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    House Price Increase Flat in the last quarter

    House prices in the three months to April were found to be 0.2 per cent lower than in the preceding quarter, the first quarterly decline since November 2012. A drop in prices of 0.1 per cent was recorded on a monthly basis between March and April.

    Of the latest figures, Halifax housing economist Martin Ellis says: “House prices have stagnated over the past three months. The annual rate of growth remained at 3.8 per cent in April, the lowest rate since May 2013.

    “Housing demand appears to have been curbed in recent months due to the deterioration in housing affordability caused by a sustained period of rapid house price growth during 2014-16.

    “Signs of a decline in the pace of job creation, and the beginnings of a squeeze on households’ finances as a result of increasing inflation, may also be constraining the demand for homes.


    “Continuing very low mortgage rates, together with an ongoing acute shortage of properties for sale, should nonetheless underpin house prices over the coming months.”

    Comment


      The Council of Mortgage Lenders warns of worsening arrears by a "Cohort of borrowers"

      The number of mortgages in arrears fell to its lowest quarterly rate on record in Q1, however the CML highlighted that the most serious cases - cases with arrears of over 10% of the mortgage balance - saw an increase to 26,500.

      The overall number of mortgages in arrears fell slightly in the first quarter of 2017, and is down on both the previous quarter and a year ago, according to the CML's figures. There were 92,600 mortgages in arrears, representing 0.84% of all mortgages.

      However it raised concerns that "there is a minority cohort of borrowers for whom arrears are worsening".

      The number of properties taken into possession was 10% down on a year ago (though up on the fourth quarter, reflecting a usual seasonal pattern). In total, 1,900 properties were taken into possession - the eighth successive quarter of a repossession rate of 0.02%.
      In line with the normal trend of recent times, the buy-to-let arrears rate was lower than the owner-occupier arrears rate, but the repossession rate was higher.

      The CML says this is because of the high level of forbearance that lenders typically seek to extend to home-owners to try to enable them to resolve their difficulties and keep their homes wherever possible

      Comment


        http://www.themortgageworks.co.uk/ne...?id=2017-05-15

        We're reducing our minimum Interest Cover Ratio for lower rate tax payers
        Date 15.05.2017
        Since confirmation of the PRA guidance on BTL Underwriting Standards, we've been developing the capability to segment our minimum Interest Cover Ratio (ICR) requirements for higher and lower rate tax payers.
        So, from Wednesday 17 May 2017, we're reducing the minimum ICR from 145% to 125%, for zero and basic rate tax payers.
        But;
        The maximum portfolio size upon completion of the new application is set at three properties (all rental properties are included in this total, including any TMW applications in progress and any unencumbered properties).
        What is it about the 'magic' 3 properties that makes owning more (even unencumbered!) so dangerous for lenders?

        Comment


          Hi Boletus, I suspect they are making the distinction between an "amateur" landlord and " Professional Investor" for whom come August will be subject to more scrutiny by lenders as per the Prudential Regulatory Authority who have made this categorisation. There is no other reason for making this distinction.

          Comment



            Single property landlords hit by BTL tax changes


            The latest report from the National Landlords Association has revealed that single property landlords are finally waking up to the fact they could be pushed in to a higher tax bracket following the introduction of new taxation rules for buy to let.

            The statement comes as recent research from the NLA shows the proportion of single property landlords who anticipate they will be moved up a tax bracket as a result of the changes has almost doubled since the end of 2016.

            Sixteen per cent of landlords with a single property now say the changes will push them into a higher income tax bracket - a rise of seven per cent compared to Q4 2016.

            By the time the changes are fully implemented in 2021 landlords’ mortgage finance costs will count towards their taxable profit. The current average annual mortgage finance costs for a single property landlord is £5,600.

            This means that those currently earning just below the upper limit of the basic income tax threshold of £43,500 could be pushed into the higher bracket of 40%, and therefore exposed to significantly more tax liabilities.

            Individuals who only let out a single property are by far the most prevalent type of landlord, representing approximately 62 per cent of the UK’s landlord population – approximately 1.5 of the estimated 2.3 million. The changes are thought to affect approximately 368,000 homes, with young couples and families potentially at the greatest risk if landlords are forced to sell up as a result.

            The NLA says that any single property landlords forced up a tax bracket would need to increase the rent by more than 11 per cent in order to continue to make a steady yield from the property, which equates to as much as £116 per calendar month more for the average rental property.

            Richard Lambert, Chief Executive Officer at the NLA, said: “Single property landlords are responsible for providing a huge proportion of the UK’s private rented homes, and these findings show that, slowly, more and more are waking up to the fact their tax bills could be significantly higher in the coming years.

            21% of landlords with just one property do not make a profit, and over the next few years those bumped up a tax bracket will find that their ability to continue to provide good quality housing will be seriously affected.

            More and more families and young couples are making their home in the private rented sector because they cannot either access social housing or afford to buy their own home. Affected landlords will have the choice of either increasing rents or selling up – so either way it’s the people they currently home who look likely to suffer the most as a result of this damaging tax change”.

            Comment


              They haven't taken into account the probable raises in the tax threshold to 50K by 2020.

              Comment


                Don't shoot the messenger

                Comment


                  Originally posted by loanarranger View Post
                  Don't shoot the messenger
                  No problem with the messenger! I much appreciate your mortgage news contributions.

                  But speaking of shooting holes, that is exactly what supporters of section 24 will do to this report.

                  There is an excellent case to be made against section 24 and the industry is failing to make it.

                  Osborne and his anti landlord advisors must be laughing up their sleeves.

                  Comment


                    Godiva make a clear indication on how BtL loans will be considered

                    In light of all that is happening amongst BtL lenders, Godiva have issued the following for ease of brokers and clients understanding as to which camp their personal income will place them for rental stress calculations.

                    • If the total gross income of all applicants is less than £40k, the ICR is 125%.
                    • If the total gross income of any applicant is £40k or more, the ICR is 140%.

                    At the same time, we’re making the following changes for Buy to Let mortgages:

                    • removal of minimum income
                    • removal of minimum time in employment

                    Comment


                      Originally posted by loanarranger View Post
                      Godiva make a clear indication on how BtL loans will be considered

                      In light of all that is happening amongst BtL lenders, Godiva have issued the following for ease of brokers and clients understanding as to which camp their personal income will place them for rental stress calculations.

                      • If the total gross income of all applicants is less than £40k, the ICR is 125%.
                      • If the total gross income of any applicant is £40k or more, the ICR is 140%.

                      At the same time, we’re making the following changes for Buy to Let mortgages:

                      • removal of minimum income
                      • removal of minimum time in employment
                      Loanarranger

                      Am I reading this right, Godiva have/are removing the minimum income? If so, when does this come into effect?

                      Many thanks
                      Claymore

                      Comment


                        Hi Claymore
                        The changes according to the briefing notes to intermediaries indicate that they are effective from today. Anything else just ask.

                        Comment


                          That's brilliant news. Thanks LA :-)

                          Comment


                            No problems as always happy to keep everyone abreast of the continual changes within the BtL funding sector.

                            Comment


                              Southern cities see "stark slowdown" in house price growth

                              City level house price growth dropped to 5.3% in April, a significant slowdown from the 8.7% registered in April 2016, according to the latest Hometrack UK Cities House Price Index.
                              In London, house price growth has fallen from 13.0% a year ago to just 3.5% in April 2017.
                              The most unaffordable cities in southern England, such as Bristol, Cambridge, Oxford and London have all seen the rate of growth slow from double to single digits over the last year.

                              Elsewhere, eleven of the twenty cities that form part of the UK Cities Index are registering higher growth than at the same time a year ago. Manchester continues to register the fastest rate of growth at 8.4%, up from 6.3% a year ago. The ratio of sales to new supply in Manchester indicates relatively tight housing market supply which points to continued upward pressure on house prices.

                              Across the Midlands, many cities are registering robust, above average growth including Leicester (7.7%), Birmingham (7.7%) and Nottingham (7.2%). House price inflation in these cities has now surpassed the previously high growth cities such as Bristol and London.
                              By the end of 2017, Hometrack expects house price growth in London to slow further to between 2 and 3%. With the level of inflation increasing this means the capital is set to record a real terms drop in prices over 2017, the first time this has happened since 2011.
                              Richard Donnell, Insight Director at Hometrack, said: “Looking ahead we expect current trends to continue with house price growth losing momentum in cities across southern England. This is due to record high housing affordability and subsequently a large numbers of households being priced out of the market.”
                              “Outside southern England, we anticipate prices will continue to increase over 2017 as households take advantage of record low mortgage rates and an improving economic outlook. On paper there still remains material upside for prices in the Midlands, northern England and Scotland but much depends on how market sentiment is impacted by factors such as the General Election, Brexit negotiations and rising inflation which will create a decline in real wage growth."

                              Comment


                                Loanarranger - your PM's are full up.

                                Comment

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