Tag Archives: Mortgage Advice

Oliver Adair MAB
Dawsons, Mortgages

How will the new loan-to-income cap affect first time buyers?

Increasing house prices, restrictive lending and rising deposits have all been problems faced by first-time buyers in recent years. So, with the new loan-to-income cap now in place, how are newcomers to the market going to be affected?
Here the UK’s leading independent mortgage broker, Mortgage Advice Bureau, reveals how the cap will impact on the currently thriving first time buyer market.
“Recent figures released by the Council of Mortgage Lenders (CML) showed that first-time buyer numbers were at a six-year high, showing that a once impossible market has rebuilt itself to become a competitive arena once again,” said Oliver Adair from Mortgage Advice Bureau.
“Now, thanks to the Mortgage Market Review (MMR), responsible lending is at the forefront of the industry and each lender has been monitoring their affordability limits closely in light of the recovery of the sector.”
Enforced at the beginning of October, the loan-to-income (LTI) cap began when the Bank of England stated that loans over 4.5 times the income of the buyer must account for no more than 15% of a lender’s new lending total.
“Affordability remains the most important factor when assessing a potential borrower and every lender will have its own procedures to carry out to determine how the caps are implemented,” added Oliver.
Despite the added regulatory changes, the number of first time buyers rose by 27% in the first half of this year, and with the Help to Buy scheme, increasing employment levels and growth in higher loan-to-value lending, the confidence in the market may potentially overpower any effects the LTI cap will have in the coming months.
“The effect of the cap on the market and on the first-time buyer arena in particular will continue to be a topic of discussion until the cap has settled and we can see what difference, if any, it will have made,” concluded Oliver.
For further information please contact Oliver on 07917 146 430 or email olivera@mab.org.uk. Alternatively, please visit www.dawsonsproperty.co.uk

 

Chris Hope, Dawsons Senior Director
Dawsons, Mortgages

Nationwide survey settles the debate on buying versus renting

According to a recent estate agency survey, with interest rates still at an all-time low at the moment, buying a property is still cheaper than renting one.

Conducted by Relocation Agent Network, of which independent agent Dawsons is a member, the survey revealed that not only is it cheaper to buy, but you could make significant savings. Relocation Agent Network, a national network of independent estate agents, asked its members whether it was cheaper to buy or rent a property over the course of a calendar year. 87.5% said that it was cheaper to buy.

Christopher Hope, Property Partner from Swansea Relocation Agent Network member Dawsons, said, “This survey shows us that buying really is the preferred option when it comes to making cost savings.”

The national survey also looked at the possible savings you could make when buying a property instead of renting.

Based on a three-bedroom house, members were asked what they estimated the annual saving was from buying a property instead of renting. Over a third (33.85%) stated that it was possible to save up to £1,500 a year by purchasing a three-bedroom house instead of renting.

“At Dawsons, we understand that some people are renting because it’s their favoured method. Whilst others simply can’t get onto the property ladder – the so called ‘trapped tenants’ – but we’re here to help and actively guide all our clients through the buying process. Contact us today to discuss your options.”

Mortgages

Are you prepared for the interest rate rise on your mortgage?

David Treharne
David Treharne

For the first time in five years, industry experts have admitted that there is a growing chance that we will see a base rate rise within the next six months. And, after the vote was declared ‘no’ for Scottish independence, some have suggested that there could even be a rise before the end of this year, though this remains unlikely.

Here the UK’s leading independent mortgage broker, Mortgage Advice Bureau, answers the all-important questions on every homeowner and prospective buyer’s lips, giving you the facts you need to decide what to do with your mortgage before interest rates rise.

With these mixed messages surrounding the rise, borrowers are left wondering what would happen if they were to buy a house or remortgage before the end of the year. Considering whether now is the time to fix or remortgage is a question that many are asking in the midst of current market conditions and with rumours of interest rate rises certain to become a reality.

“The obvious answer to that question depends on your individual circumstances and you should always seek advice from a professional adviser when deciding,” said David Treharne from Mortgage Advice Bureau.

“If you are currently running on tight funds and are on a variable rate, then you may find it difficult to manage with any increased monthly payments when rates rise. Remortgaging to a fixed rate will give you the reliability and peace of mind of having to make the same payment each month.”

Those with a low variable rate however, should consider staying with their current mortgage deal if they are able to afford the effect of some of the rate rises to come.

According to a survey carried out by Principality Building Society, only 48% of homeowners in England and Wales know what interest rate they are paying on their current mortgage.

“Taking this into consideration, it is imperative that you prepare in advance when making the choice on what to do. Find out what mortgage deal you are currently on and what interest rate you are currently paying over how many years. Start this process approximately six months ahead of when you are looking at the possibility of changing, rather than leaving it until the last minute when rates have already increased,” concluded David.

For further information please contact David on 07501 720320 or email davidtr@mab.org.uk. Alternatively, please visit www.dawsonsproperty.co.uk

There will be a fee for mortgage advice, which is dependent on your circumstances. The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.

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Dawsons, Mortgages

South West Wales Estate Agents add expertise to Agents’ Mutual

Leading Estate Agents from across South West Wales are putting their collective weight behind Agents’ Mutual, a new online property portal set to compete with Zoopla and Rightmove.

So far 115 agents (effectively 85% of all agents) including Astleys, Carter Phillips, Clee Tomkinson Francis, Dawsons, John Francis and Fresh, from across the region have committed to join OTM and will be moving away from either Rightmove or Zoopla.

Therefore the new portal will immediately become the carrier showing the most properties in this area. This is a major change and a significant development for those interested in buying or selling property.

Agents’ Mutual is set to launch its UK-wide website with the domain name ‘OnTheMarket.com’ in January 2015 with around 4,000 agencies already recruited.

Unlike its competitors, Agents’ Mutual will be 100% agent owned and there is a consensus among agents that ‘OnTheMarket.com’ will be give their client base more choice.

“This is a chance to support and play an active part to developing what is expected to be, the country’s ‘most complete’ property portal, which doesn’t happen very often and Dawsons along with the majority of Swansea agents have signed up to make sure the public get the best property portal,” said Dawsons Senior Partner Christopher Hope.

“The clear advantage of this portal over others, will be the genuine opportunity for clients to see the largest available choice of homes at the click of a button.”

Nigel Jones, Director at Astleys, is confident ‘OnTheMarket.com’ will present more than adequate competition for Zoopla and Rightmove.

“It will be a website designed by agents for buyers and sellers. There will be no subliminal adverts or distractions just properties. This will give a better user experience to clients and customers. It is also the only property portal to be endorsed by the National Association of Estate Agents,” said Nigel.

“The impact of these portals have revolutionised the way buyers and sellers search for properties but this duopoly exercise too much influence and the market needs a further portal offering a different and clearer message.”

Matthew Wiggall, Director at Fresh, said: “The introduction of ‘OnTheMarket.com’ is hugely exciting and a welcome change for property agents. We at Fresh have been a supporter from an early stage and firmly believe it will quickly become the public’s first choice to search for properties after its launch in January 2015″.

James Phillips, Director at Carter Phillips, and Neil Jones, Business Development Manager at Clee Tompkinson Francis, agree Agents’ Mutual will provide legitimate competition for the other property portals.

“It is great we as agents have come together to create this portal in competition to Rightmove and Zoopla and the plan is that it will become a one-stop-shop for our customers. We need this in the marketplace,” said James.

Neil added:“Agents’ Mutual will provide a property-search service to agents, their clients and the property-seeking public which is not driven by the narrow requirement of maximising returns to shareholders.

“All the profits will be put back to improve the portal or keeping advertising fees as low as possible. That is the key.”

That is a view backed up by Paul Beaton, Director at Astleys. “The site will be run by agents and we feel that will work better for agents not onlyin this part of Wales, but across the country. It gives us more control on the marketing of the site.”

Former CEO of Primelocation, Ian Springett, has been appointed Chief Executive ahead of the portal’s launch.

“We’re delighted that over 100 quality estate and letting agencies across south-west Wales have signed up with us. Their collective support is a resounding vote of confidence and a major boost to our market strength in Wales,” said Ian.

“We’ll be hitting the ground running in South West Wales as soon as we launch in January 2015 and I’m confident that such a strong strategic message of commitment will also serve as yet another tipping point for many other independent firms to join us to create a winning portal that serves all agents across the UK.”

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Dawsons

Becoming an estate agent proves to be the nation’s top career move

As the market continues to gain traction, Dawsons has revealed a new industry focus as the role of an estate agent becomes the nation’s hottest property.

The award winning estate agent has recently recruited five new employees, each of which will take on a ‘Saturday negotiator’ position at one of Dawsons’ 13 branches.

“Welcoming five new members to the team shows a new level of respect for becoming an estate agent. All of our new starters are passionate about pursuing their positions as a long-term career, and for some it can offer the perfect route to getting back to work after having a family,” said Chris Hope, Senior Partner at Dawsons.

Graduate Myles Ellis Thomas is one of the new starters that has recently joined the Dawsons team. After studying law at the University of Leicester, Myles returned to his hometown of Cardiff and applied to Dawsons soon after. As a Welsh and French speaker, the Dawsons team will not only benefit from his legal expertise but also his multi-linguistic talents to reach a wider range of customers.

Myles added: “Despite only being with the company for the past few weeks, I’m really enjoying the training to become proficient with the varied workload aspects that this industry has to offer. No two days are the same, and it’s a great feeling to help find a buyer that special place that they can call home.”

Katie Skilton is a young mum who’s joined Dawsons Morriston office, to be trained as a ‘Saturday negotiator’. ‘I’m delighted to have the chance to get back into work and within a company who offer great career opportunities of full time work when I feel I’m ready’

“As the industry changes and the role of the estate agent enjoys higher respect, myself and the rest of the Dawsons team look forward to watching our company and the wider industry grow and develop further,” concluded Chris.

Oliver Adair MAB
Mortgages

How does the Bank of England’s mortgage lending cap affect you?

In an attempt to try and ‘cool down’ the housing market and its buoyancy, the Bank of England (BOE) and its governor Mark Carney have recently revealed that caps will be imposed on mortgage lending.

Under the new rules, lenders will now not be allowed to lend amounts that are 4.5 times or more above the prospective mortgage borrower’s income if they already have more than 15 per cent of its total mortgages at this level. Here the UK’s leading independent mortgage broker, Mortgage Advice Bureau, unveils how these caps will affect borrowers throughout the UK.

“In reality around 9% of all loans made are at 4.5 times a borrower’s income (or above) so there is still plenty of latitude for those borrowers whose borrowing requirement warrants this and where they satisfy the lender’s affordability model,” said Oliver Adair from Mortgage Advice Bureau.

Due to come into force on 1st October 2014, the new lending caps are just one measure introduced to ensure future affordability amongst borrowers.

“Lenders have already introduced a mortgage stress-test as part of their responsibilities under the recently introduced Mortgage Market Review. The BOE has now gone a stage further whereby a borrower must be able to demonstrate that they could still afford mortgage repayments should rates rise by up to 3%.”

The mortgage income cap is only expected to reduce lending by 2.5%, whilst London and the South East will be hit hardest as currently the ratio of mortgages where more than 4.5 times a borrower’s income is required is 19%.

Oliver added: “Don’t panic, if you were eligible for a mortgage prior to this new measure being introduced, then it is likely that you still will be. Lending volumes will be hardly touched by the plans, and smaller lenders will remain unaffected as Carney has excluded those that lend less than £100m per year – though it must be noted that not all lenders will stretch to the equivalent of a 4.5 times income multiple.”

The same principles apply to Buy-to-Let mortgage lending, which sits outside of these rules, whilst landlords will also remain unaffected.

“It is anticipated that lenders will begin putting the rules into place as soon as possible to prepare. Therefore, it is vital to get advice from a professional mortgage adviser who understands the new rules and which lenders will accept your personal circumstances,” concluded Oliver.

For further information please contact Oliver on 07917 146430 or email olivera@mb.org.uk. Alternatively, please visit www.dawsonsproperty.co.uk

David Treharne
Dawsons, Mortgages

How is the Mortgage Market Review helping you prepare for the future?

With mortgage rates now increasing, both current and prospective homebuyers need to be aware of the increase in their mortgage repayments when interest rates eventually rise.

The Mortgage Market Review (MMR) was officially introduced by the Financial Conduct Authority (FCA) in April to allow lenders to determine a borrower’s affordability. Here the UK’s leading independent mortgage broker, Mortgage Advice Bureau, reveals how the Mortgage Market Review’s stress test could help buyers prepare for the future.

Under the MMR rules, lenders must check that you can afford your repayments both now and in the future, and they do this through processes such as mortgage stress tests. The stress test gives lenders all the information they need regarding your finances, from how much you earn to how much you spend on food, utilities and even leisure.

“With a base rate rise inevitable, the FCA has stated that borrowers must not receive a loan if a bigger mortgage repayment could ‘break’ their finances. You will be extensively checked, with your day-to-day finances and spending coming under intense investigation,” said David Treharne from Mortgage Advice Bureau.

“Research carried out by Experian this month revealed that homebuyers are underestimating what their mortgage repayments could be by as much as £650 if interest rates were to rise. Whilst this may sound like a frightening statistic, this is one of the main reasons why the MMR has been introduced to the market.”

As well as ensuring that a return to irresponsible lending that took place in the run-up to the credit crisis is avoided, the MMR aims to protect borrowers from falling behind on their repayments so doing a check now will prepare you in good time for when rates rise.

When the Bank of England’s Monetary Policy Committee votes to increase the base rate, expectations are that it will be increased in a controlled manner until it reaches between 3-6 per cent to minimise the risk exposure level.

David added: “If a homebuyer was to purchase a £235,000 property and had a combined average household income of £50,674, research by Experian shows that they are claiming they can afford an average mortgage repayment of £780 per month. However, if rates were to increase by 5.5 per cent at the end of a typical two-year fixed deal, the homebuyer could find themselves paying around £1,440 per month!”

As the economy continues to improve, interest rates are inevitably going to rise. This is why it is better that the MMR is letting borrowers know now how much they can afford, rather than a year from now, when it is too late.

“Whilst the MMR continues to look to the future, so should you. Regardless of what measures are taken by the Bank of England and the Government, there is always going to be a risk factor when taking out a mortgage, which is why considering taking out income protection insurance and seeking professional advice should be a serious consideration,” concluded David.

For further information please contact David on 07501 720320 or email davidtr@mab.org.uk. Alternatively, please visit www.dawsonsproperty.co.uk

Oliver Adair MAB
Mortgages

Is now the right time to fix your mortgage?

With lenders steadily lifting the rates on new home loans, it is looking progressively more likely that the record mortgage rates that we have witnessed over the past two years are swiftly becoming a thing of the past. The UK’s leading independent mortgage broker, Mortgage Advice Bureau, reveals why now may be the time to fix.

Whilst the 0.09 per cent increase on a two-year fixed-rate mortgage in April may seem moderately small, it is still evidence of the fastest increase in mortgage rates in a single month since February 2012, according to data released by Moneyfacts.co.uk.

Statistics also showed that the average two-year fixed rate increased on 14 of the 20 business days in April, with the five-year fixed rates quickly following suit.

“If you applied for a two-year fixed mortgage on the 1st April, you would have been offered an average rate of 3.52 per cent. If you went to apply for the same mortgage at the end of April however, that rate would have increased to 3.61 per cent,” said Oliver Adair from Mortgage Advice Bureau.

As a result of rapidly rising house prices and a strong rebound within the economy, mortgage rates are slowly being increased from their record lows, with the anticipation that the Bank of England (BoE) may put the Base Rate up to relieve pressure on the market.

Economy experts however are still undecided on when this change will happen, with some predicting a Base Rate increase in 2015. The speculation has led to increased volatility in the money market swap rates, the cost of funding that directly affects fixed rate mortgages.

Oliver added: “Nationwide reported house price growth of 10.9% year on year in April, yet BoE governor Mark Carney and the Monetary Policy Committee have still kept the Base Rate at its record low of 0.5%. In turn, bank officials maintain that the economy is still too delicate to begin increasing the rates.”

The Mortgage Market Review (MMR), introduced at the end of April, now means that all borrowers looking to take out a mortgage have to go through more thorough checks to ensure that they can afford repayments if an interest rate rise were to occur. Whilst two-year fixed rate mortgages have proved more favourable for borrowers reluctant to take the risk of taking out a tracker mortgage.

“As those fixed deals come to an end and with many lenders offering a cheaper alternative with their own variable rates, many borrowers have moved over to a standard variable rate mortgage. A change in the Base Rate is not the only factor affecting the cost of your mortgage, and with economists still debating on when it will increase, seeking help from a professional mortgage broker is an essential step to securing the right deal,” concluded Oliver.

For further information please contact Oliver on 07917 146430 or email olivera@mab.org.uk. Alternatively, please visit www.dawsonsproperty.co.uk