LANDLORD NEWS
Landlords opting for two-year fixed-rate mortgages
More landlords are choosing two-year fixed-rate deals as they anticipate a decrease in mortgage rates. Paragon Bank reports that 23% of mortgage applications last month were for two-year fixed-rate deals, compared to 66% for five-year fixes and 11% for variable rates. Experts suggest that people are hesitant to lock into longer-term fixed rates while rates are at their peak. Landlords expect rates to start falling towards the end of next year. Two-year fixes are cheaper for landlords, but they come with high fees of up to 7% of the loan value. Despite the fees, many landlords are still opting for these deals. The rise in mortgage rates has led to concerns of landlords increasing rents or selling properties. However, recent rate cuts by several lenders may improve the outlook for landlords.
The Times The Times The Times
BUY TO LET
Quarter of a million students left without housing
An analysis has found that a quarter of a million students in top university cities are without housing due to an exodus of landlords. The shortage of housing has led to record rents and a highly competitive race for students to find accommodation. The number of student rooms needed has risen from 5,000 to 240,000 in the past five years. Glasgow and Bristol are among the cities with the biggest shortage of student housing. Experts warn that the situation is expected to worsen this year, forcing students to live further away from campus. Landlords are selling up due to high mortgage costs, tax rises, and increasing regulations.
The Daily Telegraph
No-fault evictions hit six-year high
The Ministry of Justice has released figures showing that 7,491 no-fault eviction claims were brought before the courts in April and June – up 35% year-on-year and the highest number since 2017. The same period saw 2,228 no-fault evictions carried out using bailiffs, up 41% year-on-year. Polly Neate, chief executive of homelessness charity Shelter, said the Government “must get rid of no-fault evictions, which have made the prospect of a stable home little more than a fantasy for England’s 11m private renters”, while Dan Wilson Craw from Generation Rent said renters “are bearing the brunt of the cost of living crisis, with record numbers being evicted for rent arrears and increasing numbers being evicted so landlords can sell up or raise the rent”.
The Guardian
Rents set to rise despite cost of living crisis
Rents are expected to continue rising sharply despite the cost of living crisis, according to a survey by the Royal Institution of Chartered Surveyors (Rics). Over 63% of property professionals anticipate an increase in rental prices over the next three months, marking a record high since 1999. In lettings, tenant demand rose firmly over the three months to July but, reflecting an imbalance between demand and supply in the rental sector, landlord instructions declined further.
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COMMERCIAL
Profits fall at Savills
Half-year profits at Savills collapsed amid a dearth of dealmaking in the commercial property market. Revenue in Savills’ transactions business fell by a fifth in the first six months of the year, and income from commercial property sales and leases in the UK fell by a third. Overall group revenue dipped 3% to £1.01bn. Pre-tax profits fell almost 88% to £6m, while Savills’ property management arm delivered an 18% rise in profits. Simon Shaw, chief financial officer at Savills, said: “In early May, the mood music was that rates would soon peak and that [central banks] would start to cut [interest rates] in the first quarter of 2024. Things have changed since then and the world is now looking at [rates being] higher for longer. That, I think, has fundamentally delayed some of the recovery we were expecting by probably about a quarter.”
Financial Times Financial Times The Times I Daily Mail The Times
AUCTION NEWS
Come and meet the DMI team at live auctions next month
Why not visit a real live auction, see the bidding live and meet some of the DMI team who will be in attendance arranging funding for successful bidders? Upcoming auctions include Barnard Marcus in London on 11th September and Cottons in Birmingham on 13th September. You can review their websites for a list of Lots or just pop in for a coffee and a chat. See you there!
New research published on size of auction house market
The size of the UK property auction house market reached the highest point in 10 years in 2022, approaching half a billion pounds in revenue, according to research by Upfront information provider Moverly. Ed Molyneux, co-founder of Moverly, commented: “A severe bottleneck in the buying process, caused by surging buyer demand during the pandemic, forced many sellers to the auction house in 2022. This is far from an ideal path to selling as it often means accepting a lower price than would be expected on the open market, not to mention the uncertainty over just what that price will be.”
Estate Agent Today
iamproperty launches new innovation drive
iamproperty has announced a new “era of innovation” which will enable agents to manage their workflow more efficiently. Co-Founder Ben Ridgway remarked: “To support this innovation and build our future, we’ve invested heavily in our people and technology, with the appointment of Neil Hope our Chief Technology Officer earlier this year, as well as a recruitment drive to add even more talent to our Technology Department. We put people at the heart of great technology with our support teams, and that’s what sets us apart.”
Estate Agent Today
PROPERTY FINANCE
Average UK mortgage payments on detached houses exceed £2,000 per month
The average mortgage payment on a detached house in the UK has surpassed £2,000 per month, marking a significant increase from £1,200 in 2021. London experiences an even higher surge, with average mortgage payments on detached properties reaching nearly £5,000 per month. Nicholas Mendes from mortgage broker John Charcol expresses surprise at the rapid rise in repayments, attributing it to the dramatic increase in property prices following the pandemic. Mortgage holders who opted for the cheapest two-year deals will face tripled or quadrupled rates, resulting in higher mortgage payments. The Bank of England’s recent interest rate hike to 5.25% suggests borrowers will continue to face higher rates in the future. Landlords are also feeling the impact, with a third experiencing mortgage repayment arrears. However, some lenders have started reducing interest rates. Industry experts warn that this trend may lead to a decrease in available rental homes and higher charges for tenants.
The Times
Cash buyers on the rise
The proportion of cash buyers in the property market is increasing, with 31% of all property sales in England and Wales in the first three months of the year being paid for without a mortgage. This is up from 29% in the same period last year and 27% in 2020. Cash buyers are usually homeowners looking to downsize, property investors, or wealthy buyers who don’t need a mortgage. Rising interest rates have put many people’s plans to buy a new house on hold, leading to a decrease in the number of people buying a home with a mortgage. Cash buyers have the advantage of less competition and can negotiate better deals. Sellers are more willing to accept lower offers from cash buyers due to the reduced risk of the sale falling through. However, there are signs that this advantage may start to level out as inflation eases and mortgage rates decrease. Regardless of whether a buyer is paying with cash or a mortgage, the highest bidder will usually win in today’s market.
The Sunday Times
Homeowners cut back expenses amid mortgage worries
Homeowners are cutting back on expenses as they worry about rising mortgage payments. According to research by online money-saving tool Nous.co, one in three homeowners have reduced their groceries bill and over half have stopped eating out. Additionally, 46% have cut back on holidays abroad due to concerns about their mortgage. Many homeowners on fixed-rate deals are worried about unaffordable repayments when their current arrangement ends. Greg Marsh, CEO of Nous.co, stated that mortgage holders are terrified and are cutting back on everything else. He advised homeowners to find the best mortgage deal and avoid overpaying on other household bills.
The Sun Sunday Express
Competition returns as lenders reduce mortgage rates
At least 13 lenders out of 82 are set to reduce mortgage rates this week, signaling easing pressure on homeowners as competition returns to the market. Halifax and NatWest are among the lenders reducing rates by up to 0.71 and 0.65 percentage points respectively. HSBC, Nationwide and TSB have already cut rates this week after the latest data on inflation was better than expected, despite the Bank of England raising the base interest rate for a 14th successive time last week. David Hollingworth, of L&C mortgages, said: “We are seeing the beginnings of a rates war. There is tougher competition in the market.” With more lenders coming forward to announce cuts to rates on some of their fixed mortgage deals, he said: “It certainly looks that mortgage rates have turned a corner.”
The Independent I The Daily Telegraph
Sellers reducing asking price by over 5% doubles
The number of sellers reducing the asking price for their home by more than 5% has almost doubled across much of the UK this summer, according to Zoopla. The South East has also seen an 8% drop in the four weeks leading up to 23 July, which is almost double the 4.4% average over the past five years. High increases have been recorded in the East of England, where the number jumped from 4% to 7.3%, and the South West, where the number increased from 3.6% to 6.3%. A drop of 3.5% was seen in Greater London, followed by falls of 3.3% in the South West of England and Wales.
I
High mortgage rates hit property sales
A survey of agents and surveyors suggests that high mortgage rates have hit property sales, with a net 44% saying they saw a decline in sales agreed in July. The Royal Institution of Chartered Surveyors poll saw a net 45% of estate agents and surveyors say inquiries from new buyers fell last month, with the report declaring this a “sharp downturn in buyer demand.” Even in 12 months’ time, a net 25% of estate agents believe their deal pipelines will be smaller than they are now. Simon Rubinsohn, the institution’s chief economist, said: “The continued weak reading for the new-buyer inquiries metric is indicative of the challenges facing prospective purchasers against a backdrop of economic uncertainty, rising interest rates and a tougher credit environment.” The poll found that near-term sales expectations “have turned increasingly subdued of late”, while a net 53% of respondents reported a drop in prices last month.
Financial Times The Times
More lenders announce mortgage rate cuts
Halifax and First Direct have announced cuts to their mortgage rates. Halifax is reducing five-year fixed-rate mortgages by up to 0.71 percentage points, and two-year fixed-rate loans will fall by as much as 0.27 percentage points. First Direct has reduced rates across more than 20 of its two-, five-, and 10-year fixed-rate mortgages by up to 0.20 percentage points. NatWest, meanwhile, says it is reducing its fixed rates by up to 0.65 percentage points. Virgin Money has also announced it will be launching a range of cheaper remortgage deals for those wanting to fix their monthly payments. The rate reductions come as inflation eases and swap rates stabilise.
Daily Mail The Guardian The Independent
LENDING CONDITIONS
Higher mortgage rates the ‘new normal’
While a number of banks have recently reduced mortgage rates, experts have warned borrowers that there is unlikely to be a significant decline in rates, with the Bank of England expected to continue increasing its base rate in a bid to bring down inflation. Charlotte Harrison, chief executive of home financing at Skipton Building Society, said there “doesn’t look to be a silver bullet on the horizon” when it comes to higher loan rates, saying the market is pointing toward a “higher interest rate environment for a longer period of time.” Richard Donnell, Zoopla’s executive director, expects mortgages below 5% to make a return to the market later this year, with rates between 4% and 5% set to be “the new normal.” Roland McCormack, director of mortgages at TSB, believes that “the era of very cheap money is gone,” adding: “I think we will see rates hover around where they are, certainly for the rest of the year.”
The Daily Telegraph
ECONOMY
Resilient economy makes rate rises more likely
Calum Muirhead in the Mail on Sunday warns of “more pain” for mortgage holders, with stronger-than-expected economic growth making further interest rate rises more likely. Office for National Statistics data shows that the economy grew by 0.5% in June after a 0.1% decline in May. Figures this week are expected to show that inflation eased to 6.5% in July from 7.9% in June. Despite falling, this remains well above the Bank of England’s 2% target. Mr Muirhead says the data means the Bank has more “wiggle room” to consider further rate rises in a bid to rein in consumer spending and bring down prices. Neil Birrell, chief investment officer at asset management firm Premier Miton, said: “The GDP data gives the Bank of England a headache. They may well have been thinking about pausing interest rate increases soon, but this data will make that more difficult.”
The Mail on Sunday Homebuyers delay plans as interest rates soar
One in five wannabe home owners have delayed their plans as interest rates continue to soar. Among those already with a home loan, 27% have opted to make lump sum repayments to reduce their debt ahead of having to remortgage. And 13% have downsized to reduce their monthly bills, says a survey by Butterfield Mortgages. It comes as official data shows mortgage payments for the average household have soared by a fifth since the Bank of England first began its policy of raising interest rates. The average monthly home loan repayment has risen from £718 in December 2021 to £866 in July, the Office for National Statistics (ONS) said. The sharp rise likely reflects borrowers rolling on to higher rates as well as those rushing to over-pay.
Daily Telegraph Mirror.co.uk
