ROOF Blog

Repossessions among sub-prime borrowers accounted for 30 per cent of all repossessions in the UK during 2008, Fitch Ratings said yesterday. Despite the sector comprising less than 10 per cent of the entire UK mortgage market, approximately 12,200 properties repossessed last year were from so-called sub-prime borrowers, and the numbers gathered pace during the year, with more properties repossessed in the fourth quarter than in each of the previous three quarters.

A surge in demand caused by the credit crisis has meant that a £200 million government scheme to help first-time buyers on to the housing ladder has fully allocated its cash for the financial year. The Open Market HomeBuy scheme which offered loans to first-time buyers to buy on the open market was completely allocated for 2008/09, but a spokesperson from the Homes and Communities Agency confirmed that more money would be available for 2009/10 in April, and those on waiting lists would be informed.

Planning applications to local councils have dropped by an average of almost 19 per cent, causing a drop in income averaging 16.3 per cent across England. The amounts ranged from a 50 per cent fall in income in Cambridge to a 27 per cent increase in Kerrier. Councils believe the overall fall is the result of the credit crunch and recent changes to the planning rules which allow more work to be done without planning permission.

Speaking to the Observer, Gordon Brown said the Financial Services Authority (FSA) would consider controls on mortgage of more than 100 per cent of a home’s value, and on high multiple mortgages, offering loans of up to six times an applicant’s salary. He said more caution in the mortgage market would reduce chances of a future property crash: ‘We do want to see the reinvention of the traditional savings and mortgage bank in Britain for loans to be made on prudent and careful terms’.

The government has confirmed that Northern Rock will revive its mortgage lending, with new loans worth up to £14 billion becoming available by 2011. The loans will be financed by money from new deposits, repayments of existing loans, and more government money, as part of a wider move to restructure the nationalised lender. The bank says it will offer ‘responsible’ loans for first-time buyers and customers who are remortgaging. A spokesperson said that mortgage would be lent at up to 90 per cent of the value of the property being bought.

Homeowners who bought properties from a Hampshire developer have complained that they are living on a ‘glorified housing estate’ and are considering suing after 20 units were sold to social landlords. They say they were told the development would include 15 per cent affordable housing, but that this has increased to between 30 and 50 per cent with the recent deal between Bellway, the builders and Kingfisher housing association.

The Royal Bank of Scotland and Lloyds TSB, the two banks bailed out by the government, will add between £1 trillion and £1.5 trillion to the public debt – the equivalent of between 70 and 100 per cent of gross domestic product, the Office of National Statistics (ONS) has warned. The ONS said it had decided to classify the banks as public entities from 13 October 2008, and analysts believe that the government will probably have to revise up its borrowing forecasts in April’s budget.

Low interest rates have boosted the investment appeal of buy to let, with agents reporting renewed interest in the sector. According to a recent survey conducted by the Association of Residential Lettings (ARLA), 75 per cent of agents reported a rental yield of 4 per cent of more, with the majority reporting a return of between 4 and 5 per cent – much higher than savings accounts.

Londoners’ confidence in the property market has bounced back according to research from Rightmove. A majority of people living in the capital – 59 per cent – say that now is a good time to buy, and more than half expect to purchase a home to live in this year, with 12 per cent planning to buy an investment property. Nationally, around 50 per cent of people expect to buy a property during 2009, although seven in 10 predict further price falls.

The government should consider imposing caps on the amount mortgage companies can lend to homebuyers, the deputy governor of the Bank of England has suggested. Sir John Gieve, who is stepping down at the end of the month, said that in theory, a ceiling on loan-to-income and loan-to-value ratios could have provided an effective brake on the excesses of the last housing boom. He also acknowledged that the bank could have set interest rates more appropriately in the decade before the credit crisis began.