 
Quick Move Blog
Wednesday, 30 April 2008
According to new figures from Nationwide, house price year on year in April by 1%, the first fall since 1996.
Prices were down 1.1% on March prices.
To add to the housing woes, David Blanchflower, a member of the Bank of England's Monetary Policy Committee, forecast in a speech last night that house prices could drop by up to 30% over the next 2 to 3 years. He also said that without a sharp reduction in interest rates, the UK risked falling into recession.
HBOS, the UK's leading mortgage provider, also forecast yesterday that house prices will fall steadily over the next 2 years.
The Bank of England released figures yesterday showing that the number of mortgage approvals had dropped to the lowest since the Bank's records began in 1993.
Monday, 28 April 2008
The latest Hometrack survey confirms that house prices are now falling year on year. The average house is now worth £173,100 - £1,500 less that a year ago.
Industry analysts say that this 0.9% fall is 'symbolic' as this is the firsthouse survey to show an annual house price fall since the start of the credit crisis.
Homes are now also tking a record length of time to sell, with the average property stayinh on the market for 9.1 weeks before selling.
Houses are selling for 7% less that their asking prices.
This latest survey increases the likelihood of the recurrence of negative equity. Analysis of Bank of England and mortgage lenders' data suggests that 350,000 homeowners will face negative equity if prices fall by 10% this year - which is being widely forecast by property experts.
This would equate to 3 in every 100 mortgage holders being hit by negative equity.
Kelvin Davidson, the property economist at Capital Economics, said: "This data all adds to the growing gloom.
The number of mortgages granted int hepast year has fallen by 50%. Economists at Citigroup have called this fall 'stunning' and said it is evidence that the credit crunch and falling houing market has made it all but impossible for many people to borrow to buy a property.
The British Bankers' Assoc (BBA) reported mortgage approvals of hyst 35,417 in March, the lowest figure since collecting recors in 1997 and a fall of 46% since March 2007.
The amount advanced totalled £5.6bn in March, down by 43.7% in March 07.
Nationwide is planning to launch a range of new mortgages to help first itme buyers, the group most affected by the recent credit crunch.
Nationwide has said it plans to cut arrangement fees for first time buyers. For instance, for those with just a 5% deposit, the arrangement fee on a 3 year fixed rate of 6.45% will be £299. Most lenders are currently charging closer to £1,000 for new mortgages, while others are charging up to £1,500.
It should also be noted that many lenders are no longer offering 95% mortgages. The Woolwihc, C&G and Northern Rock all require a deposit of at least 10%. Other banks chanrge a higher arrangement fee for those with a low deposit.
Friday, 25 April 2008
The Bank of England (BoE) launched an unprecedented £50 billion scheme this week to bail out Britain’s ailing banking system and help to ease the tightening mortgage market.
The BoE confirmed that it would allow lenders to swap assets for government-backed bonds in an attempt to restore confidence and ease the effects of the credit crunch.
The BoE will allow banks principally to swap UK and European mortgage-backed assets for "safer" government bonds, which banks can then use to raise money.
Mervyn King, the Governor of the Bank, said on monday: “The Bank of England’s special liquidity scheme is designed to improve the liquidity position of the banking system and raise confidence in financial markets while ensuring that the risk of losses on the loans they have made remains with the banks.”
Not everyone has confidence in the new plan; Liberal Democrat deputy leader Vince Cable said:
"I am very concerned that in addition to all the costs associated with Northern Rock, the government is going down the disastrous road of bailing out the banks and leaving the taxpayer with the liabilities,"
The government's decision to go down the route of support for the banks confirms the uncertain state of the housing market, which is having an effect on people's house sale decisions. Many more people are now thinking, "shall I get a house buying company to buy my house?", and are choosing to avoid the long waits, uncertainty and stress of selling their home on the open market by selling their home to quickmovenow.com. Call us for more details.
Wednesday, 16 April 2008
Confidence in the housing market is falling nationally as several recent surveys have shown. Another stark illustraiton are the results from a recent house auction in Leeds.
Out of 93 lots on offer, only 48% were sold. In an auction in Bradford, just 4 lots of out 11 were sold.
This gives a graphic illustration of the freeze in lending and overall current caution in the housing market.
For those people looking to sell their house quickly, an auction has often been seen as a worthwhile option. However, you must now bear in mind that even if your house is one of the lucky ones to be sold, what price will it actaully achieve?
This is where quickmovenow.com can help. Not only will you achieve certainty in the sale of your house - we will guarantee to buy your house, but you are also like to receive more moeny for your house than at an auction.
Also bear in mind that auctions are the traditional route for the disposal of repossessed properties. With a lack of buyers, prices again will be hugely depressed. If you find yourself on the route to repossession, call quickmovenow.com now - we can help you achieve a better price for your home.
Why is the Government destroying the UK housing market? Is it intentional or just incompetence?
The Government in general and Gordon Brown in particular have done well out of the housing boom over the past decade. Stealth taxation via stamp duty and inheritance tax have enabled them to increase public spending faster than the economy has grown, while lax controls in the credit market have powered equity release to feed consumption growth in the ‘spend not save’ culture they have encouraged.
They readily blame the sub-prime problems in the USA for the current state of the UK housing market but we believe the real rot is much closer to home! Northern Rock has little to do with the sub-prime debacle but everything to do with a business model the Government tells us was flawed, but which was regulated and controlled by the FSA and the Bank of England? Indeed the flawed business model they criticised Northern “Wreck’s” management for, is precisely the same model they are now wrestling with. They can drop base rates but the real world is running off LIBOR, which is priced against toxic debt not political whim.
At the same time the uncontrolled inflation of house prices has encouraged off-plan investors and buy-to-lets while producing an impenetrable barrier for first time buyers. The Government has of course enjoyed dramatically higher Stamp Duty - £6.4 billion in 2006/7 - to squander on ever increasing Government (out of control) spending. When will they be made to measure the benefits achieved from their expenditure honestly and consider the costs to the economy?
Meanwhile the total lack of understanding of the new-build planning process means we are still building too few dwellings and those we are building are of the wrong type – 50 per cent flats compared with 15 per cent in 1996. Following this, new built flats are now selling at auction 26 per cent below their original selling prices while instead of building more, housing starts are actually falling. As if this is not enough, their dogmatic insistence on introducing HIPS, in the face of the best advice from all stakeholders, has added insult to injury in a market already suffering from economic mismanagement over the last 10 years.
I leave you to debate whether all this is incompetence or a deliberate (but failed) attempt to micro manage one of the key drivers of the economy for political aims. Either way if the Government was a public company the senior management would be gone by now!
Hywel Luke
Tuesday, 15 April 2008
With house prices falling, many buy to let landlords may have to add extra capital into the homes under a clause in their mortgage contract.
Both Bradford & Bingley and Birmigham Midshires, each with 20% of the buy to let mortgage market, require custoimers to top up their initial deposits if falling house prices mean their mortgage rises above 85% of the value of their home.
Analysts are now worried that this topping up of deposits will be the final straw for many buy to let investors who will be forced to sell their houses.
Under the terms of the contract, if a £100,000 home with an £85,000 mortgage falls in value by 10pc the landlord has to find another £8,500 to maintain the lender's maximum 85pc loan-to-value rate - even though there is still £5,000 of equity in the property.
This topping up of deposits is required at revaluation and there are 679,000 buy to let mortgages due for renewal this year and next, with many taken out at an 85% loan to value.
Rising mortgage rates will also affect these investors with many original mortages taken out at 5.25% - the current prevailing rate is 6.5%.
Confidence in the UK housing market has reached its lowest in 30 years according to a new survey from RICS.
78.5% more surveyors reported a fall than a rise in house prices. This is the worst figure since RICS starting compiling this survey in 1978.
The report shows more surveyors than ever, 73%, believe that prices will fall over the next 3 months.
In the East Midlands, 90% o surveyors reported price falls, 85% reported falls in East Anglia. Scotland is the only area not reporting falls.
RICS blamed the figures on the credit crunch and the ensuing difficulty people are having in securing mortgages. However, they still say that a large fall in prices is unlikely.
Tuesday, 8 April 2008
New analysis from the credit rating agency, Experian, shows that up to 75,000 households are under threat of negative equity.
Areas of Manchester, Glasgow, south-east London and Birmingham are said to be potential "negative equity hot spots", as the value of the average home is only a modest amount above the mortgage on the property.
It is understood that the information is being looked at by banks and building societies, which may refuse to lend money to people living or moving to the negative equity hot spots.
According to the research, 78,394 households have less than 20 per cent equity in their homes, and face being plunged into financial turmoil if house prices fall by 20 per cent - as some experts predict.
If house prices fell by 25 per cent, a further 87,524 households would be dragged into negative equity. More than 8,000 people are already in negative equity and more than 23,000 would be if house prices fell by 10 per cent.
100% mortgages are no longer availbale, with the Abbey being the final bank to withdraw its 100% mortgage product yesterday.
This finally signals the end of an era where people could purchase a property with no deposit at all.
Buyers will now need a deposit of at least 5pc - an average of £10,000 - to purchase a home.
House prices across England and Wales saw their sharpest fall last month, since 1992, according to the latest report from the Halifax.
Overall in March, prices fell bt 2.5% with falls reaching 5% in certain areas.
Halifx has now changed its annual forecast from house prices remaining flat, to a forecast of a small fall in prices.
The annual rate of house price inflation has now fallen to a 12 year low of 1.1%.
House prices in the Midlands fell by 5% and in Wales by 4.7%. Conversely, the North saw a rise of 1.2% and Greater London a rise of 1.6%.
Tuesday, 1 April 2008
The latest figures from the Land Registry today show house price inflation falling again for the 6 month in a row. House price inflation now lies at 5.6%.
House prices in England and Wales in February remained the same as the previous month, with the average property costing £185,616.
Prices in London actually fell by 0.4%.
A number of surveys over the past week have shown house prices falling at the fastest rate since the early 90s.
Last week Nationwide revised its opinion that house prices would be static in 2008. It is now predicting a "modest fall" in prices by the end of the year.
Despite prices falling, there are few new buyers in the market showing the effect of the creit crunch on the UK housing market. The cost of new mortgages is rising and today for the first time, existing mortgage holders are facing higher rates, with NatWest raising mortgage rates for those on its offset mortgages from 6.2% to 6.45%.
With mortgage rates tending to follow base rates, which are expected to fall, these moves are highly unusual.
If you are finding it difficult to sell your house, or to afford your mortgage repayments, then do give us at Quick Move Now a call - we can help you.
Quick Move Now was featured in the Mail on Sunday at the weekend in an article about "sale and rent back" services. The article highlighted the fact that many house buying companies are offering services where they buy a home from a customer, then rent it out to them so they can stay in their property. The article highlights the concerns about the practice held by many people in the industry. Helen Loveless, the journalist writing the piece, commented that "...despite many former homeowners being led to believe they will be able to stay in their homes as long as they like, standard tenancy agreements are drawn up for between 6 and 12 months, which means they can be evicted with little notice, or face soaring rents."
This is the reason that Quick Move Now do not partake in sale and rent back schemes: often people who need to sell their house to us do it because they can't afford their mortgage; if this is the case, it is unlikely that they would be able to afford the rent on the same property. So the ethics of sale and rent back schemes are questionable. It's for this reason that the Chancellor recently announced that sale and rent back schemes would be investigated by the Office of Fair Trading. We welcome this.
The article also mentioned a Quick Move Now case study: "Anne says: 'You hear horror stories about companies who claim to buy your home quickly and charge huge fees or undervalue the property. But we got a good price (from Quick Move Now) and the deal meant we now live where we really want to.'"
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