newsletter jan 2014
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January 2014 NewsletterLast year was an interesting and optimistic time for theHousing Market. An economy that started the year on thebrink of a ‘triple-dip recession’ ended the twelve months asone of the fastest growing in the developed world with theFTSE 250 growing by 20%. Three quarters of all UK postcodesrecorded an increase in house values whilst London pricesgrew by over 10%.
This was coupled with continuing low mortgage rates andthe prospect of a real return of 95% mortgages for First TimeBuyers through the ‘Help to Buy’ scheme.
Perhaps not quite a cause for outright celebration, butdefinitely optimism!
January 2014
Housing Market-Predictions for 2014
A busy 2014 ahead?
This year is looking like it will be a strong yearfor the UK housing market as more and more ofus start to feel ‘bullish’ about the economy, jobsand the future. The Housing market is anindicater of the national mood and the signs arepositive. Almost 100,000 flats or houses weresold in November 2013 - that’s the highest figurefor almost 4 years and a sign that the housingmarket has finally turned a corner. It’s not quitethe 150,000 homes being sold every month at theheight of the housing boom but most expertspredict that the numbers are set to increase in2014.
The potential result of greater activityhowever will be house prices. TheNationwide in their latest house price indexcommented that whilst demand for houseshas grown quickly in 2013, the supply ofhouses for sale coming onto the market hasbeen much slower to react. ‘If demandcontinues to run ahead of supply in thequarters ahead, affordability may becomestretched’ said Robert Gardner, chiefeconomist at Nationwide - which is a politeway of saying that prices will rise.
The Office for Budget Responsibility - theTreasury forecaster - agree and believe
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BEREPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT
house prices will grow by around 5% in 2014for the UK as a whole, with prices in Londonand the South East expected to continue tobe the strongest.
This may not cause the housing ‘bubble’predicted by many of the doom and gloommerchants however as there are signs thatsellers are reacting. Martin Ellis, housingeconomist at the Halifax commented ‘therecovery in the housing market during 2013has resulted in a significant improvement insentiment towards selling a property inrecent months. This shift could provide amuch needed increase in the supply ofproperties during 2014 which would helpconstrain upwards pressure on house prices’
Mortgage funding looks as though it will alsobe a catalyst for a stronger housing market in2014. The cost of borrowing continued to fallin 2013 due to the Banks own funding costsdeclining. The Bank of England’s ‘Funding forLending’ scheme and the easing tensions inthe Eurozone meant that the issuessurrounding Bank lending have eased andlenders have reacted by offering cheaperfixed rate mortgage deals to customers.
Interestingly in contrast to previousreductions, these have been aimed not justat the mortgage borrowers with largedeposits, customers with less equity havealso benefited from cheaper mortgage dealson offer.
Housing Market - predictions for 2014Coupled with cheaper mortgages is the impactof the ‘Help to Buy’ scheme which sees thereturn of 95% mortgages. This is expected tohelp First Time Buyers - the lifeblood of theHousing Market - get onto the market, thusfuelling further demand for homes.
And interest rates? Will we see a rise ininterest rates in 2014? The Bank of England saidthat nothing would be done until UKunemployment fell below 7%. That had seemeda long way off until last month whenunemployment fell from 7.8% to 7.4%. A similarreduction could make a rise more likely,however most commentators believe that theBank is unlikely to increase rates in 2014 evenif the 7% marker is breached. Any increase inrates will push up mortgage and borrowingcosts not just for individuals, but for industryalso and this could threaten the UK’s stillfragile economy.
So the signs are positive, 2014 seems set to bea good year for the housing Market - time willtell!
Light BitesThe number one New Year’s
resolution this year was to
Enjoy Life moreThis beats many of the traditionalfavourites such as lose weight,
get a better job or quitsmoking.
According to the Financial Times, more than 1m homeownerswill be at risk of defaulting on their mortgages in the wake of evena small rise in interest rates, a new analysis reveals. Borrowers who failed to pay down theirmortgages when interest rates were at record low levels now face being overwhelmed by"perilous levels of debt" when the inevitable hike comes.
We have enjoyed a long period of very cheap mortgage rates and it’s never too late to takeadvantage of this critical period by paying a higher monthly mortgage amount to pay yourmortgage off sooner. Doing so now will help cushion you from the effects of interest rates risesin the future.
Contact us for a review
Pay down your mortgage
whilst Rates are low
Help to Buy Scheme - Exactly what is it?The controversial Government ‘Help toBuy’ scheme, initially targeted at NewHomes, was extended to second handhomes in October 2013 to mixed reaction.The announcement by the Prime Minister that hewas bringing forward the ‘Help to Buy’ scheme bythree months caught the housing market bysurprise. Most lenders had planned to join thescheme in 2014 so were not prepared enough tolaunch any products, which meant that only theHalifax, RBS and Nat West brought out specificmortgage deals aimed at ‘Help to Buy’. The resulthas been that it hasn’t had quite the initial effectpredicted with less than 6,000 applying for thescheme since it’s launch and whilst defendedvigorously by the Government, many pundits havepredicted it will fuel house price inflation.
So how does the Help to Buy(phase 2) scheme work?
Unlike it’s predecessor - Phase 1 - which wasprincepally aimed at New Homes only,the scheme isdesigned to help both First Time Buyers and thosewho currently own a home, purchase a new orsecond hand property to live in with only a 5%deposit. This is limited to properties worth upto£600,000. Up until recently it was almostimpossible to buy a property if you had less than a10% deposit.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BEREPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT
With the Help to Buy scheme, eligibleapplicants will only need to put up 5%.They then borrow the remaining 95% via amortgage in the normal way. TheGovernment provides a guarantee to makegood any loss incurred by the lender if theborrower subsequently falls into arrearsand the property is repossessed and soldat a loss.
Is it right for me?
At the moment the 95% Help to Buyschemes are much more expensive thanother mortgages, so if you do have a 10%deposit or more, then it’s probably not foryou. The prospect of more lendersoffering 95% ‘Help to Buy’ mortgage dealsin 2014 will mean that increasedcompetition in the market place will startto force down rates. It’s probably a goodidea to seek out advice and comparewhat’s available before you decide.
Don’t just review your bills at New YearA common New Year’s resolution is to look at the monthly expenditure to try and cut wastage,reduce the monthly bills and save money, but how many of us also take the time to review our lifeinsurance and other protection to make sure that our family is fully protected should theunthinkable happen? Here are one or two triggers that should make you review your protection.
in it’s annual ‘cradle to college’ report -a rise of 58% in a decade. It is vital to have life insuranceonce you start a family or increase it. Food, clothing, childcare, schooling and even holidays allcost more once you have little one’s.
Having children The cost of bringing up a child to the age of 21 has shot up according to LV
Moving Job Many employers offer ‘death in service’ cover which provides a lump sum toyour named beneficiaries should you die whilst working for the firm, but these perks are underreview as companies seek to cut their costs - if you move job you need to check the terms of yournew employment. If you no longer have this benefit you could need to increase your life cover.
costing your life insurance. Smokers always pay more than non-smokers so if you have given upsmoking for a year or more then you could be getting cheaper life cover
Getting Healthier Insurance companies look at age, occupation and general health when
WE CAN HELP REVIEW YOUR LIFE COVER AND PROTECTION NEEDS
JUST GIVE US A CALL
