ROOF Blog

The number of mortgages approved for house purchase fell for the third month in a row during February as the housing market continued to show signs of slowing down, figures revealed today. A total of 47,094 loans were approved for people buying a home during the month, 21% down on the recent peak reached in November last year, according to the Bank of England. However, the Bank’s figures also showed a rise in unsecured lending during the month, with consumers taking on more debt through credit cards, personal loans and other forms of credit than at any time for 15 months.

Thousands of first-time buyers will be priced out of the housing market if the Treasury presses ahead with plans to offer new tax breaks to buy-to-let investors, campaigners warn today. The Treasury published a consultation paper in February which included plans to boost the supply of private rented housing. One key proposal was for professional investors to pay stamp duty separately on each home, even when they buy a large portfolio of properties, reducing their total bill. PricedOut, which campaigns on behalf of first-time buyers who are not able to enter the property market, says the proposal is grossly unfair to first-time buyers and would make their struggle to buy a house even more difficult. William Griffith, spokesman for PricedOut, said: ‘The large tax breaks that buy to let currently enjoys mean that they can always outbid first-time buyers. It is astonishing that the government is seeking to further entrench this disparity in the housing market.’

90% of couples under 40 with children in London can’t afford to get on the housing ladder. Analysis by the National Housing and Planning Advice Unit found that as an average figure across the capital only 10% of young families could afford to buy a suitable home. The figure drops to 5% in some areas including Camden, Hammersmith and Islington. Only in the wealthier boroughs of Richmond, Redbridge, Merton and Bromley can more than 20% of young families afford to buy a home. The figure of 10% in London compares with 21.4% in the South West and 23.8% for the South East.

The British housing market is improving at a faster rate than property prices across most of the rest of Europe, a report by the Royal Institution of Chartered Surveyors (RICS) has found. House prices rose in only five European countries, including Britain, during 2009. But other countries continued to suffer a sharp market correction, with prices diving by up to 53%. RICS warned that countries with vulnerable economies would continue to suffer from price falls and depressed markets during 2010. Norway led the revival, with property prices in the country rising by 12% during 2009, followed by Finland at 8% and Sweden at 7%. Britain was the fourth best performing country, with the average cost of a home ending the year 1% higher than it started it, although house prices had risen by 10% from their lowest point in April.

Two of the biggest bellwethers of the housing market yesterday provided mixed messages on the recovery of the UK property sector. While the housebuilder Barratt Developments boasted an improved trading performance and an uplift in selling prices over the six months to 31 December, Travis Perkins, the owner of the DIY retail chain Wickes, reported a slump in annual sales at its eponymous builders’ merchants, and warned that it was unable to predict when the group will return to growth. Barratt Developments’ buoyant update came against the backdrop of stark warnings on the economy and housing market by Kate Barker, a member of the Monetary Policy Committee, on Monday, that the rally over the last 12 months cannot continue.

The end of stamp duty relief at the start of the year has helped cause a substantial dip in mortgage lending during January, with just £8.02 billion lent during the month, the lowest level since March 2001. This compares with an average monthly amount of about £18 billion during 2007. The data, released by the British Bankers’ association, are the latest figures to suggest the economy will endure a slow recovery, after signs of optimism at the end of last year. A leading member of the Bank of England’s Monetary Policy Committee warned today that the housing market could be ‘weak’ during 2010.

With a growing number of Americans facing negative equity and becoming ever more pessimistic about the prospects of house prices recovering to make up that difference, they are surrendering to foreclosure even though they can still meet the repayments, according to reports. The trend is clear in recent rates of non-payment, or delinquency, on mortgages. In January, delinquencies on outstanding ‘jumbo’ mortgages - big loans granted to people with good credit histories - rose to 9.6 per cent, according to Fitch Ratings. Many of these problem loans, which have gone unserviced for 60 days or more, were taken out after 2005. And nonpayment is increasing not just in hard-hit states such as California: in New York, Florida, Virginia and New Jersey they are all on the rise too.

Tessa Jowell, Minister for the Cabinet Office, discussed with housing co-operative tenants and staff whether the mutual model – tenant and staff owned enterprises – could play a bigger role in the UK housing market, in a visit to New Cut Housing Co-operative in Lambeth. She asked tenants about the benefits of living in a housing co-operative and discussed with staff the barriers stopping increases in the co-operative housing market. Last month, the Minister gave a speech outlining her views that mutuals should have a major role in public service delivery and reform. She announced plans to create an independent Commission on Ownership, chaired by Will Hutton, to investigate the issue. She also announced she was to meet ministers responsible for housing, social care and Sure Start, to investigate a larger role for mutualism. Read all about the benefits of cooperative and mutual housing in the most recent issue of ROOF magazine.

Tens of thousands of borrowers face a shock jump in mortgage payments after Skipton Building Society confirmed plans to raise its standard variable rate from 3.5 per cent to 4.95 per cent. The move, to take effect from 1 March, will raise mortgage repayments by up to 40 per cent for some borrowers, adding almost £200 a month to repayments on a £150,000 interest-only loan. Skipton, Britain’s fifth-largest building society, with 100,000 borrowers, previously had guaranteed that its variable rate would not rise while Bank of England base rate stayed at 0.5 per cent, but it has cited a clause in its loans’ small print allowing it to ignore the promise in ‘exceptional circumstances’. Skipton has blamed its decision on ‘unprecedented’ competition in the savings market from National Savings & Investments (NS&I), the Treasury-backed savings provider, and state- controlled banks. Experts say that other building societies are likely to follow suit and raise interest rates for homeowners on an SVR, the ‘revert’ rate that borrowers switch to when a mortgage deal ends.

Buy-to-let investors are back in favour with mortgage lenders for the first time in two years, raising renewed concerns that first-time buyers could once more be squeezed out of the market for one and two-bedroom properties by landlords. Brokers said that a number of lenders have started to focus on attracting landlords with more favourable interest rates, after a long period of freezing them out. Despite the credit-fuelled boom and subsequent collapse of the buy-to-let market, which left many city centre flats empty and landlords unable to complete purchases, the lenders that are now re-entering the market perceive their customers as less risky than first-time buyers.