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Funding for lending taking effect as UK economy grows
Paul Bennington of Mortgage Advice Bureau comments on the ongoing effects of the “Funding for Lending” scheme on the UK mortgage market.
The UK economy returned to growth during the third quarter of 2012, bucking the trend set over the 3 previous quarters. However, it unfortunately wasn’t good news all round, with a number of sectors, notably manufacturing and construction still continuing to struggle.
A number of forecasters were of the view that The Bank of England’s Monetary Policy Committee would announce a further injection of funding following their November meeting. However, it appears that the committee is adopting a cautious approach all round as the base rate also holds at 0.5%.
The “Funding for Lending” scheme introduced in August, partly aimed at encouraging lending to potential home buyers, does appear to be having a positive impact on the market as lenders continue to jostle for business. The average mortgage pricing fell with on both 2 and 3 year fixed products, with 5 year rates unchanged from October.
Although these reductions in average rates are modest when viewed as a single figure, the recent overall trend shows interest rates on 2 year fixed deals declining in each of the last five months, 3 year fixed rates having fallen in each of the last three months, and 5 year fixed rates having declined in four out of the last five months.
As a consequence at the beginning of November average rates now stand at 4.40% for 2 year fixed rates, 4.73% for 3 year fixed rates and 4.57% for 5 year rates.
Fixed rate mortgages still appear to be the choice products amongst borrowers as many look for stability. During October we have seen further take up of fixed rates with more than 85% of all borrowers who arranged mortgages last month electing to fix their mortgages, a new high for 2012.
Mortgage product numbers typically available to intermediaries once again continued to improve in October, rising to above 6,000, the highest level since January. This is yet further evidence of the confidence that the “Funding for Lending” scheme is bringing to lenders, and as a result, to the whole of the market.
If you would like to speak to Paul Bennington about getting a mortgage or re-mortgaging your current property, you can call on 0121 746 6411.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
Newmans Open House Strategy Achieves More Viewings
“Funding for Lending” scheme continues to heat up mortgage market
Paul Bennington of Mortgage Advice Bureau comments on the benefits for potential borrowers of the Bank of England’s new “Funding for Lending” Scheme:
The MPC unsurprisingly voted for no change to the Bank of England Base Rate during their September meeting. The decision to stick comes 2 months after the injection of £50bn into the UK economy in July.
Last month the rumour mill was rife with the suggestion that the MPC may cut the Base Rate beyond 0.5%, but it seems the rumours were wide of the mark.
The decision will no doubt be good news for some, as there is a possibility that such action would have caused problems for lending in the mutual sector. A potential Base Rate cut could have sent savings levels crashing, resulting in a lack of funding for homebuyer lending.
The Bank of England’s newest initiative to stimulate lending in the wider economy - the “Funding for Lending Scheme” officially launched on the 1st August. During the last month or so we have seen a high degree of competition re-emerge in the mortgage market following its introduction, although the most competitive rates remain largely in the low loan-to-value sector.
Although the Olympic and Paralympics events have quite understandably dominated our attentions and the media over the last month or so, the increasing competition has kept mortgage borrowers out in significant numbers. We have continued to see a further shift in borrower appetite towards the fixed rate arena with over 80% of borrowers - both house purchase and those refinancing existing arrangements - opting for those deals during August.
More good news for potential borrowers was the number of available products in August. Deals available to intermediaries continued to increase, climbing for the third month running - now standing at more than 5,800.
As well as stimulating an increase in product numbers, the Funding for Lending Scheme has also resulted in a fall in interest rates as lenders compete for business. This is evidenced by Moneyfacts data showing that at the beginning of September average rates fell once again.
The average cost of 2, 3 and 5 year fixed rates have reduced month on month. The average two year fixed rate fell to 4.57% in September, the three year fixed rate to 4.89% and five year fixed rate to 4.60%.
To contact Paul Bennington to speak about your own circumstances and how you could benefit from what is happening in the market, call on 0121 746 6411.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
Reports by the BBC state that more than 100 students at the University of Warwick have still not found accommodation, less than a week before term starts.
The students' union said accommodation on campus was so oversubscribed some students had delayed coming for a year. Welfare officer Leo Boe said some had been told they might have to temporarily live in hotel rooms.
University spokesman Peter Dunn said it was always hard to estimate how many students would need accommodation. Universities across the country faced record numbers of applications this year - and some were given additional places to help relieve the pressure.
Students are trying to find accommodation before the new term starts on Monday.
Mr Boe said any students who did not find accommodation by 1 October could move into hotel rooms in Coventry until the end of the month at a cost of £100 a week - the price of rent in halls.
He added: "I've had parents ringing me up asking me how they get more money for their child."
Mr Dunn said students were also being helped by being given free accommodation at the university so they could meet other people and search for house shares together.
Dr Dunn added it had been difficult because more undergraduates had been given places than expected.
He said: "Time and time again the kids out there simply excel and get better grades than even we would expect and we have more people coming here."
Market comment from Brendan Petticrew, Director of Newman Estate Agents.
Now could well be the ideal time to enter the buy to let market. there are clear signs that supply and demand is tipping and there is a shortage of houses to let for Warwick university.
Higher letting yields are likely given the shortage of available homes.
Newman property services have numerous properties within the Leamington spa and Coventry area, ideal for student letting – ready for budding landlords.
Alternatively, we also require homes in these areas urgently – so if you are a current owner of a student property or similar, we would be more than happy to help.
Call your local branch for further details:
Leamington Spa: 01926 431431
Coventry: 02476 500000
Lending eases on Buy-to-Lets
Welcome economic news has been recently reported in the UK. Mortgage companies are beginning to reduce the deposit amounts on buy to let house purchases. Specialist lending divisions of certain high street banks will now lend up to 80 per cent of a property's value. This compares with previous loan to value levels of 75 per cent during the credit crisis meaning that investors would have to had to put £25,000 down on a £100,000 purchase.
Brendan Petticrew, director of Newman Estate Agents says, "The housing market has suffered from the "disappearing investor" who left the market when prices began to decline and mortgage deposit amounts started to increase. Investors made up 31% of the 2006 buying market so you can imagine how it contributed to the housing downturn which began in the autumn of 2007 through to the beginning of 2009. The fact that deposit levels are starting to go down is a clear indication that the stringent mortgage lending criteria is starting to ease. It also signifies the confidence the money markets are starting to show in the future of UK housing". The recent news on investor mortgages has been underpinned by the welcome return of the 95% mortgages re-available to private buyers.
Meet the Team
To kick off our meet the team blog posts we interview Becki Thomason our ballet dancing manager from Solihull…
Tell us a little about yourself?
My name is Becki and I live in Bourneville, Birmingham with my partner Tom. I grew up in Allesley Village in Coventry, studied at Bablake School and Sixth Form before leaving home to go to university and start my working career.
What is your role at Newman?
Branch Manager, Newman Estate Agents in Solihull.
How long have you been part of the Newman team?
Did you grow up wanting to be an estate agent?
I knew I wanted to do something to do with property, my Auntie is an interior designer and I always thought I would follow in her footsteps (I also liked watching Changing Rooms with Carol Smiley!) My parents moved several times when I was a child and they always encouraged me to get involved in the decision making process and I had a lot of practice showing people round our own home!
What is your favorite part of being an estate agent?
I love meeting new people every day and actually making a difference in their lives. When an estate agent does their job properly they can make a friend for life with their client and it's at times like that when I am very proud to do what I do. Some people need more help when moving house which is what we're here to provide – enjoyable, reliable service and sometimes a bit of support.
How do you feel about the reputation estate agents have?
Times have changed and our work is much more customer focused than ever before. The best estate agents are those who are able to produce the highest levels of customer service and customer satisfaction by going the extra mile to help a client reach their goal in the moving process. If you don’t believe me, please pop in to any of our offices and meet our sales staff!
What's your best single bit of advice to anyone moving home?
If you are buying with a mortgage make sure you speak to the Mortgage Advice Bureau. They have such an ability to make sure you are getting the right options and are actually interested in the client sat before them. Friends and family whom I have referred to them have always been extremely happy and I have had several occasions where MAB advisors have actually saved sales from falling through because of their dedication, concern and ability.
What is your favourite colour for a front door?
Have you ever found yourself in an unusual or comprising situation on a viewing or valuation?
Yes - another agent locked me in a house once. Hopefully by accident?!
Have you ever sold a property to or for someone famous?
No but I was on BBC's 'To Buy or Not Buy' last year when they were filming in Leamington Spa & that's where I met my partner Tom – he's the camera man.
Tell us about your hobbies outside of work?
I like dancing and go to a ballet class every week and I'm also learning to play the drums!
What is your boss like?
How many friends do you have on Facebook?
161 & 90 Followers on Twitter... www.twitter.com/becki_newman !
Newman the winner at the 2009 Estate Agency of the Year Awards
Newman Property Services received the ultimate industry accolade on Friday by being crowned as winner of 3 Golds and a Silver including Best Estate Agency Customer Service in UK, Best Training & Development in UK, Best Small Midlands Agent and Silver for Best Small Letting Agent in UK.
The 2009 Estate Agency of the Year Awards in association with The Sunday Times, was held at the Chelsea Football Club’s presentation suite at Stamford Bridge.
The event, now in its sixth year, was this year supported for the first time by The Sunday Times and is widely recognised as the most important in the industry calendar. The sold out event attracted agents representing over 4,000 branches nationwide and in a sign of improving times for the market, this year received a record number of award entries. The winners of the 28 categories at the award ceremony were presented with their awards by GMTV personality Penny Smith.
Following their initial submissions, each of these winners has been subjected to rigorous scrutiny by a panel of independent industry experts and the whole judging process is overseen by the Property Ombudsman Christopher Hamer.
Newmans were delighted to receive the awards. Managing Director, Jonathan Handford commenting: "We recognise the importance in creating the best possible experience for our clients and take action to make it happen."
The judges' report highlighted the particular qualities of Newman stating, "For sheer weight of initiative Newmans has harnessed the challenges of the recession to hammer the customer service issue with all guns blazing. Utilising a mix of tried and tested methods and new initiatives, their dedication to providing fantastic customer service is the result of excellent leadership and clear standards, they truly deserve the award."
Once again the Awards were also supported by the Property Ombudsman and leading professional bodies the NAEA and ARLA.
The special achievement award for 2009 was presented to the Property Ombudsman Chairman, Bill McClintock in recognition of his exceptional and continuing contribution to the industry.
The chosen charity for the 2009 Awards was Help for Heroes and the event was addressed by the charity’s Mark Elliott who explained how money raised will go to help the charities Launchpad to Life and Combat Stress initiatives which help ex-service people who cannot return to active service and need help re-adjusting to civilian life due to physical or mental breakdowns or injury. Donations on the day raised £5,000 which will be donated to Help for Heroes via the Estate Agency Foundation, an umbrella charity through which agents' donations go to existing charities that help combat the causes of homelessness.
Click here to visit the Estate Agency Events website and to view the judges report.
Local Estate Agent Fine & Country celebrates its second award of 2009
There's yet more positive news for the property profession this week as the results of the Daily Mail UK Property Awards 2009 have been revealed. The Rugby, Leamington and Solihull operation of Fine & Country were recognised as the Best Estate Agency in Warwickshire. Already jubilant after being crowned the best in the UK through an internal awards ceremony in the summer this year. Managing Director Jonathan Handford commented, "I am incredibly pleased for the team as they thoroughly deserve the recognition. The market got tougher and they simply raised the bar on service standards. They put everything into making the sale happen which is evident from the glowing acknowledgment from clients who have taken advantage of the exclusive service."
Later this year, top scoring winners from the Daily Mail UK Property Awards will compete against other winning companies from Asia Pacific, Europe & Africa, the Americas and Arabia to find the ultimate World's Best in each category. Organiser Stuart Shield comments, "We are really pleased with the growth in interest in these awards across all the different programmes and categories. I can't help but be impressed with the outstanding quality being shown by property professionals. Selecting the World's Best is going to be a hard task for the judges." Entries were judged by a panel of professionals whose collective knowledge of the property industry is second to none. This year's judges included Eric Pickles, chairman of the Conservative Party, Ben Wood, industry head property markets of Google UK; Peter Bolton King, group chief executive of the National Federation of Property Professionals; Imtiaz Farookhi, chief executive of the National House Building Council; Christopher Hall, president elect of FIABCI; Helen Shield, editor-in-chief of International Homes magazine and Gillian Farr, head of design of Laura Ashley Home.
Fine and Country have also confirmed that due their continued success in the sale of prestige homes they will be opening more offices in and around Warwickshire.
The Dabbling Estate Agent- Nichola Barnett
The Dabbling Estate Agent – as estate agents turn their attention to the Lettings market for survival, property expert Nichola Barnett of Newman Residential Letting discusses the REAL cost of using an amateur.
There's no doubt that trading times have been challenging for all of Warwickshire's property agents. Rugby's leading lettings specialist; Newman Residential Lettings; who recently celebrated their landmark anniversary of 20 years of servicing Rugby warns, that as the residential sales market shows slow signs of recovery - more and more estate agents are frantically launching lettings divisions or buying franchises in a desperate attempt to avoid bankruptcy.
As the one area of the residential property market which continues to show signs of growth, lettings is being seen as something of a lifeline for desperate estate agents as they bid to keep their businesses afloat. But at what cost? Lettings Director, Nichola Barnett elaborates:
"Landlords and tenants should see beyond the glossy marketing campaigns and too good to be true offers, and seek professional accredited advice from an established letting agent. Landlord and tenants alike must take the time to research reviews on their prospective agent. Find out whether there are any independent customer review sites available on the internet before committing themselves and their hard earned money to an agency offering on the surface the cheapest fees. It goes without saying that a quality lettings specialist will have far greater market knowledge and a much better understanding of a landlord's or tenant's needs than someone who has just moved into the sector, in a bid to make a quick and much-needed buck."
There has been much controversy over the UK's largest franchise operation, Martin & Co. where franchisees have misused tenants' deposits and four owners have been stripped of their franchises. In one case in Chester the franchise owners stole over £200,000 in rent and deposits from unsuspecting landlord's and tenants. While this sounds like the thing you hear of, but never expect to happen to you, Nichola advises things a bit closer to home are not shaping up to be much better.
Nichola says "I would advise any would be landlord or tenant, to walk down Regent Street and compare it to 2 years ago. Many of the big named estate and letting agents have had to close their doors to trading." While the recession and redundancies have been widely debated and publicised, Nichola highlights the total lack of support and guidance available for the real losers in this economical recession - the landlords and tenants. The ones who are now facing the reality of having a legally binding contract, no deposit, no rent and nowhere to turn!
"Only last week, one Letting Agency closed it doors on the Monday morning and by the afternoon we had people walking into our office desperate for advice on their rents or deposits. We had one lovely couple who were meant to move into their dream house on Tuesday and realised they had nowhere to live. Luckily they were able to cancel the cheque they had paid the previous week and Newman Residential Lettings were able to locate the landlords who didn't even know they had a prospective tenant moving in or that the agent had ceased trading. Thankfully for all involved, the move still took place without any further hitches. It is a real shame that not all stories end like this. Nichola goes on to say "Newman Property Services is recognised as an established community member and we wanted to offer any assistance we could to those that have been affected by these adverse trading conditions" Nichola continues, "we are proud to have set up a specialist service for any customer regardless of how they been affected by the recent closure of Greenwoods Ltd"
Many of the new 'lettings agents' – estate agents who are dabbling in the sector as property sales dry up – are aggressively marketing their services at very low introductory rates as they try to keep the wolf from the door, Nichola offers landlords and tenants the following advice when looking to appoint a lettings and property management company:
· Find out how long that company have been trading in your area
· Speak to several agents before making a decision
· Find out how much specialist knowledge an agent has, particularly in terms of the legal side of things
· Ask to speak with other landlords or tenants on their books to find out if they are satisfied with the service they receive.
· Make sure you read the small print before signing on the dotted line.
· If an agent is uncomfortable about you asking questions or tries to fob you off, walk out of the door.
· Confirm that the agent is member of a regulatory body such as National Approved Letting Scheme (NALS) or The Property Ombudsman (TPO). Newman Residential Lettings are proud members of both
· Ensure that there will be clear agreement or contract in place when considering aspects such as repairs, deposits, inventories etc.
· Ensure the agency has Professional Indemnity insurance – to protect your MONEY, ask to see proof of it.
Nichola concludes "With so many new kids coming onto the block at the moment it pays to do your homework and make sure you work only with the very best Letting Agent in your area" She continued: "After all, if history has taught us anything, it isn't necessarily the cheapest company which offers the best long term value for money; it's the company that offers the best value for services received. Renowned American oil well fire-fighter Red Adair, is famous for saying:
"If you think it's expensive to hire a professional to do the job, wait until you hire an amateur." Quoted while he was discussing his involvement in assisting the American Government when extinguishing oil well fires in Kuwait in the early 1990s during the Gulf war.
Nichola summarises; for the tenant, there are few things as important as having a safe, secure and comfortable home to live in. For the landlord, especially the new breed of landlords who will be novices themselves, working with a specialist company will ensure that they don’t get their fingers burnt."
House price net balance turns positive
The RICS house price net balance turned positive for the first time in two years says the latest RICS UK housing market survey.
The seasonally adjusted net balance of surveyors reporting rising rather than falling prices over the last three months turned positive in August with a reading of 11% (compared to -6% in July). That was the highest net balance since May 2007 and is consistent with the picture painted by other house price indices.
The latest survey provides further evidence that activity in the housing market continues to improve, although the pace of improvement may be slowing. The net balance of surveyors reporting an increase rather than a decrease in new buyer enquiries edged down from a recent high of 66 in June to 49 in August. Similarly, the agreed sales net balance was 34 in August down from 45 in July. However, the actual number of sales per surveyor over the last three months averaged at 17, the highest reading since May 2008.
There are further signs that the change in news flow on the housing market may be encouraging vendors back into the marketplace. A net balance of 12% of surveyors reported that new instructions had increased in August, compared to a reading of 4% in July.
Property Drums Lindsay McAloon speaks to Caroline Newman
"Having worked in the lettings industry for the last 22 years I have seen many changes over this period. And essentially they all relate back to two elements - legislation and market conditions. Since the housing market hit rock bottom (pretty much over night) we have seen many estate agents put on their 'lettings cap' and become 'letting agents' over night - understandably as a means to financially survive as residential and commercial sales dried up. And whilst competition is never a bad thing however typically these agents are charging incredibly low commission rates to attract custom but the lack of experience they can demonstrate is in some cases damaging the sectors reputation and failing to offer peace of mind to the consumer."
"At Newman's we took the radical decision to increase our fees. To us, experience and knowledge and being an active members of an independent industry organisation such as NALS provides that peace of mind and guaranteed credibility. When NALS took the decision to licence all its members - it took that credibility to the next level. Agents are officially authorised to operate and it is easily recognisable to everyone in the industry and most importantly the consumer. To the consumer the NALS stamp says we are 'tried, tested and approved'. The world of lettings can be a minefield to a landlord who lets his property
through an agent who has no industry organisation to back up their reputation and protect them. And, the same also applies to the tenant who generally has little awareness of what they should be looking for."
Newman group success at Mortgage Advice Bureau National Awards
Pride Park Derby County Football Club was the setting for the Mortgage Advice Bureau annual conference and awards ceremony. Several industry leaders took to the stage including representatives from the Abbey National, Nationwide, Royal Bank of Scotland and Lloyds.
The day is orchestrated to inform on current market trends and also create a picture of what is expected for the future. It also provides an opportunity to celebrate success from the previous years and recognise outstanding performance. Matt Clarke won top advisor in the UK for recommendations. Newman Property Services Leamington Spa branch won the second place for Estate Agency introducer.
Newman Property Services Managing Director Jonathan Handford said "it was a great day for us in terms of the awards". It demonstrates our commitment to customer care that we have been recognised with an award determined upon by recommendations".
Jonathan also added "we expect to see some changes in the mortgage market over the coming 12 months, with interest rates expected to climb in the early part of next year then now could be the perfect time to look at your options".
Tony Sweet Newman Surveyors Director. RICS reporting price increases is up AGAIN
The RICS are reporting that the headline RICS house price balance recorded the highest figure since the onset of the credit crunch. The net balance of chartered surveyors reporting rises rather than falls in house prices reached a positive reading of 21.5% in September, up from 9.9% in August, the highest result since May 2007 when the net balance was 25%.
This further proves that consumer demand outstrips the supply of property coming onto the market.
The expectations of the next three months also remains good, with the net balance of surveyors expecting price increases rather than a decrease being up to 25% from 18% in August.
The strongest regions for both price increases as well as expectations were London and the South East. In addition, for the first time since 2007 all regions showed expectations of forthcoming price increases leading up to 2010.
The table below show the percentage of price changes reported by surveyors in some selected regions and shows how the trend is moving from price decreases to a higher percentage of surveyors reporting increases in property prices.