Chelsea Beats HSBC to be Top for First-Time Buyers

Chelsea is now top on the list when in comes to two-year mortgage rates catering first-time buyers as revealed on this article by lovelymoney.com on September 18th, 2013.

Chelsea Building Society has launched a market-leading two-year fixed rate mortgage for first-time buyers.

Borrowers with a 10% deposit can apply for the deal, which comes with a fixed rate of 3.54% for two years and a one-off fee of £1,545.

The new offer from Chelsea shoves HSBC from the top spot for two-year fixed rates on 90% loan-to-value deals – making a mockery of a price promise the bank pledged just a couple of weeks ago.

Flawed price promise

The HSBC price promise is a guarantee to be 'first for first-time buyers' on three of its 90% LTV deals.

The deals include a two-year fixed rate at 3.59%, a five-year fixed rate at 4.39% and a lifetime tracker rate of 3.99% (base rate plus 3.49%). Each of the offers come with a £999 fee if you have a HSBC current account, otherwise you will have to fork out £1,499.

HSBC said it would automatically beat or match providers that offered a better rate elsewhere between 2nd September and 3rd November 2013.
But this bold claim comes with an important catch.

The HSBC price promise will only beat or match rates on offer from Barclays, Woolwich, Halifax, Lloyds TSB, Nationwide, NatWest, Royal Bank of Scotland and Santander.

HSBC says these providers represent 81% of the UK mortgage market.

This means that HSBC will be able to match or beat four out of five providers on the price of 90% LTV mortgages, but not all of them, as the latest move from Chelsea Building Society has highlighted.

HSBC vs. the 19%

The eight providers HSBC challenged have so far failed to set the mortgage world alight with counter offers that might put the price promise on HSBC's leading deals to the test.
 
Only Chelsea Building Society, part of the 19% of providers HSBC's guarantee doesn't cover, has brought out a challenger rate that is just 0.05% lower.

Elsewhere Nottingham Building Society has launched a rate of 4.39%, fixed for five years with a low fee of £299, which matches the rate on offer from HSBC's five-year fixed rate.

The HSBC deals have only been challenged by lenders it discounted, a flaw in an otherwise bold offer.

HSBC said it had no immediate plans to extend the promise to the many building societies excluded from the guarantee, which is a shame as things could really get interesting if they were.

Punching above their weight

Last year building societies increased gross lending by 30% to £31 billion. This gave the sector a 22% share of the mortgage market, compared to 17% the year before. This year building societies are on track to go even further, with the latest figures pointing towards a 24% market share.

It's clear to see that building societies are punching above their weight and giving the big banks a run for their money.

Apart from Chelsea and Nottingham Building Society presenting a challenge to HSBC's claim, Norwich and Peterborough has recently launched a market-leading rate of 1.99% to borrowers with a 35% deposit, while Leeds Building Society has come out with innovative 0%-interest mortgages.

Supporters of building societies always point out that they are run in the interest of their members rather than shareholders, so this is where the flexibility comes from. But the lower rates have almost certainly been spurred on by the Government's Funding for Lending Scheme.

This has given lenders access to cheap funding, which they have passed on to mortgages borrowers in the form of record-breaking low rates.
Now building societies like Chelsea are coming to represent a real threat to the big banks.

First time buyer mortgages

Don't discount the other 19% of lenders out there like HSBC has. Make sure you shop around for the best deal on a mortgage. You can visit our mortgage centre.

There are also deals like Help to Buy and New Buy which have been designed to assist first time buyers onto the property ladder.
 
Article Source: http://money.aol.co.uk/2013/09/18/chelsea-beats-hsbc-to-be-top-for-first-time-buyers/

London House Prices Rise by 9.7% Another Fears of New Property Bubble

This article by Vicky Shaw of The Independent on September 17th, 2013 reveals of another increase in London house prices by 9.7% that may led to fears of another property bubble.

House prices in London have risen by nearly 10% in the last year, adding to signs of a sharp north-south divide in the market.

A 9.7% increase in prices in London over the year to July helped to push the value of homes across England to a new high of £255,000 on average, the Office for National Statistics (ONS) said.

House prices in London and the South East both raced past their 2008 peaks and stood at an average of £438,000 and £303,000 respectively, while prices in the East of England and the South West also edged close to their previous highs.

But the UK market was still patchy and while house prices were up by 3.7% year-on-year in England they dropped by 2% in Scotland and 0.7% in Wales.

Prices in Northern Ireland were up by 1.8% year-on-year as the market showed signs of starting a slow recovery after some sharp falls following the economic downturn.

The annual pace of house price inflation picked up across the UK in July to its fastest rate recorded in 2013 so far at 3.3%, taking values to £245,000 on average. Prices rose by 0.3% month-on-month.

Concerns have mounted in recent weeks that Government initiatives to kick-start the housing market such as Funding for lending and Help to Buy are in danger of creating a property bubble, with borrowers over-stretching themselves as access to low-deposit deals returns.

Last week, the Royal Institution of Chartered Surveyors (Rics) suggested that a 5% cap should be placed on annual house price growth to stop any future house price bubble and borrowers taking on too much debt for fear of missing out on a boom.

Matthew Pointon, property economist at consultancy Capital Economics, described London as a "special case", with prime central London in particular seen as a safe haven for overseas buyers to place their cash. He said some areas of London are seeing "bold behaviour" from buyers.

In the short term, a shortage of homes on the market in London is likely to spell further price gains in the capital, he predicted.

Peter Rollings, chief executive at London-based estate agents Marsh & Parsons, described the London market as telling "a different story" to the rest of the UK.

He said: "The huge demand for property in the most desirable parts of the capital, from both UK and overseas buyers, is helping to push prices higher.

"In the three months to June, we recorded 11% more buyers entering the market in competition for 14% fewer properties. Property is changing hands in record time and for close to the asking price."

At £132,000 on average, house prices in Northern Ireland are still 49% below a previous peak recorded in 2007. Prices in Scotland are around £182,000 and are sitting 6% below their previous high, which was recorded in 2008.

House prices in Wales are 7% below their 2008 peak, and currently stand at £160,000 on average.

Richard Sexton, director of e.surv chartered surveyors, warned that rising house prices in some areas threaten to price some people trying to get on the property ladder out of the market at a time when households are still under pressure from high inflation and stagnant wages.

He said: "If the Government wants to make housing more affordable - and avoid inflating another property bubble - then it needs to encourage more house building."

Housing Minister Mark Prisk said: "New housing supply is at its highest level since 2008, with 334,000 new homes built in England over the past three years, including 150,000 affordable homes.

"Over the coming months we will unlock construction for thousands of new homes at stalled sites, and our £1 billion Build to Rent fund will help build a bigger, better private rented sector with more choice and quality for people in the housing market."

Article Source: http://www.independent.co.uk/news/uk/home-news/london-house-prices-rise-by-97-sparking-fears-of-new-property-bubble-8822383.html

House Prices Rise Again Fuelling Fears of a 'Bubble'

Another house prices increase in addition to low mortgage interest rates could be mean economic crisis for the country according to this article by Eileen Kersey of Digital Journal on September 16th, 2013.

London - When the economic crisis hit in 2008 it had direct links to the housing market. The UK has experienced inflated house prices in the past and the "bubble" subsequently bursting. Could the introduction of a Government scheme to help buy homes be bad news? 

 

People buy homes for many reasons -- to get a step on the housing ladder, investment, to get a family home or as there is little alternative available. 

 

News that house prices in parts of the UK are rapidly increasing, added to low mortgage interest rates, may be a winner for householders but it could be bad economic news for the country. 

 

The UK is suffering a housing shortage. The ill-thought out "bedroom tax" was allegedly created to ease this shortage, but to date has failed. Householders faced with a reduction in benefit or moving to a smaller property faced "Catch 22" -- there were no properties available. 

 

The coalition government's Help To Buy Scheme offers a lifeline to would be homeowners. On the surface it sounds a good scheme but there are some possible pitfalls. One for the British economy is that it could create a "housing bubble" which sooner or later will burst. If that happens any short term monetary gains you may have made will soon be wiped out. 

 

Deputy Prime Minister, and leader of the Liberal Democrat party, Nick Clegg insits that the UK is not facing another "housing bubble". The Lib Dems are holding their annual conference and Monday the Irish Examiner reports: 

 

 Nick Clegg, Britain’s deputy prime minister, has said that the UK is nowhere near a house-price bubble and the Bank of England has tools to prevent it, amid growing concerns that government support for home-buying is stoking another boom. If there’s another bubble, the Bank of England and the government “have means by which we can anticipate that and make sure it doesn’t happen again,” Mr Clegg told the BBC. 

 

 An increase in the value of your home is good news if you are a home-owner. House prices in the UK have stagnated, with some decreasing in value, since 2008. 

 

A false house price increase, stoked by a boom in the housing industry though, is bad news. In the past it meant that banks had expensive mortgages on properties that had reduced in value. 

 

This shortfall hit the banking industry in Spain and that economy has yet to recover.

 

The UK and US can pinpoint there financial woes to the banking sector, and housing industry. 

 

Getting a mortgage in the UK has been difficult since 2008 but this weekend Santander announced that it was offering a raft of new deals to open up the mortgage market. 

 

More good news but what about a possible housing bubble? Monday the Guardian reports: 

 

A leading estate agent has tripled its forecast for house price rises in 2013, stoking fears of a destabilising house price bubble. 

Online estate agent Rightmove has raised its 2013 house price forecast for the third time this year to more than double the rate of inflation. The chain expects the average property price to increase by 6% this year, up from the 4% it predicted just two months ago. At the start of the year it predicted prices would rise by 2%

On Wednesday the Bank of England's financial policy committee will meet to discuss the possibility of a property bubble, and what remedial measures can be taken. 

 

Calls for that committee to cap annual house price growth in the UK at 5% a year illustrate concerns about a housing bubble which could quickly form and rapidly burst. According to the Independent: 

 

 Britain’s leading chartered surveyors have made an unprecedented call for the Bank of England to put a cap on annual house price inflation in order to avoid a “dangerous” debt bubble. 

 

Surely, however, this will hit confidence in the UK housing market and deter those who buy property as an investment? 

 

With a north south divide in the UK house prices are already a hotch-potch across the country.

Read more: http://www.digitaljournal.com/article/358436#ixzz2f7dQ2Rsn

How A House Price Cap Could Work

This article by Hilary Osborne of TheGuardian on September 13th, 2013 basically explores how a cap would work. The Royal Institution of Chartered Surveyors has called for the Bank of England to cap house-price rises at 5% a year.

Why does Rics want a cap?

The organisation says limiting house prices would prevent a dangerous new property bubble, reckless lending and a build-up in consumer debt. By letting people know that they can only expect prices to rise by up to 5%, the Bank of England would stop homebuyers and lenders gambling on rising prices. During the last property boom lenders such as Northern Rock offered 125% mortgages, based on an expectation that prices would rise and borrowers would not end up in negative equity for long – but when prices crashed some people were left stuck with huge loans. Rics argues that everyone would be more cautious if there was a price cap.

Why set it at 5%?

Rics says it is "not wedded" to the figure, which it based on the average annual growth in UK earnings, plus an allowance for price pressure caused by a lack of supply of homes for sale. Growth is currently exceeding that level, according to Halifax's latest house price index.

Is that the index that would be used?

Not necessarily. Rics has said it is "agnostic" about which measure of prices is used. The Bank has previously considered all of the major house price reports when making interest rate decisions, but there is now an "official" ONS index published monthly. Its last report showed prices rose by 3.1% in the 12 months to June.

If prices were capped, would that mean I would have to reduce the price of my house?

No. The cap wouldn't restrict individual buyers' and sellers' transactions, so if you were selling a property at a profit equivalent to more than 5% a year that would be fine. What the cap would do is force the Bank of England's new Financial Policy Committee to use powers it has to restrict mortgage lending.

What are those powers?

If it believes the housing market is overheating, it can direct the banking regulator, the new Prudential Regulatory Authority (PRA – also, confusingly, an arm of the Bank), to tighten the screw on mortgage lenders.

The PRA would use so-called sectoral capital requirements to give banks pause for thought before they make risky loans. They could force lenders to set aside more capital against all residential property lending, for example, if they thought the entire market was frothy – or pick on particular areas, such as high loan-to-value ratio mortgages. In practice, whichever types of loan the PRA singled out would become scarcer and more expensive.
  
What are the problems with a cap?

The main problem is that the headline rate of growth disguises massive regional variations. In the London market (itself a multiple of the entire New Zealand market) house price rises are already up 10.2% over the past year, according to the latest figures from the property portal Rightmove.co.uk. Yet in the north, north-west, Yorkshire and Humberside and south-west regions, house prices are up less than 1% over the past year.

Also, it does not address the real problem with the UK housing market – the lack of supply of properties.
  
So price rises in London could trigger a cap and stop me getting a mortgage in Newcastle?

Spot on. Houses in Newcastle could represent good value and be affordable to first-time buyers, but lenders would be constrained from granting loans if a London boom pushed up UK prices.

Article Source: http://www.theguardian.com/money/2013/sep/13/how-house-price-cap-work

Bank of England Should Cap House Price Inflation

On this article by Reuters on September 13th, 2013 surveyors suggest that to prevent another property bubble the bank should cap annual house prices to 5%.


(Reuters) - The Royal Institution of Chartered Surveyors has called on the Bank to limit annual house price inflation to 5 percent to prevent another property bubble.

Such a policy, it says, could be implemented by imposing caps on loan-to-value ratios, loan-to-income ratios, or ceilings on the amount banks are permitted to lend.

The request - an unusual one from an industry group that typically benefits from rising prices - comes months before the government begins to offer mortgage guarantees to riskier homebuyers under its controversial "Help to Buy" scheme.


Property prices are already rising at more than 5 percent a year according to mortgage lender Halifax, and the RICS has joined a chorus of voices warning that price rises could become unsustainable.

Figures from LSL/Acadametrics on Friday showed a 30 percent rise in the number of first-time buyers.

"Sending a clear and simple statement to the public that the Bank will not tolerate house price rises above five percent would help restrict excessive price expectations across the country," the RICS report said.

"This policy would discourage households from taking on excessive debt out of fear of missing out on a price boom, and discourage lenders from rushing to relax their lending standards as they compete for market share."

The industry group notes that limits on property price inflation have been used by a variety of countries, including Canada between 2008 and 2012, when Bank Governor Mark Carney headed the country's central bank.

Under Carney's watch, Canada's national regulator the amount buyers could borrow in relation to their deposit and imposed more stringent credit checks - measures that appeared successful in bringing price inflation back down.

At a hearing before lawmakers on Thursday, Carney said that although Britain's central bank lacked formal powers to force banks to do the same, it could issue strong advice that they rein back lending.

However so far the Bank has not identified a bubble in house prices. Its Financial Policy Committee is charged with spotting risks building up the financial sector and acting to head them off.

(Reporting by Christina Fincher; editing by Ron Askew)

Article Source: http://uk.reuters.com/article/2013/09/13/uk-britain-housing-idUKBRE98B1BC20130913

Prime Property Prices in Central London Up 116% in Last 8 Years

Research shows that in the past 8 years prime Central London house prices have more than doubled and it is up by 116% outpacing the RPI by 86%, according to this recent article on September 11th, 2013 of the Property Wire.

Prime central London house prices have more than doubled in the past eight years, up by 116 and outpacing the Retail Price Index by 86%, new research shows.


By contrast the average UK property price is 19.3% down on the same period, according to the research from Savills which tracks the expansion of the market since its indices were launched in 1979 and analyses in detail the performance of different locations in the latest market cycle.

It shows that prime central London property prices have grown on average 4.9% per annum since 1979.  This compares to just 3.6% above inflation across greater London and a UK average of 2.9%, opening the gap between prime London and the rest to its widest ever.

Mayfair tops the growth chart with growth of 139% since the middle of 2005, followed by Knightsbridge, Belgravia and Chelsea with growth of at least 128%.  All are now at least 30% above peak.

The analysis points out that supply has failed to keep pace with demand, resulting in an expansion of prime London from its Belgravia core in the 1950s to a swathe that runs from Richmond in the south west to Islington in the north, from Chiswick in the west to Canary Wharf in the east.

‘London is seen as one of the premier world cities in which to both live and invest. London’s economy has been put at nearly a third the size of that of the whole of the UK. Like other global cities, London attracts capital from around the world,’ said Yolande Barnes, head of world residential research.

She pointed out that the demand catchment for London housing is therefore global and the appetite for investment remains strong. Also London is physically limited in size and by very low levels of new supply so real house prices have risen much faster  than elsewhere.

‘London is a honey pot for wealthy real estate buyers but many of these buyers also live and work in London. It would seem that London’s housing market is inextricably tied with its economic success but it has been failing for some time to increase supply at a sufficient rate to curb price growth,’ explained Barnes.

This means that the lack of housing supply is playing out most visibly in London’s prime housing markets where the wealthiest home owners can compete most effectively for space.

Looking forward, the analysis suggests that the strength of outer London prime markets will be dictated by the creation of new wealth from the London economy and the flows of wealth between prime markets.

The report says that generally, over the next five years, London and the south east are expected to lead the economic recovery in the UK. In London, the economic growth from the all important financial and insurance sector is likely to be on a par with the average for the capital. The highest economic growth is forecast from the professional scientific and technical and information and communication sectors.

‘These sectors will, like financial services before them, also attract international investment and human capital which is expected to be reflected in overseas demand for housing. This is likely to widen the profile of buyers and support underlying housing demand for prime property beyond central London,’ it points out.

It also suggests that an increased proportion of prime demand is likely to be focused on the commuter zone given the gap between pricing in these markets and prime domestic London.

‘We expect to see a continued displacement of wealth from the prime central London markets into other parts of prime London and beyond. The markets in closest proximity to prime central London will see continued overseas buying activity, mainly from full time residents in the capital. This means the prime central London and other prime markets will remain linked,’ adds the report.

Article Source: http://www.propertywire.com/news/europe/london-prime-property-analysis-201309118224.html

UK House Rrices Recorded Their Fastest Rise

This recent news article by Reuters on September 10th, 2013 reveals the fastest rise of house prices ever recorded in almost seven years and sales volumes also jumped to a multi-year high.

(Reuters) - British house prices recorded their fastest rise in almost seven years last month and a measure of sales volumes also jumped to a multi-year high, a survey showed on Tuesday.

The Royal Institution of Chartered Surveyors' seasonally adjusted house price balance climbed to +40 from a slightly upwardly revised +37 in July, staying at its highest since November 2006.

The balance reflects the percentage of property professionals saying that prices rose minus those reporting falls.

Britain's housing market has shown signs of a revival this year, spurred by a healing economy and help from the government and the Bank of England to ease access to finance. But the scale of the recovery has raised concerns about a new property bubble.

The RICS survey found that a net balance of +45 of surveyors expect further price growth over the next three months. Over the coming year, house prices are forecast to rise by 2.2 percent.

"Momentum is increasingly broad-based across the country; this isn't just a London story," RICS said.

The average number of sold properties per surveyor rose to 17.9 over the last three months, the highest since January 2010.

The number of properties going on sale also increased markedly in August, with the relevant balance jumping to +26 from 16 in July.

"With positivity starting to return to areas right across the UK, it seems those who may have been waiting for the right time to sell are choosing now to do so," RICS said.

(Reporting by Olesya Dmitracova; editing by Ron Askew)

Article Source: http://uk.reuters.com/article/2013/09/09/uk-house-prices-rise-further-sales-jump-idUKBRE98817R20130909