ROOF Blog archive

The Council of Mortgage Lenders (CML) released data yesterday showing that lending fell to £30.7 billion in November, down 8 per cent from the same time last year. It is the first year-on-year fall since 2005 that clearly ‘demonstrates the market slowdown has started’. CML expect the downward trend to continue next year and called for more support from central banks to help increase liquidity in the money markets.

The state of Britons’ finances is perilous according to a report by the Office of National Statistics (ONS), which shows that households are setting aside more cash for debt repayment than at any time since 1991. Families are having to spend an average of 13.6 per cent of their income on repayments.

Meanwhile the number of first time buyers getting on the London housing ladder has fallen by more than 40 per cent in the past five years. As prices have risen by 54 per cent since 2002, 30 out of 32 boroughs now have their ‘average’ homes priced out of reach of first time buyers, while the average deposit paid by buyers has also increased 49 per cent since 2002. Experts have said that this year has been one of the worst for aspiring buyers.

And finally, Nick Clegg, new leader of the Lib-Dems has announced his shadow cabinet which includes Lembit Opik, boyfriend of one of the Cheeky Girls, becoming shadow secretary for housing.

This is the last lunchtime news for 2007. We will be back on 2 January 2024 to give you the latest housing news as it happens. Merry Christmas and a happy new year to all our readers.

The prospect of a new cut in interest rates increased when the Bank of England’s monetary policy committee minutes were released. The minutes showed that all members of the committee unanimously voted to reduce the cost of borrowing earlier this month, when the BoE dropped rates by 0.25 per cent. They also discussed whether a larger reduction in rates might be necessary to cope with a slowing economy. Most experts expected at least two members of the committee to reject a reduction in rates. The next rate cut could come as soon as 10 January.

In America, permits for new home builds dropped 1.5 per cent to a 14-year low over November. The permits are seen as an indicator of the future health of the housing market. At the same time, single-family home starts, which account for the bulk of house building, fell for the eighth straight month, dropping by 5.4 per cent to a year-on-year total decrease of 24.2 per cent. Economists however believe that a fall in house supply, may stop prices from falling any further.

The world’s central banks have again had to bail out the financial markets with a £263 billion injection of funds this week – the biggest ever recorded. The European Central Bank alone lent over half a trillion dollars for two weeks at a rate of 4.21 percent, well below the market cost of short-term money. The Bank of England also auctioned off £10 billion on Tuesday, while the US Federal Reserve is planning to lend approximately £20 billion over two weeks. Analysts warn that further big injections will be unlikely to prevent any inflationary pressures.

The global credit crunch has spread to Japan, with the world’s second largest economy now teetering on the brink of a recession ‘bought about by government policy error’. GDP growth to March ‘08 expected to be just 1.3 per cent, down from 2.1 per cent, following the introduction of new building standard laws which are expected to lead to a 12.7 per cent fall in housing investment. Analysts fear the damage to the construction sector will be massive.

Mortgage rates could rise and the housing market slow down if high street banks are forced to hold more liquid assets in an attempt to avert a rerun of the Northern Rock debacle, the Financial Services Authority (FSA) said. The FSA is planning to develop new reporting requirements next year where banks and building societies will be required to provide a monthly analysis of their cash flow position. It has acknowledged that requiring banks and building societies to hold more liquid assets which carry a lower yield will divert resources away from the banks’ main business of lending and may increase costs.

And finally, a couple have had a convicted criminal move into their home against their wishes, after he gave their address to the court as his own. The couple say the first they knew about it was when Sims, a friend of their daughter, moved in, bringing with him a box ito enable the court to monitor his ankle tag. Sims appeared before magistrates last week where he was sentenced to a week’s curfew after breaching a supervision order. He gave the address after the couple’s daughter said he could stay with her family, and the Probation Service didn’t verify the address. The courts are looking into the situation, but the police say they cannot act with a court warrant.

The government is to publish a new planning policy designed to boost the use of renewable energy and community heating schemes in new buildings. The planning policy statement will require all councils to plan with renewables, such as wind power, in mind on all new buildings – not just houses which already have to be zero carbon by 2016. The share of renewables required on new buildings is also to rise to 20 per cent.

Demand for rental flats has fallen sharply over the past three months as a result of oversupply in the market, according to the Royal Institution of Surveyors (RICS). RICS reported that the rise in demand among tenants over the past three months has fallen to 17 per cent, down from 37 per cent in the previous quarter. It also found that the number of new landlord instructions, a strong indicator of buy-to-let activity, has almost halved over the past six months. Figures indicate that investors who bought houses were in a better position than flat owners. Overall gross yields for flats had fallen for the fifth quarter in a row, whereas it continued to rise on houses.

The Home Office announced yesterday that 19,000 asylum seekers whose cases date back to 1994 are to be allowed to stay in the UK. More than a third of the backlog being considered for deportation have being granted leave to remain since 2006 and many more people are expected to be told they can stay, as officials work through up to 450,000 files still to be determined. On the current figures if the trend continues, up to 160,000 asylum seekers could be allowed to stay in the UK.

At the same time, a study by Ernst & Young has found that the recent influx of 1.5 million migrants has boosted Britain’s economy and kept inflation low, although it may have increased unemployment for younger Britons and reduced pay increases for all. A spokesperson for Ernst & Young said that they would expect GDP to grow by three per cent a year over the next decade if immigration were to continue to increase at the same rate as the past two years, whereas if there was no immigration at all the figure would be likely to drop to just 2.2 per cent a year.

And finally, opposition housing spokesperson, Grant Shapps, will spend Christmas Eve sleeping rough near the House of Commons. Planning to keep warm with a sleeping bag, blankets and cardboard boxes, he insists the plan is not a stunt and that he wants to call attention to the plight of homeless people.

Shadow housing minister, Grant Shapps, has complied a report showing that the number of homeless children in England has increased 128 per cent since Labour came to power, and now stands at more than 130,000. Mr Shapps said the rise highlighted the ‘dismal record of the government’. However a spokesperson for the Department of Communities and Local Government said it had lifted 1.4 million children out of bad housing and ‘want to raise this to well over two million by the end of the decade’.

The December house price index from Rightmove.co.uk today showed that house prices have decreased 3.2 per cent in the past month. Rightmove said that many homeowners cut prices in a bid to sell before 14 December, the deadline for the introduction of home information packs on all house sales.

A report out by the Bank of England showed nearly a million families are struggling to pay off their mortgages, while a further 1.8 million said they had hit problems ‘at least occasionally’, as annual mortgage repayments topped £3.6 billion. The poll shows that almost half of the families facing higher repayments had cut back spending on everyday items; nearly 10 per cent had been forced to borrow more or extend their mortgages; and another 10 per cent had taken on a second job or work overtime to make ends meet. The proportion of households paying more than 20 per cent of their gross salary on mortgages and debt repayments is now higher than it was in 1991.

To add to the problem, many lenders are dragging their feet over passing on of the Bank of England quarter point interest rate cut announced last week. Personal finance website moneyfacts.co.uk has found that a number of lenders have yet to announce any cut – including HSBC, Northern Rock and Yorkshire Building Society; while seven have made reductions less than the Bank’s 0.25 per cent.

And finally, councils have been condemned for allowing ’swathes of mediocre housing’ across the UK as a result of pressure to get new developments built. Former chief planning inspector, Chris Shepley, said that some applications are ‘bloody awful’, while the Royal Town Planning Institute has warned that the quality of new housing is likely to deteriorate further as the grounds on which town planners can object are curbed: ‘There are real incentives there to build lots of houses but no incentives for quality’.

The Bank of England (BOE) yesterday joined central banks around the world to launch a joint effort aimed at tackling the global credit crisis. The BOE, US Federal Reserve Bank, European Central Bank, Bank of Canada, and Swiss National Bank said they would each release additional financial reserves to free up credit and help prevent a global economic meltdown. The BOE is increasing the amount of money from £2.85 billion to £11.35 billion until mid-January, and will look at whether further amounts will be necessary after that.

Housing minister, Yvette Cooper, announced yesterday that older people will be encouraged to give up their council homes in cities and move to smaller properties in the country. In a voluntary scheme, they will be paid cash, helped to move, and given priority for council homes outside cities, to free up larger properties that can then be given to families in a bid to ease overcrowding. Officials believe that there are 445,000 ’under occupiers’ in social housing.

Citizens Advice has attacked irresponsible lending decisions and ‘aggressive arrears management’ by sub-prime lenders, which is forcing households out of their homes. The number of repossessions is already at a seven-year high and is expected to rise by a further 50 per cent this year. One in five people who sought advice on mortgages or loan arrears from Citizens Advice are on a means-tested benefit, while a third had incomes below the UK poverty line. Chief Executive, David Harker, said that far from providing housing security and a valuable asset, ‘home ownership has proved a fast track to debt and homelessness for many vulnerable borrowers on low incomes’.

Social mobility in the UK remains lower than any other advanced nation according to research by the London School of Economics. The potential for children born in 2000 to move to a higher income bracket than their parents is still as low as it was for children born in 1970. For example a child born to wealthy parents who scored badly in tests as a 3-year-old, will have caught up with a more intelligent child born to poorer parents by the age of seven.

The latest Royal Institution of Chartered Surveyors (RICS) survey shows that sales of homes fell at their fastest rate for at least eight years, while the number of newly agreed sales dropped for a fifth month in a row in November. However the supply of properties on the market climbed, in what appears to be a rush to get a property sold before the widely forecast slowdown occurs. The biggest falls occurred in Northern Ireland, and prices are expected to fall further as confidence among the surveyors questioned reached their lowest level since the survey began in 1999.

Gordon Brown’s house-building plan could lead to house price collapse, a leading economist has warned. Professor Bernhofen at the University of Nottingham said that a big increase in the housing stock could have serious consequences for homeowners and the economy: ‘The government should be careful that it is not getting confused between need and demand’. With property values already in decline, the promise of a further three million homes by 2020 could result in an oversupply that would lead to the sort of slump affecting the US.

Meanwhile, Save the Children has said that up to 2.3 million people have had t0 take out loans with interest rates of almost 200 per cent from ‘doorstop lenders’. A further 165,000 people have been forced to borrow from illegal lenders or loan sharks – with repayments almost three times what was initially loaned. The effect that excessive credit repayments has on low-income or families in poverty means that nearly one in three families with credit problems have difficulty in buying adequate shoes or clothing, and nearly one in four have difficulties providing food.

And despite the Bank of England lowering interest rates last week, experts are preparing for millions to be hit with more woes as banks increase their lending rates. Financial analysts have described the past few weeks as the worst on record in the credit market , and this anxiety will be passed on to consumers in the form of steep interest rises. It is expected that a record £11.7 billion will be spent using credit cards in the run up to Christmas, with enormous repurcussions for the £65 billion in credit debt already amassed.

However, research has shown that 41 per cent of the British public believe there is ‘very little’ child poverty in the country, contradicting official figures showing that the number of children in poverty is actually more than three million. The findings also revealed a widely held belief that the poor only have themselves to blame. Yesterday children’s secretary Ed Balls, recommitted the government to meeting its target of halving child poverty by 2010 compared to the 1990 figures.

The Swiss investment bank, UBS, has reported a further $10 billion (£4.9 billion) in write-downs from its exposure to bad debt in the sub-prime market in the States. This is the equivalent of its entire net profit for 2006. It is the second write down by UBS after it announced in October that it had lost $3.5 billion, and despite raising $9.7 billion from the Singaporean government. The OECD has predicted that losses related to the US sub-prime market could reach $300 billion.

Looking for a place to bring up the kids? You could do worse than Cambridge or Leeds, according to a report by charity4Children, which campaigns for more community help for families. Factors such as school results, leisure centre facilities and the numbers of parks placed Leeds on top and Northampton, with few services for teenagers, at the bottom of the league.

First-time buyers are using social networking sites such as Facebook to find people to share the costs of buying a property and get on the housing ladder. The site’s Sharetobuy message board is increasingly popular.

A group of pensioners are launching a legal challenge against the smoking ban stopping them from lighting up in the communal room of their sheltered housing. Residents at the housing association home said the ban has ruined their social life and are planning on applying for legal aid to fight the ban, and even the non-smoking residents are calling for the ban to be overturned.

And finally, the Dutch government is considering a plan to build a £7 billion island in the shape of a tulip in the north sea to relieve pressure on its cities and protect the coastline from rising sea levels. About half the population of the Netherlands lives below sea level, and the proposal is for an island about twice the size of the Isle of Wight. However, coastline communities and environmentalists are in uproar saying the idea is too expensive and its consequences ‘dramatic’ for the ecosystem.

The Bank of England lowered interest rates by 0.25 per cent yesterday, dropping the rate to 5.5 per cent. Homeowners received a boost as two of Britain’s biggest mortgage lenders – Halifax and Nationwide – said they would pass on the reduction to borrowers. Halifax was preparing to reduce its standard variable mortgage rate to 7.5 pre cent, while Nationwide is cutting its to 6.99 per cent. Many other lenders are expected to follow suit, however not all borrowers will see a decrease as experts are seeing a change in the way some banks and building societies price fixed-rate home loans.

Over in America, President Bush announced a plan to bail out hundreds of thousands of US homeowners who are struggling to meet their mortgage repayments. The plan is to freeze interest rates on certain sub-prime loans for the next five years, which could affect as many as two million people. Other borrowers will be ‘fast-tracked’ towards refinancing packages. This comes as the Wall Street Journal reported that the New York attorney-general has issued further subpoenas against Wall Street firms including Merrill Lynch, Morgan Stanley and Deutsche Bank, along with Royal Bank of Scotland, seeking information about the packaging and selling of sub-prime mortgages.

Meanwhile, the Royal Bank of Scotland said it expected to deliver a pre-tax profit of more than £10 billion, despite taking a £1.5 billion loss against exposure to American sub-prime mortgages and loans.

Local government minister John Healey announced council funding for the next three years yesterday with councils in England receiving an £8.97 billion ‘boost’ in funding. However town halls are warning that cuts to the services and further council tax rises are needed after what they described as the ‘worst finding settlement for 10 years’. The Local Government Association said many councils, particularly those in shire districts and London would see their funding fall in real terms. Mr Healey maintained that keeping council tax under control was a priority for the goverment, and they expected the average price increase would be below 5 per cent.

A new report looking at how and why people borrow money has been released by the Personal Finance Research Centre. It shows that borrowers who rely on rising house prices or insolvency to get out of debt were risking ‘financial suicide’. Young adults are increasingly reliant on borrowing for day-to-day spending, and see debt consolidation or insolvency as a potential debt solution, while borrowers of all ages looked at property as the ultimate solution for their financial problems. As expectations increased about living standards and readily available credit few borrowers looked for alternatives.

And finally, we leave you with a joke from yesterday’s Mirror newspaper: what’s the difference between a pigeon and thousands of nurses, posties, firefighters, cooks and cleaners across the country? The pigeon is the only one still able to leave a deposit on a house.

The Financial Services Authority (FSA) issued a warning that the global credit crunch is likely to worsen and both UK banks and homebuyers will face ‘impossible financial stress’. The FSA believes that banks should draw up contingency plans, and fears that more banks could suffer the same fate as Northern Rock. For house buyers they predict a surge of home repossessions in line with the Council of Mortgage Lenders figures’ of a 75 per cent increase, to reach 30,000 this year alone. They also expect 1.5 million homeowners will struggle to find an affordable mortgage next year as fixed rate deals start coming to an end.

Two former members of the Bank of England’s monetary policy committee have urged the Bank to reduce the cost of borrowing tomorrow. They warn that unless the Bank reduces rates by a quarter percentage point it risks leaving the economy even weaker over the coming months. However they and the majority of City economists expect the rate to remain at 5.75 per cent.

All this pessimism comes on the back of the Halifax’s November house price index which showed a fall of 1.1 per cent for the month, taking the annual rate of growth down to 6.3 per cent compared with 8.9 per cent in October. It is the first time that the Halifax figures have shown house prices falling for three consecutive months, as higher mortgage repayments and a fall in real earnings take their toll.

A new report out by the Joseph Rowntree Foundation has debunked some of the myths about immigration and social housing. Looking at recently arrived asylum seekers and migrant workers from Liberia, Pakistan, Poland and Somalia living in Sheffield, the report found that asylum seekers usually move into unsafe social housing that nobody else wants, resulting in a concentration of immigrants in particular sectors of the local housing market and neighbourhoods. However, restricted welfare rights of migrant workers meant the majority were reliant on the private rented sector.

The Joseph Rowntree Foundation says the government is losing momentum in tackling child poverty, with little progress in the past three years and one in three UK children still living in poverty. A treasury select committee said Tony Blair’s 1999 pledge to halve child poverty by 2010 is in doubt.

Homes built on flood plains should be refused insurance to stamp out the threat of a million more flats and houses being erected in high-risk areas, according to the Environment Agency. Last year 13 major developments including housing estates and holiday parks were given building permission against agency advice. The agency also described a further 5,000 sites of ‘critical infrastructure’ as at risk of flooding.

A poll by the Guardian newspaper has found that Britons live in fear of growing old in a society that fails to ‘respect the over-65s or provide adequate support for those in need’. The number of older people is set to increase by more than 60 per cent during the next 25 years, and the poll found that 40 per cent of Britons fear being lonely; 66 per cent are ‘frightened’ by the prospect of moving into a care home; more than 90 per cent did not think they could live on the state pension but would need to use savings.

A cross party group of MPs is expected to introduce a private member’s bill this week in a bid to prevent the government backpedalling on rules that require construction companies to fit renewable energy sources to new buildings. The bill will aim to stop the building industry from using ‘off-site renewables’ as part of the 10 per cent contribution.

The subprime buy to let mortgage market in the UK has virtually collapsed as lenders have withdrawn almost 90 per cent of deals. Since July the number of subprime deals has fallen from more than 1,300 to less than 150 today. More than half of buy-to-let landlords with bad credit histories have also disappeared in the past month, as investors needing to remortgage are no longer offered favourable rates.

While over in the States, mortgages lenders and regulators are close to finalising an aid deal for homeowners hit by the credit crunch. As hundreds of thousands of sub prime mortgage holders could default on repayments, it is thought that mortgage rates will be temporarily frozen.

Momentum is apparently building for a new EU-wide ’super regulator’ to oversee financial markets and clamp down on speculators. Italy’s finance minister, Tommaso Padoa-Schioppa, has sent a letter to EU colleagues calling for the plan to be discussed urgently at today’s finance ministers meeting. One spokesperson said that ‘pressure is mounting… Financial institutions should be subject to essentially the same rules irrespective of where they operate in the Single Market’. It is expected that Alistair Darling will oppose the plans.

And finally, the Welsh Assembly is looking to suspend the right to buy council homes in a bid to tackle the shortfall of affordable housing. The assembly wants to apply for powers from to suspend tenants’ right to buy in some areas of Wales, particularly in rural areas. The number of council homes in Wales has halved since the scheme was introduced in the 1980s, and more than 80,000 people are currently on the waiting list for social housing.