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Is the property market set for another buy-to-let boom? Landlord mortgages soared by a fifth in 2012

  • £16.4bn lent to investors in 2012 - 19% higher than the previous year
  • 136,900 BTL mortgages agreed last year - almost 50,000 higher than 2009
  • 'Buy-to-let is only going to grow in popularity as mortgage rates become increasingly competitive,' says expert
Signs emerged today that the UK property market could be on the way to a new buy-to-let boom, as landlord mortgages were shown to have soared a fifth in 2012. Last year, £16.4billion was lent to buy-to-let investors – a figure 19 per cent higher than the £13.8billion advanced in 2011, according to statistics released this morning by the Council of Mortgage Lenders (CML). This is the strongest level since of lending to investors since 2008. Buy-to-let lending accounted for 11.5 per cent of the total mortgage market last year, up from 9.8 per cent in 2011.
Buy-to-let: Lending is starting to steadily grow after falling dramatically in 2009

Buy-to-let: Lending is starting to steadily grow after falling dramatically in 2009

The CML data revealed 136,900 buy-to-let mortgages were agreed last year – half of which were remortgages. However, this is less than half the number in 2007 when 346,000 mortgages were advanced. It still indicates growth in the market, however: in 2009, buy-to-let levels had tumbled to just 88,400 mortgages. On a quarterly basis, there were 36,700 buy-to-let loans worth £4.6billion advanced in October to December. This figure is up from 34,300 loans worth £4.2billion between July and September, and 34,200 loans worth £3.9billion in the same period of 2011, showing stronger growth towards to the tail-end of the year. The total number of buy-to-let mortgages outstanding at the end of 2012 stood at 1,445,300, accounting for 13 per cent of all mortgages. Lenders typically required a minimum 25 per cent deposit on buy-to-let loans throughout 2012, with an average minimum rental cover requirement of 125 per cent. Paul Smee, director general of CML, said: ‘Buy-to-let is benefiting from strong tenant demand, which is likely to continue. Loan performance compares favourably with the owner-occupier sector, and the overall outlook for the buy-to-let sector is positive. ‘Landlords who can demonstrate a strong track record are in a good position to expand their portfolios.’ In terms of loan performance, 1.14 per cent of buy-to-let loans ended the year in arrears of more than three months, compared with 2.03 per cent of owner-occupier loans. On the other hand, the annual repossession rate at 0.48 per cent was higher than the equivalent owner-occupier rate of 0.27 per cent, reflecting the different considerations involved in the two sectors.

Lending boom: There were 136,900 advanced buy-to-let mortgages last year - this figure had dipped to 88,400 in 2009

Lending boom: There were 136,900 advanced buy-to-let mortgages last year - this figure had dipped to 88,400 in 2009

Buy-to-let mortgage rates continue to tumble

Buy-to-let fixed mortgage rates have tumbled to levels last seen in 2007, as the Funding for Lending Scheme continues to boost landlords. The average buy-to-let fixed mortgage rate is now 4.69 per cent. One year ago it was 5.04 per cent and three years ago it was 5.77 per cent. And increasing numbers of people are now renting a property as they struggle to raise a deposit and get on the ladder.

BUY-TO-LET FIGURES

How many buy-to-let mortgages advanced in the last ten years:

2002 - 130,000
2003 - 187,600
2004 - 226,000
2005 - 223,100
2006 - 319,200
2007 - 346,000
2008 - 225,300
2009 - 88,400
2010 - 92,200
2011 - 121,500
2012 - 136,900

A knock-on effect of the mortgage drought that followed the banking crisis of 2008 was that fewer people could borrow to buy and had to rent instead. This has increased tenant demand and pushed up rents. According to the latest Census figures, the proportion of British households renting has increased in the past decade from 31 per cent to 36 per cent. At the same time, the average monthly rental price has risen from £660 to £734 in just three years, according to LSL Property Services – this figure is even higher in the South East. At the same time house prices have remained steady. Jonathan Harris, director of mortgage broker Anderson Harris, said: 'It is no surprise that the sector continues with its strong performance. As would-be first-time buyers continue to struggle to get on the housing ladder, more people are turning to renting. ‘This is pushing up rents, making the sector increasingly attractive to investors. With more buy-to-let deals available, rates are increasingly competitive although criteria remain tighter than before the downturn and are not easing significantly. 'While capital growth on investment properties is likely to remain subdued for some time to come, income is strong and returns favourable when compared with other investments. Buy-to-let is only going to grow in popularity as mortgage rates become increasingly competitive. 'However, while the private rental sector becomes increasingly important to the provision of housing in the UK, it has a long way to go to reach the 2007 peak of the market, reflecting the continued caution of lenders and investors alike.'

The opinions expressed are those of the author and are not held by 0131 Auction unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.

Why house sellers are deluded

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Below is a typical buyers take on the property market today...
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Stubborn sellers are part of the reason the housing market is so slow

We've tried to buy three houses lately, and three times the seller has been unwilling to meet our offers. “We have advised them that it’s a good offer, but they still aren’t keen to drop the price any further,” explained the estate agent. “I’m sorry, the seller won’t budge any further on the price,” sighed another. “The vendor says they are delighted to accept your offer, as long as you can pay an additional £6,000 for fixtures and fittings,” said a third, before telling me it “certainly isn’t tax evasion”. Each offer was the result of careful assessment, using all the tools at our disposal. We’ve been looking for a new home for two months now and it’s starting to look like we’ll never find one. Or at least, never find one at the right price.

The peak

It must be hard to accept that your property is worth less than it was. I know it was hard for us. We bought our little starter home at the peak of the property boom and then watched tens of thousands of pounds fall off the value. Property sellers right now need to get real. Since the peak of the market, property prices have fallen by a painful amount. Figures compiled by Nationwide show that a property worth £162,722 today was worth £184,131 in 2007. Factor in inflation and that’s a ‘real’ comparable peak price of £212,887. That’s quite a drop in value and it’s bound to be hard to accept. But if sellers won’t admit that their property value has fallen then that’s another drag, slowing down the housing market. It’s not just that new buyers and second-steppers can’t afford to stump up inflated prices - although why should they? Lenders demand a valuation of a property before approving a mortgage. If the price is too high then this can mean holdups and even cause sales to fall through.

Finding the price

We’re not making unrealistically low offers on the houses we’ve considered. I’m confident that every offer we’ve made has been at around the right price – and the estate agents I’ve spoken to have agreed. We’ve checked comparable property sales within the area using the website Zoopla, which also gave us an estimated value. We had been using the site UpMyStreet to learn about local schools and neighbours, but that has since been sold to Zoopla. On top of that, we checked out crime in the area using UKCrimeStats.com. Then we used the Rightmove price comparison tool to see how the asking prices compared to other properties for sale in the area. It was the comparison tool that really opened our eyes. We saw two properties needing at least £20,000 of modernisation that were on the market at the same price as modern and beautifully decorated homes. Because we’d concentrated our search on one area, we could easily compare and see just how inflated these asking prices were. It was also shocking to see just how little effort some sellers were going to, despite their high asking prices. In one home, a teenage girl didn’t bother getting out of bed to let us view the room. It might be a buyer’s market but no one seems to have told many of the sellers in this town.

Is the message getting through?

Maybe sellers are becoming more realistic. The most recent data from Rightmove shows that new sellers failed to raise their asking prices in May. That’s the first time that’s happened since the website began measuring house market statistics more than a decade ago. Miles Shipside, director of Rightmove said that prices normally rose in May, as the market picks up. “Perhaps the first-time buyer stamp duty holiday, and the knock-on activity it helped to create, has concertinaed the market’s stronger than expected early spring momentum into the first four months of the year rather than the usual six.” He also suggested that the wet May will have been keeping would-be buyers at home, while a summer of sports and Jubilee celebrations could serve as a distraction over the next few months. So if you’re planning to put your property on the market in the near future, be aware that it’s still a very tough market. Make sure you understand the real value of your home and that you’re not living in the past. Using the tools above lets you see what information potential buyers will consider when suggesting a price. If you think your property is worth more than these tools suggest, then make sure people understand where the extra value is coming from. Highlight the bigger garden or the extension or the brand new kitchen – or whatever it is that makes your home worth more. And remember, the key to selling a house is to make it easy for the potential buyer to imagine themselves living there. So please, kick your teenagers out of bed before anyone looks round.

Offer accepted

Since writing this article, one of the houses we made an offer for came back to us and grudgingly accepted our top price. With any luck we’ll be moving by the end of the summer. The reason the seller was able to accept our price was that they used our lower-than-expected offer to negotiate down the price on the property they wanted to buy. So, we get the price we can afford and they don’t lose out as they upsize. Admittedly someone somewhere along the chain is going to take the hit, but I don’t see why it should be us. Our current home has lost a lot of its value and we’re hardly in a position to overpay for our next. There’s certainly one lesson to learn here. If you’re selling a house and the only offers you’re receiving are lower than you want, then you need to drive an equally hard bargain when you come to buy your next home.
The opinions expressed are those of the author and are not held by 0131 Auction unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.

Where next for mortgage rates?

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Mortgage rates have been pushed up by the lack of competition in the market. That means that as SVR hikes have arrived and more borrowers have been pushed to remortgage, lenders have raised prices to both take advantage and try and limit the new business coming to them. Fixed mortgage rates have risen the most; tracker mortgage rates sit slightly higher than they had been but are back to being considerably lower.

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Interest rates and the money markets

Economists now forecast the first hike from the record low 0.5% base rate may come as late as January 2016 - that has been pushed back from the end of 2014 earlier this month.

After this, base rate is expected to rise slowly and gradually, as the Bank of England fears damaging the weak recovery.

That revision of how soon rates will rise has led money market swap rates - which influence fixed rate mortgage costs - to slip back.

Five-year swaps plummeted from 3.07 per cent on 5 April 2011 to 1.99% at the start of August 2011 and are now at 1.50 per cent (10 May 2012) having hit a low of 1.47 per cent at the start of February.

Economic gloom means interest rates are likely to stay low for longer.

The eurozone debt crisis has taken a dramatic turn for the worse, with talk of Greece falling out of the currency and the uncertainty and potential hit to their balance sheets scares banks.

That crisis and the drop in official CPI inflation to 3 per cent, reported on 22 May, has pushed back rate rise expectations to now stand at the first BoE raise coming in 2016.

But the base rate does not really drive new mortgage rates anymore.

A number of things influence mortgage rates: the price of funding on the wholesale money markets, the cost of getting funds in from savers and also the amount of capital regulators demand banks hold against their loans.

While the Bank of England base rate has remained at a rock bottom 0.5 per cent, banks and building societies must pay about 3 per cent rate to attract new cash from easy access savers, and last year saw the benchmark money market cost of variable rate funding LIBOR rise as the eurozone debt crisis sent everyone running for cover.

The financial authorities are also tightening up on how much capital banks must hold, thus raising funding costs.

However, while all this means that lenders are telling the truth when they say that the cost of funding mortgages has risen, crucially they are also opting to maintain their healthy profit margins and squeeze borrowers to cover their extra costs.

Until competition returns to the mortgage market lenders will hold all the cards and rates will be twitchy. It is likely that they could fall back again if a bit of confidence returns, but borrowers angling for a new mortgage may like to consider snapping a deal up, if they feel they will be disappointed if rates head north.

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Should you get a new mortgage? And what to get?

Certainly, those on standard variable rates of 4 per cent or higher with reasonable equity in their home should seriously consider moving to a fee-free, early repayment charge free, life-time tracker. This could shave money off their monthly repayments - or leave them equal - and ensure their rate will only rise when base rate does.

Some could grab a fix and pay less than they are now, or just slightly more. If you are on an SVR you should seriously think about moving, unless you have a Nationwide / C&G-style guarantee capping it at a certain level above base rate.

Recent events have highlighted the vulnerability of standard variable rates and discount rates linked to them, with mortgage giant Halifax raising its SVR, along with Bank of Ireland, Co-op and Clydesdale/Yorkshire Banks. RBS also raised rates for 200,000 borrowers with Offset and One Account mortgages. Unlike standard variable rates, which are at the mercy of bank's whims, trackers will only move up if the base rate rises.)

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Why fix for five years or track for life?

At This is Money we favour five-year fixes and lifetime trackers over two or three year deals. The first give a good rate and security over a medium term period for those who want it, the second should allow borrowers to leave without incurring early repayment charges.

By contrast two or three year deals have slightly lower rates but will incur more remortgage fees and require borrowers to be looking around for a new mortgage just as rates may be starting to rise.

For now a decent gap between a top five-year fix and a best lifetime tracker remains: with decent equity or deposits the former can be had below 4 per cent and the latter at about 3 per cent. That gap is the price of security and on a £150,000 25-year repayment mortgage it equates to £80 per month.

Despite recent rises, these five-year fixes are cheap money locked in for a decent term and very tempting, but make sure you read the smallprint and compare costs including fees to see what is best for you.
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Safety first or take a gamble

Locked in: Borrowers are seeing five-year fixed rates cut

The appeal of a five-year fix to both buyers and remortgagers is the longer term security it gives and that there is no need to remortgage in a short period of time, when rates are likely to be higher.

Homeowners should check that deals they are looking at are portable, and can therefore go with them if they move home.

Never forget the pay rate on trackers will rise when the base rate does.

The bigger margin on fixed rates meansthat borrowers willing to take a gamble on rates rising slowly arebeing tempted by tracker rate mortgages.

Those happy to take a punt onrates rising slowly can save money over time by opting for a tracker,but they need to be comfortable with the risk of higher payments andfactor in a decent safety margin when working out future mortgagecosts.
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Big fees vs rates

The best rates require big fees, but in most instances, fee-free or low-fee options are available and that highlights how vital it is for borrowers to work out if a big fee-low rate mortgage is worth it for them.

Typically, the bigger your mortgage the more worthwhile it is paying a large fee, although watch out for those that are a percentage of your loan.

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Will rates go lower?

The problem for borrowers in recent years is that they don't know when mortgage rates will hit the bottom.

It looks now as if we have already seen this last autumn and now rates have jumped sharply again, but a similar leap in costs was seen in winter 2011 and rates then headed back lower through late summer.

Lenders certainly have room to push rates down further if they had more money to lend, but there is no guarantee that they will do so though and many are likely to use chunky margins to rebuild balance sheets.

Borrowers need to be aware that in these repeated financial crisis days there is something else factored in to mortgage rates: risk.

Lenders are boosting rates to cover their fear of bad debts and the financial authorities' demands that they cover themselves adequately.That fear factor will remain for years to come, so don't expect a return to the easy credit days before 2007.
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A brief guide to what decides rates

Mortgage rates and savings rates are part of a complex financial web that draws on official lending costs, ie base rate, money market funding costs, and competition for savers' deposits.

The traditional influence on fixed rate mortgages over the past decade has been swap rates, the cost of obtaining fixed term funding on the money markets for lenders.

Meanwhile, the traditional influence on tracker rates over the same period has been Libor, the cost of floating rate funding on the money markets.

Banks use savings deposits to fundmortgages as well as money market borrowing, while building societiesare heavily limited in how much of the latter they can use.

This means fixed savings rates arealso influenced by swap rates, while instant access savings areinfluenced by variable interest costs - base rate and Libor.

Typically money market costs have tended to move in line with the Bank ofEngland's base rate, with Libor about 0.1 per cent above it and swaprates reflecting what the market thinks interest rates will be over aset period of time, ie two years, five years etc.

The credit crunch put paid to this relationship temporarily, but things then returned almost back to normal. However, Libor has risen once more, from its level at about 0.8 per cent, as the Eurozone debt crisis has deepened and was at just above 1.00% on 22 May 2012, having fallen back from almost 1.09 per cent.
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Swap rates stood at 1.27 per cent over two years and 1.50 per cent over five years on 22 May 2012 - compared to 1.22 per cent over two years and 1.55 per cent over five years, on 7 March 2012.

Generally, a rise in Libor orswap rates will push up mortgage costs and a fall will allow lenders tocut them.

However, at the moment mortgage lenders' levels of confidenceand their access to funding are equally important to rates, this hasmanifested itself in demands for big deposits and high margins onmortgages above money market rates

If confidence increases, inthe economy, the banking sector and the outlook for house prices,lenders will find it easier to raise funding and borrowers can expectrates to come down and deposit requirements to ease.

This would ironically be bad news for savers, even if base rate rose slightly, as the unfreezing of the money markets would make their deposits less important to lenders - leading to worse rates being offered.


Choosing a mortgage - the essential quick guide

Mortgages are still being rationed - but you can get them

The problem is that rates are being used not just to make money but also to ration mortgages - most lenders could not cope with the demand that offering say 3 per cent over five years to those with a 25 per cent deposit would bring. If you are in the position of needing to fix, remember if you have a 25 per cent deposit or equity, despite the doom and gloom, now is not a bad time to be looking for a mortgage. After all, any rates below 5 per cent are historically cheap.

How big a deposit do I need?
To get the full choice of deals raising a decent deposit is still vital. The benchmark figure is 25 per cent, if you have this then you'll be getting close to the best rates, although for an absolute cheapest deal you're still likely to need 40 per cent. However, things are looking up for homemovers and first-time buyers who can't raise that hefty quarter of a property's value. A selection of better deals for 15 per cent deposits are available and even the 10 per cent deposit market is looking perkier. The most consistent rates in recent times come from YBS, First Direct, HSBC, the Co-op / Britannia and the Post Office. Check them out if you are searching for a mortgage.

Should I take a fixed rate?

Borrowers face a tough decision on this, as fixed rates still remain comparatively expensive by comparison with tracker deals. That leaves the big question: when will interest rates rise? The consensus is that there will be no dramatic sudden increases- markets forecast the first rate rise for late 2013/early 2014. However, these forecasts are no guarantee that rates won't rise and when rates rise trackers will get more expensive. [Remember almost no one forecast base rate heading down to 0.5 per cent]. Borrowers needing security should consider the extra cost of a fix as worthwhile. If you are taking a tracker because you couldn't afford the equivalent fixed rate then you are putting yourself in a very dangerous position or those remortgaging, or buying and able to take their mortgage with them, if you don't need to act right now, i.e. you are on an existing low tracker rate or guaranteed standard variable rate, it might be worth keeping your cheap deal - but remember you are taking a punt on low rates and setting aside some savings that you make is a wise move.

Should I take a tracker rate?

Tracker rates look good right now. They are substantially cheaper than fixes and have surged in popularity, but they should come with a massive warning sign attached, as essentially they are a gamble. What looks like a bargain rate now, could soon get very expensive when interest rates rise. Even the best trackers are at about 2 per cent above base rate. That's fine when base rate is 0.5 per cent, but a whole a lot more expensive if it rises to just 2.5 per cent, which would still be a historically low level. Anyone considering a tracker needs to make sure they are not just storing up a problem for the future. If the tracker comes with an early redemption penalty that would make it expensive to jump ship, then make sure your finances could take a rise of at least 2 per cent to 3 per cent in interest rates. Of course, that may not happen. Inflation may subside, the UK may remain mired in economic gloom and rates may stay below 1% for many years to come. If that happens a tracker looks a good bet, but just to reiterate - it is a gamble. For that reason we at This is Money like tracker deals that fit into one of these three categories: no early redemption penalties, a cap to how high the rate will go, or that let you jump ship for a fixed rate if rates rise.

Nationwide first time buyers affordability graph, January 2012

Catch 22: As a percentage of salary the mortgage costs for owning a first home are near the lowest they had been for ten years - but most first-time buyers remain locked out by big deposit demands.

Will my lender hike my standard variable rate?

A number of mortgage borrowers have fallen victim to lenders hiking their standard variable rates, despite the base rate remaining stable. Halifax became the biggest name to do this when it announced it was bumping its SVR from 3.5 per cent to 3.99 per cent. Some RBS and NatWest borrowers have also suffered a recent SVR hike, as have Co-op, Clydesdale and Yorkshire Bank customers and Bank of Ireland borrowers. Skipton Building Society did it too when its SVR soared from 3.5 per cent to 4.95 per cent. It had previously pledged its SVR would never be more than 3 per cent above base rate and had reduced it accordingly as the Bank of England cut rates. To change its SVR, Skipton had to cite 'exceptional circumstances'. A number of small building societies, including Marsden, Scottish, Cambidge, Kent Reliance and Accord Mortgages, have also raised SVRs since the base rate hit rock bottom. Other lenders like Nationwide have introduced a new SVR - it has a new one at 3.99 per cent, instead of 2.5 per cent, for new borrowers and those remortgaging. Borrowers with smaller societies or lenders shut to new business are most at risk of seeing SVRs raised. Previously it was thought that those with larger societies or banks should be safe but the Halifax and RBS moves put paid to that view. Never forget than without a Nationwide-style base rate lock guarantee, your SVR could be hiked at any time, as could a discount rate linked to it.

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The opinions expressed are those of the author and are not held by 0131 Auction unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.

One million homeowners hit by £660 a year mortgage rate rise today... and there's more pain on the way

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  • 850,000 Halifax borrowers will see mortgage repayments rise by up to £55 a month
  • Others lenders set to follow suit in coming months
  • Rises due to difficulties borrowing from European money markets caused by financial crisis
  • Hike in interest rates expected to add £300m to UK mortgage repayments over course of 2012
  • Council of Mortgage Lenders say repossessions set to rise by 22 per cent
Homeowners will be hit by rises of up to £660 a year today as Britain's biggest mortgage lender blamed the European financial crisis for a hike in rates.

Halifax is raising its rate of borrowing by 0.49 of a per cent, meaning 850,000 borrowers will have to find up to an additional £55 a month on a typical £200,000 property.

Three other lenders, Co-operative, Clydesdale/Yorkshire and One Account will also raise interest rates today by between 0.25 and 0.5 of a per cent which will hit a further 184,000 borrowers in the pocket.

The Bank of Ireland is due to increase its rate by 1.5 per cent in the coming months.

Troubling times: Britain's biggest mortgage lender Halifax will push up borrowing rates today which will affect 184,000 borrowers

The hike in interest rates is a result of Europe's worsening financial crisis which has made borrowing from money markets more costly for lenders who are passing those costs on to high street borrowers.

Although the Bank of England kept the interest rate at a record low of 0.5 per cent in April, for the 38th consecutive month, lenders such as Halifax are increasing Standard Variable Rates (SVR) on home loans.
And today's hikes are just the start of the bad news for borrowers with other banks and building societies expected to hike up their own interest rates in the coming months.

According to a study by the consumer magazine Which? three out of every four mortgage-holders questioned said they would be affected if their repayments rose by £50 a month, with 41 per cent saying they would need to cut back on regular spending and 11 per cent claiming it would mean they did not have enough for essentials.

The study also suggested that a monthly increase in repayments of just £100 would place one in ten (11 per cent) at risk of seeing their property repossessed.

The Government has a 39 per cent share in Lloyds Banking group, which owns Halifax, and it also has an 82 per cent stake in the Royal Bank of Scotland which owns Natwest.

Big dipper: How mortgage rates have fallen over the past five years. (Source RICS)

Big dipper: How rates for fixed, tracker and standard variable mortgage customers fell in the previous five years (source RICS)

The increase will push up the total mortgage bill for the UK by £300million a year and charities such as Shelter have raised concerns that it could spark a spiral of debt.

The Council of Mortgage Lenders is anticipating repossessions to rise by 22 per cent during the remainder of this year.

Which? chief executive, Peter Vicary-Smith advised anyone who was struggling with repayments to speak to their lender immediately.

He added: 'It is encouraging that a third of people we spoke to had approached their lender, but, worryingly, in one in five cases, they said their lenders offered no help at all.

'This is just not good enough and we want to see banks do more to help their customers who are struggling.'

The majority of the borrowing hikes affect standard and variable rates - the rates that borrowers move on to when their initial discounted fixed rate deal expires.

Around six million people in the UK are thought to be on SVR mortgages.

Mortgage brokers anticipate that small and medium-sized lenders will be the next group to push up interest rates.

As bigger lenders turn to High Street depositors to raise funds instead of the money markets smaller building societies have to pay more to attract savers.

Rates rise: Mortgage brokers anticipate that small and medium-sized lenders will be the next group to push up interest rates

Brokers also predict that other lenders such as First Direct, HSBC and ING Direct will be tempted to push up rates from their current levels of between 3.5 and 3.94 per cent to benefit from the fluctuating conditions.

New borrowers have not escaped, with mortgage rates for the average two-year fixed mortgage increasing from 4.27 per cent to 4.66 per cent since the beginning of January. Arrangement fees are also at a record high at an average of £1,439.

Those who are unable to switch to cheaper deals because their properties have fallen in value or they fail to meet strict lending criteria, the so-called mortgage prisoners are worst hit.

The Financial Services Authority anticipates that nearly half of all borrowers who have taken out mortgages since 2005 will potentially be affected.
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The opinions expressed are those of the author and are not held by 0131 Auction unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.
How To Be A First-Time Buyer
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While the first-time buyer has every reason to feel aggrieved with the perceived difficulties of getting on the property ladder, some rays of light have appeared recently. It is important not to get sucked in to the "mortgages are not available" syndrome as the reality is very different. There are more lenders and products available, especially at higher loan-to-values (LTVs) than there were last year, while mortgage rates are still at historically low levels.
Proper preparation
Preparing for a mortgage starts early so make sure your documentation is in order. Lenders like to see:
  • your last three years' address history, with no gaps
  • your last three months' payslips and your last P60 form or three years' accounts
  • your last three months' bank statements
  • full details of any loans or credit cards you have
Providing this information on day one can speed up the process no end. All lenders want to make sure they are lending money to someone who is highly likely to pay it back. So it may be worth checking your credit score with a company like Experian or Equifax. Simple things like paying all your credit cards on time and making sure you are on the voters' roll at your current address will help.
Deposit
The popular belief is that unless you have a massive deposit you will struggle to get a mortgage. The amount you can borrow depends largely on your individual circumstances. However, according to the financial information service Moneyfacts, there are now 49 mortgages requiring a deposit of at least 5% of the property value, compared with just 24 last year. Meanwhile the number of 90% mortgages has increased from 214 to 343 in the past year. These products are often cheaper than they were several years ago, and work out similar to average rental payments - if not less for those in major cities.
How much to borrow?
Many lenders now work on affordability models, which means they will look at all your income, outgoings, age, number of dependants and other factors. Therefore the amount you can borrow depends largely on your individual circumstances. In some instances you can borrow a maximum of five times your single or joint income, but if you have a family or large outgoings, this could be considerably less. The standard amount tends to be about four times your income. A simple monthly budget planner detailing all your monthly spending now, and what you expect to pay when a property owner, is worth its weight in gold. Work out what you really are prepared to "sacrifice" in order to own your own home so there are no surprises, and stick to the budget you are comfortable with.
Property
When buying a property to live in, the primary concern is that it is within your budget and will be a suitable home for you. You should only consider an interest-only loan if you have a viable way of repaying the loan. The view that buying a property is as much an investment as a home looks outdated. House prices are unlikely to rise much in the near future, which is actually a good thing as it makes climbing that tricky housing ladder all the more practical. Lenders' foremost concern when looking at the security they are lending against is: "Would this be easy to re-sell?" That means, is there good demand in the area and is the property in a good condition? It is a good principle for you to apply when looking at buying your first time.
Agreement in principle
To make sure you have the best chance of buying a home, securing a mortgage "agreement in principle" (AIP) first is a good start. This confirms in writing how much a lender will be prepared to lend you, subject to them checking the information given to them. This AIP can then be used to confirm to the vendor your creditworthiness, and that you are a serious bidder. Spending some time researching the different mortgages is time well spent. Information can be obtained by visiting your bank or online comparison websites, but remember these avenues rarely give you advice unless you specifically ask for it. A visit to an independent mortgage broker can help make sense of the vast array of choices and help avoid costly mistakes.
Repayment or interest-only?
Perhaps the biggest change in recent weeks is the way that lenders view interest-only mortgages. For those looking to borrow more than 75% of the value of the property, this is now no longer an option for almost all lenders. Therefore a repayment mortgage will be the only way to proceed. You should only consider an interest-only loan if you have a viable way of repaying the loan, such as savings, ISAs, investments or the ability to trade down to a cheaper property in the future.
Sharing the cost
For those who are unable to borrow the amount they need or are struggling with deposits, you may need to turn to the "Bank of Mum and Dad". There are schemes available which allow parents to act as guarantors on the loan, or to deposit savings with a lender which act as an "insurance" against higher loan-to-value borrowings. Alternatively, purchasing with a friend or two may let you pool your resources and initially can work very well. The issue comes if one of the parties then wishes to move on at a different time to the others. It is important to take legal advice before you enter into such a transaction.
Shared ownership
There are also schemes and initiatives involving shared ownership. This involves housing associations allowing you to buy a percentage share of the property, say 50%, while paying rent on the balance.This brings the deposit required down dramatically. The remaining share can be bought later, when affordable, in stages known as staircasing. For those looking at purchasing a newly built property, there is also the government Homebuy scheme. Under this, if you qualify, there are two options:
  • Receive an equity loan - you get a loan towards the home's purchase price that has no fees for five years
  • Shared ownership - you buy a share of your home and pay rent on the remaining share
You will need to take out a mortgage to pay for your share of the home's purchase price. In summary, while lenders are undoubtedly being choosy at present, for the average buyer there is still a lot of choice, especially for the buyer who takes a little advice and time to prepare.
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The opinions expressed are those of the author and are not held by 0131 Auction unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.

UK house prices 'will hit all-time high by 2015' with average prices climbing by 14%

The price of an average house will rise 14 per cent over the next four years, reaching the highest ever recorded in Britain, a report will say today.

Respected analysts the Centre for Economics and Business Research predict the typical home will be worth more than £200,000 by 2015, up from its current £176,000.

While the expected rise is still likely to be below inflation, the positive news will come as a relief to homeowners, many of whom have been left in negative equity as the value of their properties collapsed since the recession. Average house prices peaked at £191,200 in 1997.

Confidence in the housing market has been falling but prices are predicted to rise

Forecast: Confidence in the housing market has been falling but prices are predicted to rise

Douglas McWilliams, CEBR chief executive, said the chronic lack of homes for sale is one of the main reasons that prices will start rising again. He said: ‘We do not expect a house price boom, but the housing shortage is likely to push prices gently upwards.’

In a further boost for homeowners, the CEBR believes the Bank of England will keep the base rate low for several more years. It was cut to 0.5 per cent in March 2009, slashing the cost of mortgages for millions. Mr McWilliams predicts the base rate is ‘unlikely to rise above 2 per cent before 2015’.

But the positive news came as the Council of Mortgage Lenders said that gross lending last month was just £12.6billion, the lowest monthly total in July since 2000.

Average UK house prices

Average UK house prices

Peter Rollings, chief executive of estate agents Marsh & Parsons, said: ‘Lending remains a world away from the level we need to see for the national housing market to pick up steam again.’

He added that would-be buyers were being ‘thwarted’ by ‘overly strict criteria’ which dictate that only those with large deposits get the cheap deals.

The high cost of a home has had a knock-on effect on the rental market as more and more people cannot afford to buy.

Would-be buyers are thwarted as only those with large deposits get the cheap deals

Frustration: Would-be buyers are thwarted as only those with large deposits get the cheap deals

A report from LSL Property Services, the country’s biggest chain of letting agents, said rents have reached an all-time high, with a typical tenant paying £705 a month.

In London, the situation is even worse, with the average rent reaching more than £1,000.
Rents are rising far faster than wages. The latest figures show the average pay rise is just 2 per cent, with research from analysts XpertHR suggesting there was little prospect of pay rises picking up for several months.

Demand: The housing shortage is likely to push prices gently upwards

Demand: The housing shortage is likely to push prices gently upwards

David Newnes, of LSL, which owns the letting agents Your Move and Reeds Rains, said rents will keep on rising.

He said: ‘Rents are on an upward trajectory. It is unlikely that tenants will gain respite any time soon. Demand from thousands of frustrated buyers each month is underpinning buoyant competition for rental homes, enabling landlords to increase prices.’

LSL said the situation had led to a new take on the ‘Bank of Mum and Dad’, whereby rather than lending offspring the deposit to buy their first home, parents were having to help their children with the deposit needed to rent a property.
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The opinions expressed are those of the author and are not held by 0131 Auction unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.

Buy-to-let boom shows no signs of stopping as landlords snap up property worth £160bn

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  • First-time buyers struggling to get onto the property ladder
  • 1.4million 'landlord loans' currently being invested into properties

Britain is in the grip of a buy-to-let boom, with landlords snapping up property worth £160billion.

The Council of Mortgage Lenders yesterday revealed that there are a record 1.4 million ‘landlord loans’ currently being invested into properties, as older Britons cash in on soaring rental demand from young people who cannot afford to buy their own home.

With low interest rates wiping out income from savings but making mortgage repayments cheap, a buy-to-let property, boosted by rents close to all-time highs across the country, can prove an easy moneyspinner for both amateur and professional landlords.

Boom time: Low interest rates coupled with soaring demand from young people who cannot afford to buy has led to a rise in the number of buy-to-let property investments

Boom time: Low interest rates coupled with soaring demand from young people who cannot afford to buy has led to a rise in the number of buy-to-let property investments

Older generation: Equity-rich buy-to-let landlords are emerging, opting either to rent to move or boost their pension plan

Older generation: Equity-rich buy-to-let landlords are emerging, opting either to rent to move or boost their pension plan The average rent is £711 per month, with Londoners forced to pay an average of £1,000, according to LSL Property Services, a chain of rental agencies.

Jonathan Samuels, chief executive of property finance firm Dragonfly, said: ‘Landlords are making hay while the sun shines. They can buy low and rent high, which is manna from heaven.’

According to the CML, when the buy-to-let market was in its infancy in 2001 landlords had obtained 185,000 loans to invest in rental properties.

Today, landlords have taken out 1.39 million loans, worth about £160 billion, to spend on their property empires, with an estimated 84,000 homes bought using specialist buy-to-let mortgages last year alone.

Paul Smee, CML director general, said: ‘Demand for rented property remains high.’

The buy-to-let market remains highly controversial as critics blame it for forcing up house prices to levels which many first-time buyers cannot afford.

Map of how many first-time buyers expect to purchase a house this year

First steps: Young people are finding it harder to get onto the property ladder as this graph, detailing the percentage of those who expect to buy in the next 12 months that will be buying for the first time, shows while the number of buy-to-let loans has ballooned, the number of mortgages to first-time buyers has nose-dived. During the past decade, the number of young people getting on the property ladder has collapsed from about 500,000 each year to 200,000.

Last year, according to lettings agent Countrywide, about 275,000 new tenants registered their interest in private rental accommodation – a 24 per cent increase on the previous year.

It said that a typical tenant is a couple under the age of 35, although the number of families is rising.

Nick Dunning, commercial director of Countrywide, said: ‘We are in the midst of a rental boom as renting has become the new norm.’
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The opinions expressed are those of the author and are not held by 0131 Auction unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.

BOOM IN BUY-TO LET MORTGAGES AS RENT PRICES RISE

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£14.1billion worth of buy-to-let mortgages were issued by banks last year, the highest figure since 2008.

In total, 124,000 such mortgages were issued last year, up from 94,100 in 2010 as the market continued to recover, the Council of Mortgages Lenders said.

Interest in the buy-to-let sector has grown because rent prices have risen as would-be first time buyers struggle to get on the property ladder.

Despite being the strongest figures since 2008, the 2011 results still sit at half the £28 billion worth of buy-to-let mortgage approvals in that year, showing the market remains 'relatively subdued' by historic standards, the body said.

CML director-general Paul Smee said: 'Buy-to-let lending continues to perform well.

'Demand for rented property remains high, so the rationale for buy-to-let remains strong, and there is little reason to foresee any change to this positive outlook for the sector.

'These figures do not suggest that buy-to-let is crowding out first-time buyers; more that it is performing a really important role within the overall housing market.

'The benefits of the availability of good quality, private rented housing should not be overlooked, especially as there are many households which need the flexibility and mobility that the private rented sector is well placed to provide.'

Lenders have been gradually expanding their deals to attract landlords, but the CML insisted the latest figures showed that first-time buyers were not being 'crowded out' of the market.
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The opinions expressed are those of the author and are not held by 0131 Auction unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.

EU Regulation of BTL Mortgages Could be Disasterous

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November 18th, 2011 - THE ARTICLES SHOWN ARE FOR INFORMATION ONLY AND DO NOT CONSTITUTE ADVICE OR RECOMMENDATION

Concerns are mounting over the growing likelihood of EU regulation of buy-to-let mortgages in the UK, with some landlords being urged to remortgage long-term sooner rather than later to avoid possible difficulties later.

There are fears that regulation could restrict mortgage availability and force landlords who are unable to remortgage to sell up, with falling house prices and fewer properties to rent among the results.

According to new analysis by the Building Societies Association, EU intervention could prove disastrous.

Some 1.4m landlords with buy-to-let loans are set to be affected by the proposed changes, and some might find they no longer qualify for a remortgage in as little as two years’ time.

The new EU legislation, being brought in to deter ‘irresponsible lending’, is due to be voted on early in the new year and to come into effect in 2013.

At its heart, the EU draft Directive on Credit Agreements Relating to Residential Property says buy-to-let mortgages should be regulated in the same way as residential mortgages.

This would prevent lenders from taking anticipated rental income into account when deciding the amount of the loan.

The EU proposals, which would bring Britain into line with Continental practice, would force lender to assess buy-to-let borrowers in the same way as mortgage applications by owner occupiers – ie, on earnings and the size of their deposit.

Currently, rental income is treated as unearned income, so would not count in calculations. 

Paul Broadhead, head of mortgage policy at BSA, said: “If rental income is excluded from consideration when underwriting BTL, then the availability of new borrowing could cease fairly rapidly. In addition, those with existing buy-to-let loans may well be unable to refinance.

“Over time this could lead to a reduction in private rented sector properties. At the extreme, current BTL borrowers may be forced to sell their property portfolios, which would have obvious implications for existing tenants and the housing market as a whole.”

Landlord bodies, such as the Residential Landlords Association, have consistently criticised EU attempts to regulate the buy-to-let mortgage sector, saying that it is inappropriate, given that landlords are essentially business people, making business decisions.

Regulation of buy-to-let loans would bring the sector under the remit of the FSA and its successor, thus giving buy-to-let borrowers consumer-style protection in the event, for example, of mis-selling.

The FSA appears to be ready to welcome this.

At the recent CML conference, Sheila Nicoll, director of conduct policy at the FSA, told delegates that it is for the Government to decide whether buy-to-let should be regulated. But she added: “We certainly see benefit in having the buy-to-let market regulated alongside the residential mortgage market.”
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The opinions expressed are those of the author and are not held by 0131 Auction unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.

Crowded House Britain: Third of us don't have enough space but can't afford to move

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If homework is strewn across the kitchen table and toys are piling up around the sofa, you probably wish there was a bit more space.

You are not alone. Nearly a third of parents say they feel squeezed into their homes but cannot afford to move to a bigger property, a report reveals today.

Twenty-nine per cent say ‘their property is too small to accommodate the size of their family’ – rising to 40 per cent for those 34 and under.

One in four children is ‘forced to share’ a bedroom, according to the FindaProperty.com website, part of a digital division of the Daily Mail and General Trust.

Property analyst Samantha Baden said: ‘Affordability remains a key issue for families, with the average cost of a three-bedroom home around £193,000.’

Very few can afford to buy – or to rent – a property of the size they want and in the area they desire to live, according to Miss Baden. ‘As a result, they are often forced to compromise on one or the other,’ she added.

A recent report, from investment firm LV, also found that many ‘space-starved parents’ are squashed into a two-bedroom home which was perfect when they were a young couple, but has no space for three or so children.

Grown-up offspring who cannot afford to leave home are also adding to the problem facing families in Britain’s ‘big squeeze’.

For a home to be the correct size, which means it is not overcrowded, parents must have their own bedroom. Children under ten can share, as well as same-sex children between ten and 20. Anyone over 21 also needs their own room.

The report comes as official figures, published yesterday by the Land Registry, reveal house prices are falling sharply in every region except London, although they remain unaffordable for millions.

The worst-hit area is the North East, where average house prices have fallen to below £100,000 for the first time in seven years.

When prices peaked in October 2007, the average home in the region was £129,424. Today, it is £99,464 – a drop of 23 per cent, which included a 7.1 per cent fall last year.

By comparison, house prices in the capital are close to an all-time high of £345,298 following a rise of 2.8 per cent in 2011.

In the Royal Borough of Kensington and Chelsea, where residents include bankers, diplomats and top lawyers, prices have reached nearly £1million – up 7.2 per cent.

The Bank of England said last week that many foreign investors see buying a home in the capital as a ‘safe haven’ for money at a time of worldwide economic uncertainty.

But the flood of foreign money means many families are being priced out of areas where they want to live.
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The opinions expressed are those of the author and are not held by 0131 Auction unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.

Repossessions set to soar as obscure EU clause means those in arrears for just three months will default on loans

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  • Homeowners currently have to be six months behind before repossession proceedings begin
  • Change may increase banks' lending costs by 15-20%
Last updated at 4:03 PM on 23rd January 2012

Homeowners could face soaring mortgage costs because of an obscure EU directive being pushed through the European Parliament.

British lenders will be forced to start repossession proceedings when borrowers fall behind on their payments after three months rather than six as at present.

Thousands more people will have to hand over the keys to their properties if the change takes effect, the Financial Times reported.

With the risk of default much higher, it could cost banks 15 to 20 per cent more to lend.

This is likely to be passed onto homeowners - or lenders will make less mortgages available.

It is being brought in by the EU to make banks safer and reduce the risk of another financial crisis.

The reform, which could have a wide-ranging impact, is hidden in an obscure clause within a bank capital directive.

Banks will also be given less time to restructure payments to help homeowners avoid defaulting - in a process called forbearance.

The changes, which are being discussed by the European Parliament, could come into effect as soon as next year.

Most of the 27 EU member states already class homeowners as 'in default' when they fall three months or 90 days behind on repayments.

Michael Atkinson, director of the mortgage brokers Summit Capital Mortgages, said: 'Were this European directive to become law, the amount of slack that UK lenders can give struggling borrowers would be halved.

'At a stroke, it would pull the rug from under many thousands of Britons who are currently struggling to keep up with their mortgage repayments.

'While this would be disastrous for any borrowers who are plunged into default as a result, it would also pile extra pressure - and cost - onto lenders.

'They would inevitably put up interest rates to compensate, and further tighten their lending criteria.'

Tough times: The graph shows how the number of house purchases has dipped significantly since 2007

Housing plunge: The graph shows how the number of house purchases has dipped significantly since 2007- with the lack of mortgages available one of the main factors. More expensive borrowing costs could depress the market even further

Currently the 90 day period is essential for homeowners to agree a deal to refinance their mortgage - or to move to a smaller home.

Four consumers groups the FT contacted were not yet aware of the issue - even though it could become law within months.

Approximately 1.2 per cent of the 13.6million mortgages in Britain are in arrears with homeowners struggling to keep up with repayments.

The EU are bringing in the change so that mortgage laws are identical across the Continent - so it is easier for homeowners to compare deals.
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The opinions expressed are those of the author and are not held by 0131 Auction unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.
Completely FREE Just Got Even Better!
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It's not only Completely Free to sell your property with 0131Auction but all our property sellers will also receive 100% Free Advertising Within Zoopla.co.uk & s1homes.com. Please read more below on the benefits of having your property advertised for sale on Zoopla & s1homes...

Now attracting over 5 million visitors per month, Zoopla has already overtaken a number of long-established players to become one of the UK’s top three property websites. Zoopla has quickly become the website of choice for a growing number of consumers searching for property and researching the property market.

Zoopla is currently advertising on TV as part of a multi-million pound campaign across a variety of media as it ramps up its aggressive marketing strategy to build its brand and increase its market share.

Watch Zoopla T.V. adverts HERE

About Zoopla.co.uk

Zoopla.co.uk is the UK's most comprehensive property website, focused on empowering consumers with the resources they need to make better-informed property decisions. They help users make sense of the residential property market by combining property listings with market value data, local information and community tools.

Zoopla.co.uk was founded on the principles of transparency and efficiency and everything they do aims to make the market more effective for both property consumers and professionals alike. Their mission is to provide the most useful online property experience by:

  • Displaying property listings along with value and price trend information
  • Providing rich property data and local market information in one place
  • Enabling users to search for property in a variety of customised ways
  • Allowing users to engage with professionals via our tools like AskMe!
  • Building relationships between home owners and local estate agents

By combining free, instant value estimates for every UK home with sold prices, local market information and hundreds of thousands of properties available for sale and to rent, Zoopla has become the ultimate destination for property consumers to search for property and do their market research. Zoopla is the UK's fastest growing property website and they are proud to have been named 'Best Property Portal 2009' (Daily Mail UK Property Awards).

In August 2009 Zoopla acquired The Property Finder Group which included propertyfinder.com, one of the best-known and most-visited property websites in the country, as well as other popular online property assets including HotProperty.co.uk.

s1homes launches Google Street View

By s1homes.com

s1homes was launched in September 2001 and has grown to become Scotland’s largest independent property website with up to 215,000 unique visitors per month.

s1homes have launched Google Street View, which means for the first time Scottish homeseekers can take a virtual walk around every property for sale or rent in Scotland’s four main cities.

The new service allows homeseekers to explore local areas in Glasgow, Edinburgh, Aberdeen and Dundee without having to leave the comfort of their own home, helping them make a more informed decision when deciding whether to go and view a property.

Google Street View uses high definition 360 degree photography to give a complete picture of every street and area. The new s1homes/Street View service means users can go directly from individual properties to a virtual panoramic walk around the area in one click without having to leave s1homes.

s1 Managing Director Mark Smith said, ‘We’re always aiming to make life easier for people looking to buy or rent and we think this is a great new tool with real benefits. For the first time you’ll be able to see what a property looks on to, how close the shops are, how clean the streets are, what’s round the corner….I think it’ll quickly become one of the most popular features on s1homes”

s1 also operates websites in the recruitment (s1jobs), entertainment listings (s1play), training (s1learning) and automotive (s1cars) markets. It’s part of The Herald & Times Group which is owned by Newsquest Media Group, the UK’s second largest regional publisher.

Why pay costly advertising to sell your property when 0131Auction offers you this service 100% FREE... Now isn’t that a pleasant change from the traditional Estate Agents way of doing business?
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The opinions expressed are those of the author and are not held by 0131 Auction unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.

Home values hit 8 month low, according to Zoopla.co.uk

March 22, 2011


Their latest property data shows that property values have fallen every month since last July.

However, whilst it has been a challenging period for the property market over the past few months, the recent dip in prices and the notable variance between regions may have created some interesting buying opportunities. The first half of 2010 provided strong gains in market values but, since last summer, economic uncertainty and lending constraints have eroded these gains and put downward pressure on house prices.

Their latest figures show:

  • British property values down 11% from last July
  • Avg. house price down by over £21k in Scotland
  • Avg. house price down by over £26k in England
  • With house prices 18% below peak, is now time to buy?
  • North East remains hardest hit area, London most resilient

Having hit a 5-year low in February 2009, property values rose steadily during the rest of that year and throughout the first half of 2010, but have since fallen for the past eight successive months, by an average of 11.09% since last summer, creating a potential buying opportunity.

Property prices in England have fallen by an average of £26,240 (11.06%) since last July, whilst in Scotland they are down on average by £21,489 (12.37%) and in Wales by £17,205 (10.73%). The average home values now stand at £211,003 in England, £152,106 in Scotland and £143,182 in Wales according to our figures.

Across Britain, average house prices are now 18.01% (£45,594) below their peak, with the average house price at £201,911 compared to £247,505 in October 2007. The recent dip over the past 8 months could well have created a buying opportunity if prices start to pick up in the second half of the year as predicted by many.

Regionally, the North East has been hardest hit over the past few months, down 14.12% since last July with average local house prices now at £146,242. Not surprisingly, London has proved most resilient down only 7.59% over the same period to an average of £378,295 today. Property values in the North East now stand at 24.39% below their October 2007 peak, a massive drop of £47,173, compared to London where prices now are only 8.36% below the peak levels having fallen £34,527.
House Price Drop By Country

Country

Avg. value
Mar ‘11

Change since
Jul ‘10
Avg. value
Oct ’07 peak
Change since
Oct ’07 peak

Scotland

£152,106

-12.37%

£161,436

-5.79%

England

£211,003

-11.06%

£261,035

-19.17%

Wales

£143,182

-10.73%

£182,537

-21.55%

BRITAIN

£201,911

-11.09%

£247,505

-18.01%

Source: Zoopla.co.uk, March 2011

House Price Drop By Region

Region

Avg. value
Mar ‘11
Change since
Jul ‘10
Avg. value
Oct ’07 peak
Change since
Oct ’07 peak

North East England

£146,242

-14.12%

£193,415

-24.39%

South West England

£208,806

-12.73%

£261,879

-20.27%

East of England

£216,186

-12.56%

£268,517

-19.49%

Scotland

£152,106

-12.37%

£161,436

-5.79%

South East England

£257,211

-12.19%

£313,010

-17.83%

Yorkshire & The Humber

£133,915

-11.69%

£172,216

-22.24%

Wales

£143,182

-10.73%

£182,537

-21.55%

West Midlands

£161,342

-10.19%

£204,297

-21.03%

North West England

£148,269

-9.56%

£189,378

-21.71%

East Midlands

£153,244

-8.29%

£183,660

-16.56%

London

£378,295

-7.59%

£412,822

-8.36%

Source: Zoopla.co.uk, March 2011


As always, please feel free to share and use this information, all we ask is that you credit the source as Zoopla.co.uk and link to either Zoopla.co.uk or blog.zoopla.co.uk. Thank you.
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The opinions expressed are those of the author and are not held by 0131 Auction unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.
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