Latest news with #LucianCook
Scottish Sun
3 days ago
- Business
- Scottish Sun
New mortgage rules could add £19,000 to average house price and help first-time buyers with lower deposits
Scroll down to find out what is happening with mortgage rates HOME LOAN New mortgage rules could add £19,000 to average house price and help first-time buyers with lower deposits NEW mortgage rules could add £19,000 to average house prices and help first-time buyers get on the ladder with lower deposits. Changes to stress testing practices could cause property prices to increase by between 5% and 7.5% over the next five years, claims Savills. 1 House prices could surge by up to 7.5% over the next five years, Savills said Credit: Getty New research by the estate agent also predicts the average deposit needed by a first-time buyer could fall from £58,000 to as little as £45,000 over the same time frame, The Telegraph reports. Lucian Cook, of Savills, said: 'Change would not be immediate, with the impact on house prices and transactions likely to take place over a period of five years. 'But in the medium to long term, the market would feel the knock-on effect of a widening pool of buyers." In March, the FCA reminded lenders they are allowed to tweak their stress testing based on market expectations. It said the market approach to stress testing could be restricting borrowers' access to affordable mortgages. It comes as mortgage interest rates fall, following drops in the Bank of England (BoE) base rate. Stress tests are carried out by lenders to see if borrowers could cope with an uptick in their interest rate or if their income dropped. A host of lenders, including Halifax, Santander and Barclays, have tweaked their stress tests in recent months. Santander said it could allow home buyers to borrow up to £35,000 more. But relaxing stress testing rules, while making it easier for buyers to get a mortgage, could see house prices rise as demand increases. The Sun's James Flanders explains how to find the best deal on your mortgage What is happening with mortgage rates? Mortgage rates have been falling steadily across the UK following a number of Bank of England (BoE) base rate cuts. Trump's "Liberation Day" blitz of tariffs also led to a number of lenders slashing interest rates below 4%. The base rate is the rate the BoE charges to high street banks and lenders when they borrow money. If it goes up, it means mortgage rates tend to rise too, as well as savings rates. When it falls, it sees the opposite happen. The base rate currently sits at 4.25%, having been lowered from 4.5% earlier this month, and down from 5.25% in summer last year. According to the average two-year fixed-rate mortgage is 5.12% today, compared to 5.93% a year ago. The average five-year fixed residential mortgage rate today is 5.09%. This is down from 5.50% a year ago. More base rate cuts are expected this year. It's worth bearing in mind, when your mortgage rate falls is dependent on the type you have. Those on tracker and standard variable rate (SVR) mortgages tend to see their rates fall first. However, if you're on a fixed rate, you won't feel the impact of any rate changes until your deal ends. If you are coming to the end of a fixed deal, most lenders let you lock in a new rate up to six months beforehand, which can be worth doing. If rates fall after you agree a new deal, some lenders will let you sign a new one at a lower rate.
Telegraph
4 days ago
- Business
- Telegraph
New mortgage rule could add £19k to average house price
House prices could increase by 7.5pc more than expected because of changes to mortgage stress tests, research suggests. Relaxed borrowing rules could add as much as £19,425 to the average home worth £260,000 over the next five years, according to analysis by estate agents Savills. This is on top of a predicted 23.4pc increase in house prices by 2029, fuelled by anticipated drops in the Bank Rate and strong buyer demand. The average deposit needed by a first-time buyer is also predicted to fall from £58,000 to as little as £45,000 in that time, relieving pressure on the Bank of Mum and Dad. The average first-time buyer deposit in London has reached six figures, as the chart below shows. Major lenders now allow borrowers to take out mortgages of up to £40,000 more than previously allowed. Lucian Cook, of Savills, said: 'Change would not be immediate, with the impact on house prices and transactions likely to take place over a period of five years. 'But in the medium to long term, the market would feel the knock-on effect of a widening pool of buyers. This will be good news for housing delivery, but it's unlikely to be enough to allow the Government to hit its housebuilding targets.' Savills based its analysis on historical data exploring the relationship between average mortgage loans and market activity. The Government and regulators, including the Financial Conduct Authority (FCA), have been calling for lenders to relax their rules. Following changes to Bank of England guidance in March, lenders relaxed their stress tests – the analysis they undertake before offering customers a mortgage. Santander became the first major bank to relax its rules after the announcement. Lloyds, HSBC, NatWest and Nationwide quickly followed suit. The changes unlocked tens of thousands of pounds of extra borrowing for more first-time buyers. The stress tests were introduced by the FCA in 2015 to prevent another 2008-style market collapse. In 2022, after Liz Truss's notorious mini-Budget, stress tests were made more rigorous, as the Bank Rate climbed. But following cuts to the Bank Rate earlier this year, borrowing is set to get cheaper. At least one more cut is predicted before 2026. Borrowers have had to prove they could afford payments on the lender's standard variable rate (SVR) plus approximately 1pc. But banks can now test based on what they believe their future rates are likely to be. This is just one of a handful of measures being considered to bring more flexibility to the mortgage market. Building societies are lobbying for powers to relax minimum income requirements for customers. The FCA is also looking at making remortgaging easier and shortening loan terms of more than 30 years, to support homeowners already on the property ladder. Emma Reynolds, the City minister, said: 'For too long politicians have ducked and dodged the decisions needed to support homeownership. 'Simplifying responsible lending rules and putting in place a permanent mortgage guarantee scheme shows our commitment to making the dream of owning a home a reality. I will work closely with regulators and industry to get this done quickly and in a way that supports as many people as possible.' Matthew Pennycook, the Housing Minister, added: 'The affordability challenges facing first-time buyers mean that we now have a generation locked out of homeownership. This government is determined to change that, ensuring that young families and hard-working renters can buy a home of their own.'
Business Mayor
22-05-2025
- Business
- Business Mayor
Kensington and Chelsea house prices fall to lowest level since 2013
Stay informed with free updates Simply sign up to the UK house prices myFT Digest — delivered directly to your inbox. House prices in Kensington and Chelsea have fallen to their lowest since 2013, underscoring the underperformance of prime London property due in part to higher property levies, uncertainty over Brexit and non-dom tax changes. The average price in the UK's most expensive borough plunged 15.1 per cent year on year in March to £1.19mn, the lowest since May 2013, according to Financial Times analysis of data from the Office for National Statistics. In the same month, UK house prices rose an annual rate of 6.4 per cent to a record high of £271,000, the fastest annual pace since December 2022. Local housing data is based on a smaller number of transactions, resulting in more volatility and larger revisions, but prices in affluent Kensington and Chelsea have fallen year on year for the past 30 consecutive months and for more than half the time since 2015. In March, house prices were also down in other high-end locations in the UK capital, including Hammersmith and Fulham, and Westminster, which registered annual contractions of 13.2 per cent and 20.1 per cent. In both areas, the decline lasted for at least the past 15 months. Lucian Cook, head of residential research at real estate company Savills, said the 'prolonged bull run' enjoyed by the prime London market 'really changed around 2014' when reforms to stamp duty drastically widened the gap in fees between high-end properties and cheaper ones. Factors including Brexit, the abolition of the non-dom tax regime, the Covid-19 pandemic, increased stamp duty fees on second homes and higher interest rates had since 'played against a market which has essentially been much more dependent upon flows of international wealth than it has necessarily on the cost and availability of domestic mortgage debt', he added. The non-dom regime — which allowed foreign domiciled nationals resident in Britain to earn money from abroad without paying UK tax on it for up to 15 years — was scrapped by chancellor Rachel Reeves last year, after her Conservative predecessor Jeremy Hunt said he would abolish it. The ONS on Wednesday said the end of a temporary stamp duty holiday on April 1 — which took thresholds back to pre-2022 levels — boosted national house prices in March, particularly in the North East, where costs jumped an annual rate of 14.3 per cent. As of last month, first-time buyers will start paying the levy when they buy properties worth £300,000 or more, down from £425,000 during the holiday. Stamp duty on the most expensive properties, which make up the prime London market, remains unchanged. Despite not being adjusted for inflation, house prices in prime London local authorities were down from their mid-2024 levels in March, but up almost 60 per cent in the UK and 33 per cent in London overall. House prices in the capital underperformed the rest of the country during the pandemic, though detached properties in prime locations enjoyed temporary boosts. Stuart Bailey, head of super-prime London sales at real estate group Knight Frank, said it had 'been a 10-year slow ebbing in pricing, because there has been less demand' as stamp duty rose and 'international buyers are thinking about what they want to do'. A 'massive price influx' in the four years to 2014, Bailey added, was 'not sustainable over the longer term' and 'we ended up on a longer downward trend'. Across 21 international prime markets, London and Kuala Lumpur were the only markets to register a fall in property prices in dollar terms over the past decade, according to research by Savills. While the ONS tracks all properties in each London local authority, Savills based its research on only high-end properties. Its analysis of the capital's prime properties in the most expensive local authorities found the average property price in central London was 21.2 per cent down on its June 2014 peak in the first three months of this year — equivalent to a saving of £1.2mn on the typical property, which now costs about £4.6mn. Savills expects house prices in prime central London to contract by 4 per cent this year. Richard Donnell, executive director of property consultancy Houseful, said sustained house price growth in high-end parts of the capital would be 'dependent upon stronger economic growth and increased inward investment into the London economy'. Bailey at Knight Frank said 'sentiments need to improve' for the trend to be reversed. While the capital's long-term stability in terms of politics, personal security and financial stability meant it still had 'allure and attraction' for many international buyers, 'we mustn't be complacent about that', he added.
BBC News
04-05-2025
- Business
- BBC News
Half of first-time buyers helped by Bank of Mum and Dad, says Savills
More than half of first-time buyers received financial help from their family to make house purchases last year, according to estimates by estate agency average of £55,572 was given in loans and gifts by the so-called bank of mum and dad to buyers, it buyers faced relatively high mortgage rates in 2024, while also seeing the cost of renting recently, changes to stamp duty led to a rush of new buyers before the end of March, but greater costs for anyone who missed that deadline. More help, better deal The annual report by Savills suggests that 52% of first-time buyers received assistance from the bank of mum and dad last year, which could also include other donors from the was a slightly lower proportion than the 57% of the previous year, but higher than every other year since assistance peaked in 2009 during the fallout from the financial crisis, when 70% of first-time buyers received help, the estate agency's figures estimated 173,500 first-time buyers received assistance last year, receiving a total of £ findings are based on first-time buyer and average loan-to-value data, as well as how this relates to responses from various surveys about family support. The average rate for all new two and five-year fixed mortgages last year was between 5% and 6%, figures from financial information service Moneyfacts rate would be higher for many first-time buyers unable to offer a large deposit, and much higher than a few years facing that scenario "took advantage of greater family support to try and secure a deal at a lower mortgage rate", according to Lucian Cook, head of residential research at Savills."First-time buyers are still feeling the impact of higher mortgage rates and tougher lending criteria," he said. Many potential first-time buyers have also faced financial strain from the rising cost of living, and particularly from the greater expense of renting, although the latter may have encouraged more to get on to the ladder more annual increase in rent paid to private landlords breached 9% last year, forcing many to live with their parents in their 20s and 30s. Financial assistance varies across the country, as do house prices and average stamp duty, which was primarily levied on buyers in the south of England, changed in buyers of homes bought for more than £300,000 in England and Northern Ireland must now pay stamp duty, compared with the previous threshold of £425, suggests that led to a surge in first-time buyer purchases ahead of the by the Yorkshire Building Society suggests the first three months of this year saw the highest number of first-time buyer applications since the 2022 post-Covid Cook, from Savills, added that the likelihood of regulators allowing lenders to loosen some of their lending criteria could also benefit first-time buyers and their families."[This means] lowering the barrier for entry and allowing first-time buyers to qualify for larger mortgages," he said. "So, although more first-time buyer activity may mean more bank of mum and dad assistance, this is likely to be at a lower average cost per first-time buyer."
Yahoo
28-04-2025
- Business
- Yahoo
Boomer property wealth hits record £2.89 trillion
Baby boomers housing wealth has swelled to a record £2.89 trillion, analysis shows. Research by property firm Savills found that those aged over 60 own 56pc of the nation's owner-occupied homes, while those aged under 35 hold just 6pc. The trend was pinned on the rise in boomers – those born between 1946 and 1964 – becoming mortgage free. In total, properties owned by the over-60s are worth £2.95 trillion – just £60bn of which is outstanding mortgage debt. By comparison, those aged under 35 hold £600bn in property – half of which is mortgage debt. Lucian Cook, head of residential research at Savills, said: 'Over the past 10 years, debt has become a less important component of the growth in the value of the nation's housing stock, with increasingly more equity concentrated among older homeowners and investors. 'The baby boomers have continued to build wealth, having paid off their mortgage debt, and Generation X has been working hard to achieve the same goal. 'Meanwhile, Generations Y and Z have had much less opportunity to work their way up the housing ladder profitably.' It comes as boomers face increasing pressure to downsize to free up homes for young families. Last month, Tony Blair's think tank called for larger properties to be taxed more to encourage owners to downsize. Researchers at the Tony Blair Institute proposed that the council tax system – in which bills are based on the property's value in April 1991 – is ripped up and replaced with a levy set at 0.5pc of the home's current value. Thomas Smith, the institute's director of economic policy, said the move would 'incentivise homeowners in larger, under-occupied properties to downsize, improving housing market fluidity and supporting economic mobility'. Nearly 10 million homes in England had at least two unused bedrooms last year, according to the English Housing Survey, with pensioners accounting for the largest share of these homeowners. However, David Forsdyke, of Knight Frank Finance, said older homeowners tend to be 'asset rich, but cash poor', and that their pensions sometimes do not cover their living expenses. Figures published this week by the Equity Release Council found that the amount of money extracted from the value of homes rose by roughly a third in the three months to March, compared to last year. Mr Forsdyke said: 'Older homeowners are borrowing more to cover their cost of living, which has risen sharply in the past five years. 'Equity release offers a solution whereby they can draw down small amounts to top up their income. Others simply borrow to gift money to their children or grandchildren.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Sign in to access your portfolio
