that newly listed houses will rise by circa 2%, although Rightmove points out that “this national average will vary in the many local micro-markets”.

Rightmove expects that “the number of properties coming to market will be marginally below the 1.24 million recorded in 2011. This anticipated decline reflects the fall-off in sellers coming to market seen by Rightmove in recent months. It means that new seller numbers will be about a third down on the pre-credit crunch levels in 2007. The shortage of new sellers in some locations, and improving investor yields on rental properties, will help underpin prices and stave off a price collapse except in exceptionally adverse market conditions.”

This advice was quite different from some expert opinions, which felt that prices may fall in 2012 and it might therefore be advisable for buyers to wait to see if prices dropped.  The question is, what if you wait and prices rise?  Or what if prices do drop, but because of the reduced liquidity in the economic market (for example, due to the possible collapse of the Eurozone), you are unable to secure a mortgage?

First Time Buyer Numbers Down

Anyone who follows the news will know about the lack of mortgage financing that is available.  Large deposits are still being required and lenders continue to lend to only the most credit worthy borrowers.  Sadly, this does leave most first time buyers locked out of the market, unless their circumstances have allowed them to amass a large enough deposit.

It is expected that this method of financing will continue into 2012, meaning that there will be few first time buyers looking for property. A recent Rightmove survey found that of those who intend to buy over the next 12 months just 23% will be purchasing for the first time.  In a normal and bustling market, first time buyers would make up 40% of the house hunting group. 

With such a low number of first time buyers actively buying, those sellers who need to sell their starter homes in order to trade up, will need to price their properties attractively to make their next move on the property ladder.  This means that first time buyers or buy-to-investors who are able to secure a mortgage will be in an advantageous position in the market.

Buy-to-let landlords will have the perfect conditions, with investment properties widely available for sale and rental properties hotly in demand and rents rising.

The Tide Could Turn

Rightmove’s admits that their predictions could be thrown off course if the Eurozone financial crisis deepens.  Should the worst happen in the EU, then mortgage conditions could become even more difficult. If that were to happen, the number of sales would likely drop slightly on the levels seen in 2011.

Rightmove’s Shipside wound up his 2012 predictions by saying that: “We have had a few years of testing the resilience of the bottom of the market, and we seem to have found a base level that represents an uneasy equilibrium between repressed buyer demand and affordability, and what sellers are willing or able to accept.

The questions is, if you need to move for work, to accommodate a growing family, to downsize or whatever your need might be, why wait to see if prices drop?  Why chance mortgage financing becoming even more difficult to get? 

Use the last two weeks of 2011 to view properties and put in an offer.  Northfields’s Managing Director, Richard Palfreeman has always bought his properties in November and December as sellers who continue to market their property at this time of year are motivated to sell and are more likely to take a competitive offer. 

Take a look at the properties Northfields currently has available for sale  by clicking the link or better yet, register your details online so that you can begin to schedule viewings right now.  If this is the time when property experts buy, what are you waiting for?   

New Mortgage Regulations to be Released by FSA in 2013 Are a Welcome Change

The BBC recently reported that the The Financial Services Authority (FSA) are going to be introducing new mortgage rules in 2013 which are designed to prevent risky mortgage lending.

Risky mortgage lending is what of course, kicked off the problems with the economy.

Not only are the new FSA rules meant to protect the state of economy by using what they feel are “common sense” standards to evaluate the level of risk for a bank in lending to a particular borrower, but will also protect borrowers themselves from borrowing more than they can afford.

Mortgage lenders will be expected to better assess whether or not a loan is beyond the means of the borrower.

The BBC quoted Lord Turner, chairman of the FSA, as saying: "While the excesses of the pre-crisis period have largely disappeared from the current market, it is important to ensure that better practice endures in future when memories of the crisis recede and the dangers of poor practice return."

Learning from Past Mistakes

The hope is that the new regulations will prevent lenders from becoming complaisant.  The new rules are meant to prevent any back sliding of standards so that mortgages are not awarded to borrowers with only superficial checks into the applicant’s ability to keep up payments on their mortgage.

No more will mortgages of 125% like the “Together” mortgage, formally offered by Northern Rock, be allowed.  Nor will lenders be able to lend excessively, allowing borrowers to have mortgages worth up to 7 times their salary.  Nor will self-employed people be allowed to exaggerate their actual income using "self-certified" mortgages.

What the new rules mean for you

The main aim of new proposals (which are still being finalised) is to make sure that buyers are able to realistically repay their mortgage.  However, other elements like ensuring that mortgage applicants are given the correct advice and at the right time are also within the prevue of the new regulations. 

Under the new regulations, lenders will now be expected to:

• assume interest rates may rise from their current low levels.
• not let borrowers rely on the possibility of rising house prices to claim they can eventually repay.
• assess interest-only mortgages as repayment ones, unless there is a "believable" source of money to pay off the loan.

The FSA has had a change of heart as to whether mortgage applicants should have to detail exactly how they spend their money.  Under the current proposals the lender will check income details and evaluate a broad assessment of what the FSA is calling their "committed and essential household expenditure" instead.

Interest-Only Mortgages

Interest-only mortgages will still be available under the proposed new scheme with the proviso that the borrower must prove that they have a realistic plan to repay the mortgage.  That plan must not rest on the borrower assuming that they can depend on the rising value of their home.

Remortgaging

To allow for remortgaging, however some flexibility is being built into the scheme, so that those who secured mortgages before the new rules were implemented can still rearrange their financing with the same lender.

So if an existing borrower who already has a loan that wouldn’t be allowed under the new regulations will not be locked out of remortgaging.  If you had a pre-existing interest-only loan, a self-certified one, or one with a very small deposit, you will not be prevented from remortgaging.

New Regulations Intended to Allow More People Access to Fianance

The BBc reported that, "Existing borrowers will be unaffected and lenders will have the flexibility to provide new mortgages to some existing customers even where they do not meet the new affordability requirements," the FSA said.

"We will allow lenders to waive the affordability rules when entering a new mortgage contract - providing the borrower has a good repayment history," it explained.

The FSA had proposed changes to lending standards before but many critics felt that it would lock those with good credit histories but unusual lending profiles out of the market.  It is felt that these revised plans will prevent this sort of exclusion.

The new proposals will be welcomed by the self-employed, those in existing self-certified mortgages and people with negative equity.

Paul Smee, director general of the Council of Mortgage Lenders also welcomed this new set of proposed regulations calling them "workable and appropriate".

"The FSA's new proposals seem to strike broadly the right balance," he was quoted as saying on the BBC.

If you need to remortgage now, make sure that you are getting the best possible deal that you can.  Just like you would shop around for the best car insurance quotation, make sure you do some comparison shopping before remortgaging. 

Call Northfields today on 020 8840 6666 or re-mail us at sales@northfields.co.uk and we can refer you to an independent mortgage broker who will be able to provide you with free, no obligation mortgage advice - an independent broker is your best bet for finding the best deal. 

Landlords Looking to Increase Their Portfolios Should Strike While the Iron is Hot

In its latest House Price Index report, Rightmove.co.uk reported that the market is ripe for buy-to-let landlords.  According to Rightmove, many agents are reporting that “buying activity is on the increase from investors”.

In the direct aftermath of the credit crunch, would be buy-to-let investors found securing finance difficult, but things are looking up in the borrowing department for landlords.  As lenders compete amongst themselves to attract dependable borrowers, buy-to-let investors reap the side benefits with lenders trying to attract landlords via higher loan-to-value ratios and lower interest rates.

Rents are widely expected to continue the upward trend we are currently seeing in the rental market.  Rightmove surveyed tenants and found that over half of the tenants surveyed expected rents to be higher in 12 months’ time.   This strong rental market is underpinning investor confidence with greater yields expected in the coming year.

Properties like the Freehold investment property pictured above which includes 8 apartments and a commerical unit, all with tenants and generating income already, will be much in demand.  (To find out more information about buying the pictured investment property, click the link)

Normally, buy-to-let investors have to compete with first time buyers for the limited funds available through lenders.  However, currently there are far fewer first time buyers offering up any sort of competition to landlords.  Lenders are also looking more favourably on landlords as it is expected that rental returns will continue to improve, allowing landlords to pay off their mortgages more quickly. 

Before racing off to secure yourself a mortgage, it is worth heeding a word of caution from the money advice website thisismoney.co.uk about buy-to-let mortgages.  This website wisely advises shopping around, saying: 

"Do not just walk into your bank and building society and ask for a mortgage. It sounds obvious, but people who do this when they need a financial product are one of the reasons why banks make billions in profit. If you are looking for advice consider using a specialist buy-to-let mortgage broker. Remember asking them for information means you are under no obligation to use them."

Read more: http://www.thisismoney.co.uk/money/mortgageshome/article-1596759/Ten-tips-buy-let.html#ixzz1flTK5Rvc

Another point to make about independent mortgage brokers is one that could save you a lot of money - independent brokers often have access to deals and rates that are not available on the high street so they are well worth seeing just to check that you have found the best possible deal.  You wouldn't take the first quote for car insurance you were offered without checking that it was the best you could find, so why would you do any differently when purchasing a property?  If you would like a referral for an independent mortgage broker, call Northfields on 0208 840 6666 or e-mail us at sales@northfields.co.uk and we'll put you in touch with someone who can make sure that you get the most out of your investment.

Miles Shipside of Rightmove offers his comments on the property investment climate: “Reports suggest that buy-to-let mortgage approvals are at their highest for nearly three years. With good prospects for long-term tenant demand from those that cannot buy and consequently solid rental returns, investors will be looking forward to seeing sellers suffer a longer than usual buyer slowdown this winter. The result is a window of opportunity for buy-to-let investors to bag some bargains, spend less on finance and charge more in rent”. 

When Shipside refers to the “longer than usual buyer slowdown this winter” he means that the usual seasonal slowdown that occurs when people are distracted by holiday festivities is expected by Rightmove to result in more properties continuing to linger on the market, thus he believes, forcing sellers to accept a lower asking price for their properties. 

While that may be true in some areas where the house prices have suffered, in the South East and in London in particular where house prices have been resistant to the economic woes haunting the North of England, would-be landlords in the capital will have to be savvy to bag the best investment properties.   

Buy-to-let investors should be sure to register with an estate agent.  A good agent will be looking to build up a relationship with their registered serious investors and will make sure that you hear about any new properties even before they can be published on websites and property portals.  So be sure to call a member of the sales team at Northfields on 0208 840 6666 to register your details or give us your property wish list via our online form.

House Prices "Surprisingly Resilient" Says Nationwide

The Nationwide released its latest house price figures on November 29th, saying that UK house prices have remained "surprisingly resilient" in recent months. According to Nationwide, property prices across the nation have gone up again in November.

The latest figures from Nationwide revealed that the average home rose in value by 0.4% in November to £165,798.

"House prices have remained surprisingly resilient in recent months, despite the deterioration in the economic outlook," said Robert Gardner, the Nationwide's chief economist.

The Nationwide compares the average price of the past three months with the average price of the previous three months.

On the Nationwide's data this three-month on three-month comparison shows a rise of 0.2%.

Mr Gardner felt that the buoyant property market can be attributed to a lack of supply in the market.

Mr Gardner also was quoted on the BBC website saying that he "welcomed the latest announcement from the government on encouraging first-time buyer activity, but said that any action should also include measures to increase housing supply."

The government's housing strategy, announced earlier in the month, included a mortgage guarantee scheme to encourage lenders to offer 95% mortgages to buyers of new homes. You can read more about this scheme here.

Nationwide predicted that prices would stay the same or fall in the next 12 months.

Using the mortgage data from Nationwide, the latest figures show a 1.6% year-on-year increase. The

Even mortgage approval numbers for properties purchased, but not yet completed, has risen slightly to its highest level for nearly two years.

The mortgage approval figures were provided by another source, The Bank of England. These figures showed that October saw 52,743 approvals, up from 51,193 the previous month and the highest monthly total since December 2009.

It is beleived that with higher mortgage approvals last month which represents a level higher than the average for the previous six months, could signal that sales may pick up slightly in the coming months.

However not everyone is as optimistic.

Rightmove.co.uk's House Price Index had some very different findings stating that the average asking price of a property coming to market fell by £7,528 (-3.1%) in a month, the largest monetary fall since December 2007 and third largest percentage fall on record.

While Rightmove recorded a record fall, the Land Registry published their report on Monday which showed that prices in England and Wales had slipped only slightly over the course of the year.

With so many contrasting figures, which report do you believe?

The thing is that many of these reports vary in how they collect their data. Compare how these different house price surveys arrive at their figures.

Nationwide and Halifax

Perhaps the best known surveys of the property market are provided by Britain's two biggest mortgage lenders, Nationwide and Halifax. Both surveys cover the entire UK, rather than just England and Wales. Their figures are often very similar, as they are both based on the price agreed after a survey by their mortgage customers.
However, they are based only on property sales financed by mortgage lending, and do not include cash sales.

Land Registry

The Land Registry records all completed property sales in England & Wales. It publishes a monthly report on house prices, in addition to its quarterly survey. The survey records prices since April 2000. The survey also takes into account that incidences of the same house being sold again by using something called Repeat Sales Regression to measure the change in prices over time. In short, this means it is comparing the price of properties sold now with the price paid when it was sold before.

In addition, the Land Registry's quarterly survey is still very thorough. The proceeds of all the transactions are added up, and then divided by the total number of sales to reach an average sale price, but this measurement does not include repossessions and property transfers following a divorce to avoid altering the figures.

Because Land Registry takes almost all residential property sales into account, the Land Registry's figures can provide a unique insight into not only national but local prices. The main downfall of this survey is that the survey comes out only once every three months, the figures are out of date by the time they are published.

Rightmove

This property website produces its own house price survey. Very much in contrast to the Land Registry and Nationwide the Rightmove survey reflects the prices that properties are marketed at, by surveying asking prices. However, these surveys obviously do not reflect the prices at which properties actually sell.

House Prices in Your Area

To sum up, surveys are geared to reflect different aspects of the property market with information ranging from consumer confidence, to actual property sales to the range of asking prices as the basis of the survey. Many do not reflect the specifics of your local area.

For example, even within Rightmove's House Price Index you can see a vast difference in the market conditions from one area to the next. While the headline reads that there were record drops in prices with a 3.1% drop across the nation, the London trends within the very same report tell a very different story.

Below is a chart taken from Rightmove's House Price Index, showing the top 5 performing boroughs in London, two of which are boroughs that Northfields covers - Hammersmith and Fulham and Hounslow, which are showing rises in prices ranging from 5.1% to 0.4%.

So while property surveys can give you a certain overview of the nation's housing market, they will not be an accurate enough assessment of your own property's worth or indicate the state of the market in your specific area. For a more accurate indication of where the market stands in your neighbourhood, call our sales team on 0208 840 6666 or click here to request an up-to-date valuation on your property.

How Will the New Coalition Housing Strategy Affect You?

Last week the Prime Minister announced the launch of a new government housing strategy aimed at getting the housing market moving again, laying the foundations for a more responsive, effective and stable housing market in the future, giving tenants a range of quality properties to chose from, and to improve environmental standards and design quality. While the aims of the scheme are lofty and certainly sound good, can any of these strategies actually help you?

If you are so inclined, you could read the whole of the Coalition government's housing strategy document by clicking the link.  However the main elements of the scheme include:

• a mortgage guarantee scheme to encourage lenders to offer 95% mortgages to buyers of new homes (like the new 1 and 2 bedroom apartments Northfields currently has for sale in Northfield Avenue, Ealing, pictured above)
• an increase in the subsidy available to developers under the "Affordable Homes Programme".
• a change to the rules so that the money from the sale of council houses will go towards the building of new council homes.
• increased subsidies for councils that take over neglected homes which have been left empty for a long time.

How Might This Strategy Help You?

Prospective Buyers

For those people who would like to purchase a new home but have found it difficult to secure a mortgage, the new mortgage guarantee scheme will be the most appealing part of the new strategy.  The aim of this part of the scheme is to guarantee lenders against their losses if certain borrowers fail to repay their loans.  The goal of the scheme is encourage lenders to offer up to 100,000 potential buyers of newly-built properties mortgages even if they only have a 5% deposit, and not the 20% deposit that many lenders are currently requiring.

With many lenders fearing that house prices may fall, large deposits are required to secure a mortgage, thereby, insulating the lender against any potential losses if the market does suffer. 

Essentially, mortgage lenders are protecting their interests if the borrower was unable to pay their mortgage, leading to the property being repossessed and then sold on for less than the value of the mortgage. 

Lenders are also required to put aside a much larger financial cushion in their reserves if they lend with a small deposit rather than a large one as required by international banking rules.

So both of these elements mean that lenders are not approving mortgages for people with small deposits.

How the 95% Mortgage Scheme Would Work

An article on the BBC offered a great example of how the scheme would work:

"Let's suppose you want to buy a newly built flat selling for £100,000 but can only put down a £5,000 deposit.

At the moment your chances of being offered a 95% mortgage for the rest are non-existent.

Under the new scheme, if the developer, lender and you all agree, you may now be offered the 95% loan you desire.

That is because on top of your deposit, which will absorb the first £5,000 of any fall in the value of your home in the event you cannot repay the loan, the lender now has further comfort.

If the price of the property falls below £95,000, the lender will be able to reclaim 95% of any losses it incurs."

At the moment The Council of Mortgage Lenders (CML) says that the exact details of how the scheme will work are stilling being finalised.  However, in essence, the new house builder will contribute 3.5% of the selling price of the home to the lender, which will be held for seven years.  During the 7 years that their funds are held by the lender, the builder will accrue interest on their 3.5%.

The government will also provide money to add to the lenders financial cushion to the tune of a further 5.5% of the sale price.  Between the builder and the government the lender will be holding 9% of the sale price of the property as a contingency fund against any potential losses. 

The scheme will ensure that the lender will have insurance for 95% of its loss if the borrower defaults.

Who Can Benefit From the Scheme?

• buyers who want to purchase a newly built home and would like some help
• lenders who choose to participate
• property builders and developpers who choose to participate

If you do not want to participate in the scheme you don't have to, but conversely you will not automatically be granted the benefits from the scheme.

Is There A Time Frame or Limit on this Scheme?

The short answer is "We don't know".  No limits on the scheme have been stated by the government, so we don't know how much money will be available, nor how many people might be able to take advantage of the scheme. 

We do know that currently the scheme applies only to England, but similar models are being considered for the rest of Britain.

Does This Scheme Put an End to Negative Equity Worries?

No.  If a buyer misses their mortgage payments and defaults and then sells their home to pay the mortgage in full, they will still be liable if the subsequent sale price of their home is less than what they borrowed to purchase the house.  If you are not sure exactly what negative equity means, click the link to find out.

So under this new scheme, if you defaulted on your mortgage, the lender could recoup 95% of its own loss, then chase you for the loss too.

If you had any money that the lender could then claim, they would use the funds recouped from you to repay the insurance payment they held from the scheme.

In other words, the scheme does not protect the buyer against the loss of their home, it protects the lender from loss of the money it lent to you.  As the buyer, you indirectly benefit because the lender being insured against loss allows them to loan money to you that you otherwise never have been able to obtain to purchase your home. 

Essentially, the scheme greases the wheel of the mortgage lending processes freeing up funds for buyers to access.

If you do want to be insured against defaulting on your mortgage payments you will need to arrange for your own mortgage payment protection policy. For advice on how such a scheme works, speak to an independent mortgage broker who can find the right type of cover for you. Call Northfields on 0208 840 6666 or e-mail us at sales@northfields.co.uk and we can refer you to an independent broker who can advise you on how to protect yourself.

If you are interested in taking advantage of the scheme, you'll need to start looking for newly built homes.  Why not start by looking at these gorgeous 1and 2 bedroom luxury apartments for sale in Northfield Road in Ealing. 

Or browse the properties Northfields currently has available for sale by clicking the link. 

Some Good News in October’s Property Market

There were some positive indicators for the property market in Rightmove’s latest House Price Index Report this fall. 

First of all, there was a 2.8% monthly rise in new sellers’ average asking prices across the nation with 4.7% rise in asking prices in London and the South.

And secondly we experienced a two year high in mortgage approvals.  

Although there is still a great deal of uncertainty in the global financial markets, particularly with the ongoing concerns in the Eurozone, those of us who live in the more affluent south of England have “some grounds for hope of market recovery” as Miles Shipside, director of Rightmove put it. 

Shipside also commented that: “Wider access to mortgages and rising asking prices are early signs of increasing demand, giving home owners some grounds for hope of a market recovery. However, the reality is that there is further evidence of the two-tier twist which is dogging the return to more widespread liquidity in the housing market. While those in the affluent south may have cause to celebrate their prices being well up on this time last year, prices in the north continue to go backwards, leaving the widest price gap ever. For the average asking price of a property in the south you could now buy two average properties in the north and still have enough change left to buy new carpets and curtains.”

The Highs and Lows of Higher Property Prices
For those people who do own property in London or in the South East, South West or East Anglia, the idea that their properties have increased in value even further  is welcome news.  However, for those people who want to buy property, whether for the first time or to move up the property ladder, these record asking prices are not exactly of benefit. 

You would be forgiven for thinking that the economic downturn should have led to reduced property prices.  And certainly, in the North that has been the case where asking prices for properties have reduced by 9.6%.  However, four years after the start of the credit crunch property prices for homes new to the market have risen by 5.4% in the south. 

Shipside adds his thoughts by sayinmg, “Existing home-owners in the highest priced regions are seeing the value of their bricks and mortar increase even further, though it is at the expense of buyers who are faced with the highest ever asking prices. Those trading up will benefit from already being on the housing ladder, though the gap to trade up to the next rung is a bigger financial leap when prices rise like this and desirable homes are in short supply. Those who are not property owners, such as first-time buyers or those taking an ownership break in the rented sector, will either have to spend more or compromise on what they can afford”.

What is buoying the market up in the South?
To ensure activity in the property market, you need buyers who have:
-  access to finance through the ability to raise a substantial deposit
- a secure job to fund repayments

The south of England has far more people who meet these key criteria and these variables are underpinning the market in London and the south.

Added to that, if buyers perceive prices to be rising, people tend to act more quickly to complete their property purchase in a bid to ensure that their dream home is not priced out of their range.  This effect is at least partly responsible for the higher volumes of sales in the south.

The Mortgage Factor
In August, the Bank of England’s mortgage approval figures stood at 52,410.  With the figures adjusted to account for seasonal variances, mortgage approvals were at their highest level since the end of 2009. Rightmove’s report points out that “While still half the average number seen from 2000 to 2006, it is worth noting that they are nearly twice the 26,333 seen during the trough in April 2008.”  Other factors which have seen mortgage approvals rise included the continuing record low base-rate and lenders competing amongst themselves to attract deposit rich borrowers.

Trading Up
Home owners with adequate equity will have plenty of opportunity to move up the property ladder.  Activity levels for those trading up to a bigger or better property will likely increase due to increasing prices which will motivate buyers to act sooner rather than later. 

London home owners in particular will enjoy the biggest growth in equity and should be feeling positive about trading up. However, as Rightmove points out “there are signs that the distance to the next rung of the ladder may be getting too high for some in the capital as the number of new sellers coming to market is 13.9% down compared to this time last year.”  Some London sellers may find that they need to consider slightly less pricey areas to get the type of property that they really want.  A smart move would be to look at areas that are thought to be up-and-coming or that are experiencing a certain degree of regeneration, such as Brentford or Hanwell.

Shipside of Rightmove concludes: “Low rate mortgage deals will only benefit those with the requisite high deposits, and at the moment the best equity growth has been seen in the London market. With record prices in the capital, some will be priced out of the best areas and will either have to stay put or look for value further afield.”.