LAND REGISTRY DATA: DECEMBER 2015 (released 29 January 2016)

The December 2015 Land Registry data showed a monthly increase in average house prices across England and Wales of 1.2 per cent, while the overall annual price change was 6.4 per cent. 

Regionally, the highest monthly increase was seen in London at 2.1 per cent, followed by the East at 1.7 per cent; prices decreased in the East Midlands, the North East and Wales with falls of 0.3 per cent, 0.7 per cent and 0.8 per cent respectively.

The average house price in England & Wales now stands at £188,270 and in London at £514,097. London saw the highest annual change in prices at 12.4 per cent, followed by the East at 10.6 per cent and the South East at 9.5 per cent. The lowest annual increase was seen in the North East at 0.8 per cent, but no region experienced a fall. In terms of property type, semi-detached properties showed the highest annual increase at 6.7 per cent, while the lowest increase was seen in detached properties at 5.8 per cent.

In greater detail, just seven counties and unitary authorities saw an annual fall in prices, the greatest again being Hartlepool at minus 3.3 per cent; Reading continued to experience the highest annual rise at 17.1 per cent. The strongest monthly growth was seen in Blaenau Gwent with an increase of 3.8 per cent, while Hartlepool had the most significant monthly drop at minus 4.2 per cent. Eight counties and unitary authorities saw no monthly price change.

Of the metropolitan districts, Knowsley continued to show the largest annual price increase at 10.5 per cent, while three districts saw a fall, the greatest being Sunderland at minus 3.5 per cent. Walsall experienced the highest monthly price increase at 1.7 per cent, while Rochdale saw the greatest monthly fall with a movement of minus 1.2 per cent.

Of the London boroughs, Barking & Dagenham had the highest annual price rise at 15.3 per cent, while Hammersmith & Fulham saw the smallest annual increase at 3.3 per cent. On a monthly basis, the City of Westminster showed the highest increase at 2.3 per cent. Four boroughs experienced a monthly fall, the greatest being Southwark at minus 0.7 per cent.

The volume of properties sold in October 2015 was 8 per cent lower than a year earlier in England and Wales and 13 per cent lower in London. Over the same period, properties sold for more than £1 million across England and Wales as a whole and in London fell by 2 per cent. 

Month on month, the total number of properties sold across England and Wales increased from 72397 in September to 79960 in October – an increase of 10.4 per cent. The number of property transactions from July 2015 to October 2015 averaged 80,691 per month, compared to 84,517 over the same period a year earlier.

Remortgage borrowing on the rise

The latest figures from the Council of Mortgage Lenders showed that lending had increased substantially year on year.  That applied across the board for first time buyers, homemovers and remortgage borrowers alike, reflecting the continued improvement in the mortgage market. 

The annual increase in remortgage borrowing was up by a whopping 36%, a clear sign that borrowers are taking advantage of the competitive rates currently on offer.  In fact it amounted to the highest volume of remortgage loans in November since 2011.

The level of competition in the market is only likely to increase, which is great news for borrowers as lenders fight hard for their business.  As a result, rates have been driven down and have improved across the board, not only for those with a large slice of equity in the property.  

It therefore makes sense for borrowers to keep their mortgage under review, especially when it is likely to be the single biggest outgoing for most households.  Shaving the rate on a mortgage could equate to a saving of thousands of pounds per annum.  

Borrowers can choose from a wide range of product types so may also take the chance to plan ahead for the day when interest rates start to climb.  Fixing the mortgage rate will mean that they know exactly where they stand for a period of time.  Those that feel rates will remain low for longer and can deal with an increase may prefer a variable or tracking rate.   

However, it is important to factor in any costs associated with the switch as fees can mount up and eat into the potential savings. There is a huge range of deals on the market though and many lenders offer help with switching costs.  

For some borrowers, a slightly higher interest rate with lower or even no fees will offer better value so it makes sense to shop around.  Advice tailored to your individual circumstance and requirements will help navigate the mortgage maze to find the best deal for you.

Guild Mortgage Service, Provided by London & Country Mortgages

YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

The FCA does not regulate most Buy to let mortgages.

Mortgages for the self-employed

Within the mortgage market, lending criteria has tightened enormously over recent years, focusing heavily on ensuring borrowers can prove affordability, both now and in the event of a rate rise. All applicants are subject to the same affordability checks and are required to provide evidence of their income for underwriting purposes, but for the self employed this can sometimes prove difficult.

While an employed applicant can confirm their income using payslips and P60s, the self-employed will often need to provide 2 to 3 years worth of full accounts or self assessment returns (SA302s) from HMRC. This can be particularly tricky however for someone who has changed to a self-employed status more recently. 

One such couple approached the mortgage service for the Guild of Professional Estate Agents, looking for advice on purchasing a new property. Both were sole traders, but applicant 2 had only made the transition from employed to self-employed when the couple relocated in 2013. After carrying out a range of non-contracted work from ad-hoc clients, she began a rolling contract with a consultancy in 2014, and as a result could only provide 1 year’s worth of accounts. 

Despite their limited proof of income, the couple’s mortgage adviser was able to place the applicants with a smaller, more specialised lender, who would consider a minimum of 12 months trading history.

They decided on a fixed rate deal, allowing them to secure their mortgage payment for the first 2 years, while also giving them time to build up their accounts further and have access to a wider range of lenders when their deal comes to an end. 

Although there is often an assumption that securing a mortgage if you are self-employed is almost impossible, there are options available. As can be seen here, getting advice from a mortgage broker can be invaluable when it comes to finding a lender with the most suitable approach to underwriting. 

Guild Mortgage Service, Provided by London & Country Mortgages

YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

The FCA does not regulate most Buy to let mortgages.

LAND REGISTRY DATA: NOVEMBER 2015 (released 30 December 2015)

The headline statistics of the November 2015 Land Registry report on house prices are identical to those reported for October, the monthly increase in average house prices across England and Wales being 0.4 per cent and the overall annual price change 5.6 per cent. 

Regionally, the highest monthly increase was seen in London at 1.6 per cent, followed by the North East at 1.3 per cent; prices decreased in the West Midlands, East Midlands and Yorkshire & The Humber with falls of 0.3 per cent, 0.7 per cent and 0.9 per cent respectively.

The average house price in England & Wales now stands at £186,325 and in London at £506,724. London saw the highest annual change in prices at 11.2 per cent, followed by the East at 9.8 per cent and the South East at 8.0 per cent. The lowest annual increase was seen in Yorkshire & The Humber and the North East, both at 1.3 per cent, but no region experienced a fall. Reversing last month’s statistics on property types, detached properties showed the highest annual increase at 5.8 per cent, while the lowest increase was seen in terraced properties at 5.2 per cent.

In greater detail, ten counties and unitary authorities saw an annual fall in prices, the greatest being Hartlepool at minus 2.5 per cent; Reading again experienced the highest annual rise at 16.2 per cent. The strongest monthly growth was seen in Merthyr Tydfil with an increase of 3.5 per cent, while Ceredigion had the most significant monthly drop at minus 3.3 per cent. Eight counties and unitary authorities saw no monthly price change.

Of the metropolitan districts, Knowsley again showed the largest annual price increase at 11.2 per cent; six districts saw a fall, the greatest being Barnsley at minus 3.7 per cent. South Tyneside experienced the highest monthly price increase at 2 per cent, while Sunderland saw the greatest monthly fall with a movement of minus 2.1 per cent.

Of the London boroughs, Hillingdon had the highest annual price rise at 14.4 per cent, while Kensington & Chelsea saw the smallest annual increase at 0.3 per cent. On a monthly basis, Barking & Dagenham showed the highest increase at 2.2 per cent. Richmond upon Thames and Kensington & Chelsea experienced monthly falls of minus 0.3 per cent and minus 1.4 per cent respectively. 

The volume of properties sold in September 2015 was 8 per cent lower than a year earlier in England and Wales and 13 per cent lower in London. Over the same period, properties sold for more than £1 million across England and Wales as a whole increased by one per cent but fell in London by two per cent. 

Month on month, the total number of properties sold across England and Wales fell from 74,596 in August to 72397 in September – a decrease of 2.9 per cent. The number of property transactions from June 2015 to September 2015 averaged 79,315 per month, compared to 83,095 over the same period a year earlier.

ECONOMIC NEWS: December 2015/January 2016

At its December 2015 meeting, the Bank of England’s nine-member Monetary Policy Committee again voted by eight to one to hold the UK interest rate at 0.5 per cent amid expectations that inflation will remain low after a sharp fall in the oil price and a levelling off in wage growth. The Bank maintained its view from November that inflation would not exceed one per cent until the second half of 2016. Meanwhile, interest rates for millions of UK savers have sunk to a new low with the average rate on Individual Savings Accounts (ISAs), for example, falling from 0.99 per cent in November to 0.85 per cent in December.

Later in December, the US Federal Reserve voted unanimously to raise interest rates by 25 basis points to between 0.25 per cent and 0.5 per cent – the first rate increase there since 2006. However, it is widely believed that the Bank of England will not follow suit when it meets again in mid-January. 

The Bank of England’s annual survey of 6,000 households compiled by NMG Consulting and published in December 2015, suggests that households ‘appear a little better placed to cope with an increase in interest rates than a year ago’; it also found that the share of mortgagors with high debt servicing ratios had fallen close to an historic low. However, it warned that some households, whose finances were especially vulnerable to a rate hike, might suffer from continued cuts in state spending. The Bank also released figures showing that unsecured debt in November 2015 had reached £2,759 per household, excluding student loans; one reason for this high figure is believed to be the current popularity of car loans – car sales reached a record level in 2015, when, according to the Society of Motor Manufacturers and Traders, some 2.63 million new vehicles were registered.

According to a Trade Union Congress (TUC) survey, published in early January, the proportion of household debt is at its highest for five years. Based on data from the Office of National Statistics (ONS), which includes student loans but excludes mortgages, the average UK home owed 26.5 per cent of its annual income on loans and credit cards in the third quarter of 2015, the highest proportion since 2008. The average amount owed by households is £11,800, the highest level yet. However, debt was proportionately greater in 2008 at more than 30 per cent of household income. 

In addition to low inflation, another factor that keeps the lid on UK interest rates is the current strength of the pound, particularly against the euro, which makes imported goods cheap. However, in early January, the ONS reported that the UK’s trade deficit in goods and services had narrowed in November 2015 after the value of oil imports fell; the three-month figures also showed a narrowing in the trade deficit, down £1.0bn from the previous quarter. 

In a speech early in the New Year, Chancellor George Osborne warned that 2016 is likely to be one of the toughest since the financial crisis; this assertion contrasts with the positive tone of his Autumn Statement, when he said that the UK was ‘growing fast’