coleharding – Cole Harding

Bank of England’s Bailey expects interest rates to fall

coleharding — Wed, 25 Sep 2024 14:54:45 +0000

The governor of the Bank of England, Andrew Bailey, has said he expects interest rates to fall, albeit gradually, which will be welcome news for thousands of mortgage borrowers.

Bailey said he was “very encouraged” by falling inflation and “therefore I do think the path for interest rates will be downwards, gradually”.

Bailey told the Kent Messenger he did not expect rates to return to the historic lows close to zero last seen four years ago, and his “best guess” was that it would settle “at a neutral rate”, widely tipped to be around 3% over the next decade, barring a financial crisis.

Bailey said: “Will we go back to the very low near-zero interest rates that we had until not that long ago?

“My answer is I would not expect that because what caused interest rates to go that way it was, among other things, two very big shocks to the economy.”

UK banks are actively engaging in a mortgage price war, with Barclays today launching a new low five-year fix rate, while Nationwide announced earlier this week that it plans to let first-time buyers borrow up to six times their earnings.

The central bank reduced UK interest rates by 0.25% in August to 5% and financial markets expect a further cut in November.

Almost 80% of economists, 49 of 65, polled by Reuters earlier this month, expected one more rate cut this year. While 48 predicted it in November, one said December. The other 16 economists saw two more rate cuts this year.

“The bigger picture is that the economy is slowing again, the labour market is cooling, and interest rates are higher than necessary to continue bearing down on inflation,” said IEA Economics Fellow, Julian Jessop, at the free market think tank, the Institute of Economic Affairs.

Mortgage price war hots up as Barclays undercuts Nationwide with new low rate

coleharding — Wed, 25 Sep 2024 14:53:04 +0000

Barclays will today launch a range of new mortgage products, including a new lowest home loan rate on the market, just 24 hours after Nationwide released the first sub-3.75% deal.

Barclays will today introduce a five-year fix at 3.71% for those buying their home with a 40% deposit. The deal will come with an £899 fee, and is cheaper than Nationwide’s 3.74% five-year fix, launched yesterday.

An even cheaper option at 3.7% is available but only for premier customers of the bank. Brokers said that lenders were “gently easing pricing as they compete for business.”

Nationwide still offers the cheapest two-year deal on the market at 3.89%.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “No sooner does one lender offer a sub-3.75% five-year fix, then another joins the fray, with Barclays launching a market-leading 3.71%.

“The clear direction of traffic for mortgage rates is downwards, with lenders gently easing pricing as they compete for business.

“We don’t expect any dramatic reductions going forward but nevertheless, subtle improvements in rates will make life easier for borrowers.”

Mortgage rates have falling in recent months on the expectation of further Bank of England interest rate cuts.

New portal launches inviting estate agents to list properties for free

coleharding — Wed, 25 Sep 2024 14:51:18 +0000

A new property portal called NI Bricks has launched in Northern Ireland.

To commemorate the launch, estate agents are being invited to join NI Bricks’ platform with the opportunity to list properties for free for up to three months.

Founded in November last year and launched this week, NI Bricks is the latest product of Soham Technologies Limited. With a strong commitment to reducing listing fees and simplifying the estate agency operations in Northern Ireland.

“NI Bricks was born out of a need for innovation in the real estate sector. We recognized the gap in affordable, tech-driven solutions for estate agents,” said Pragati Kumar Dhingra, founder and CEO of NI Bricks. “With this platform, we aim to lead the digital transformation of the real estate industry in Northern Ireland, ensuring that agents can maximize their reach, minimize their costs, and enhance their business efficiency.”

Dhingra, an industry veteran with over 20 years of experience in the tech sector and 15 years of work specializing in artificial intelligence and digital transformation, brings a wealth of expertise to the company. He is also a member of the advisory board for a publicly listed broker aggregator in India, which serves over 10,000 brokers.

To encourage early adoption, estate agents who register with NI Bricks before the 31st of October 2024 will be able to list properties for free until 31st December 2024.

“Our free listing offer is a chance for agents to experience the full benefits of our platform without any upfront investment,” added Dhingra. “We’re not just offering them a service – we’re providing the support and tools needed to transform their business, save time, and streamline estate agency operations.”

In addition to free listings, NI Bricks is committed to ensuring a smooth onboarding process for its users. The company has also announced the addition of Fred Ashton to the team, a real estate brokerage veteran with over 50 years of experience in Northern Ireland.

The launch of NI Bricks marks a significant milestone in the evolution of the portal market in Northern Ireland.

Rival portal, HomesNI, officially launched last week with 120 agents signed up and over 11,000 listings.

The portal will be free-to-use for the first month and then introduce a flat rate of £50+VAT per month per branch for all listings for a year, rising to £75 a month from 2026.

The portal plans to become majority-agent-owned in the future and wants to offer up to 75% of the business to agents in Northern Ireland.

Last month the two of the biggest property websites in Northern Ireland announced plans to merge.

PropertyPal unveiled a strategic merger with Propertynews, with a new leadership team set to oversee both listing websites.

Mortgage rates cut for buyers with small deposits

coleharding — Fri, 13 Sep 2024 13:26:53 +0000

Major lenders have introduced further mortgage rate cuts across fixed deals.

Nationwide Building Society, NatWest and TSB have all lowered their mortgage products, including high loan-to-value (LTV) home loans aimed at buyers with low deposits.

The latest announcements follows fresh in the wake of Barclays and TSB who cut mortgage rates earlier this week, including on 5% deposit deals.

Nationwide has reduced rates by up to 0.25% across two-year, three-year and five-year fixed products for those purchasing with deposits of between 25% and 5% of the purchase price.

From today, the lender is offering the lowest rate on the market for first-time buyers and home movers purchasing with a 5% deposit.

Its five-year fixed deal will charge 5.04% with a £999 fee. On a £200,000 mortgage being repaid over 25 years, that equates to £1,174 a month.

Henry Jordan, director of home at Nationwide Building Society, said: “These latest reductions will ensure that we have some of the most competitive rates on the market with a particular focus on supporting first-time buyers in what remains a challenging environment.”

In another welcome change for those with smaller deposits, NatWest has also announced fixed rate cuts of up to 0.19% across selected 90% and 95% LTV products.

TSB has also reduced rates, albeit not in the high loan-to-value brackets with rates changing on deals that require a deposit of at least 15%.

Also from today, TSB has reduced rates by up to 0.35% with first-time buyers, home movers and remortgaging customers set to benefit.

TSB’s rates now start from 3.79%, which is only marginally higher than the market currently offered by NatWest at 3.77%.

Bank of England are set to cut interest rates again

coleharding — Thu, 12 Sep 2024 11:47:04 +0000

The Bank of England is expected to cut interest rates again this year in what would be a welcome move for buyers, sellers, and of course, estate agents.

UK estate agents have already reported more buyer interest after last month’s BoE rate cut, with buyer enquiries increasing significantly in recent weeks.

At the meeting last month, the Monetary Policy Committee cut the Bank Rate to 5% from a 16-year high of 5.25%, in a tight 5-4 vote. But governor Andrew Bailey emphasized “careful” reductions in borrowing costs going forward.

The Bank of England will keep its main interest rate at 5% next week but reduce it in November even though inflation is expected to stay above the central bank’s 2% target, a firm majority of economists in a Reuters poll said.

All 65 economists in the Sept. 6-11 poll predicted the Bank Rate will be left at 5% next week.

Nearly 80% of economists, 49 of 65, expected one more cut this year. While 48 predicted it in November, one said December. The other 16 saw two more rate cuts this year.

Interest rate futures are pricing in two more cuts, in November and December, to put the end-year rate at 4.5%.

Monica George Michail, associate economist for the National Institute of Economic and Social Research, highlighted that services sector pay fell faster than expected to 3.8% compared to an average of 5.9% in the first five months of this year.

“This is positive news for inflation and might provide the Bank of England with increased confidence regarding interest rate cuts,” she said.

Mortgage rates set to come down

coleharding — Fri, 26 Jul 2024 08:14:30 +0000

Lenders are continuing to drop the cost of their mortgages as speculation grows that the Bank of England could opt to cut the interest rate for the first time in four years next week.

Earlier this week, Nationwide reintroduced sub-4% fixed rate mortgages as it cut rates by up to 0.25% across its two-, three-, and five-year fixed rate products.

Now, Barclays and TSB have become the latest lenders to cut fixed-rate deals, with a summer price war appearing to intensify ahead of the Bank of England interest rate decision on Thursday 1 August.

Barclays announced cuts of up to 0.1% to a wide range of its residential purchase and remortgage deals, effective from today (26 July). The lender is offering a five-year fixed rate for home purchase at 4.04%, with an £899 fee, for borrowers with at least a 40% cash deposit (60% loan to value), while Barclays Premier Banking customers can get the same deal at 4.03%.

TSB, meanwhile, has lowered selected fixed rates for new and existing customers by up to 0.2%, effective from today. The lender is offering a two-year fixed rate for home purchase from 4.54% with a £995 fee, or at 4.14% over five-years, with the deal requiring at least 40% cash deposit.

A number of other lenders have also reduced borrowing rates this week, including Skipton, Mpowered Mortgages and Atom Bank.

Nick Mendes, mortgage broker at John Charcol, said: “The rate reductions we’ve seen this week are great news for borrowers and reflect strong market competition and confidence that there will soon be a reduction to the Bank of England base rate.

“These latest reductions will provide significant savings for those looking to secure a mortgage or remortgage, making it an opportune time to consider locking in a fixed rate.”

There appears to be growing confidence that the Bank of England will cut interest rates next week. A Reuters poll of economists found the majority expected the monetary policy committee to vote in favour of a drop in the base rate from its current 15-year high of 5.25%. Some 49 out of 60 – over 80% – of respondents to the survey, held over 18-24 July, believed a cut would be made.

The latest falls in mortgage rates and speculation surrounding the Bank of England’s next move coincide with a new report from the Institute of Fiscal Studies claiming that as many as 320,000 UK adults had been pushed into poverty by rising mortgage costs following 14 hikes in the base rate over the last two years.

Property completions 40% below ‘normal market conditions’

coleharding — Thu, 18 Jul 2024 07:33:52 +0000

Property listing volumes are averaging 6% higher than in Q2 2019 (used as the benchmark year), meaning that supply is the strongest it has been in years. However, transactions are struggling to progress through to completions, reflecting the ongoing affordability issues driven by high interest rates, new figures show.

Landmark’s newly released Q2 Residential Property Trends report provides a comprehensive analysis of property data from the second quarter of the year, examining the entire residential property transaction chain. The data reveals that Sold Subject to Contract (SSTC) levels are down 32% compared to Q2 2019. Similarly, completion rates, while showing moderate growth in May, remain circa 40% below where we’d expect from normal market conditions.

Despite the challenges, the data suggests that the market is poised for a potential upturn when the broader economic picture stabilises. The high level of listings, coupled with moderate growth in completion rates and the increasing availability of competitive mortgage deals, points to a possible return to more dynamic conditions in the latter half of 2024, provided that economic stability improves, and systemic inefficiencies are addressed by the new government.

Simon Brown, CEO of Landmark Information Group, said: “Our Q2 trends data paints a clear picture of the scale of the challenge the new government inherits. Whilst housing supply is the strongest it has been in years, inefficiencies within the home-moving process, combined with affordability constraints for buyers, mean that transaction levels are not where they should be. This is frustrating for home-movers and detrimental to the property market as a whole. By putting data at the heart of the home-buying and selling process, we can streamline transactions, reduce delays, and ultimately revitalise the property market.”

Brown continued: “With the property market contributing to 20% of UK economic activity, addressing these inefficiencies presents an enormous untapped opportunity. The Labour government’s commitment to building 1.5 million homes is commendable, but unless
we also focus on improving the transaction process and ensuring economic stability, it could take years to see the full benefits.”

What does today’s King’s Speech mean for housing?

coleharding — Thu, 18 Jul 2024 07:29:36 +0000

he new Labour government’s plans for the year ahead will be read out by King Charles in a speech to Parliament today.

The speech is expected to outline around 40 draft laws ministers intend to introduce in the coming months, following Labour’s victory at this month’s general election.

Measures relating to illegal migration, workers’ rights, a new energy company, railway nationalisation, crime and punishment, budget rules, mental health, online safety, democracy and devolution, as well as education, are also expected to feature in the government’s programme, along with housing and planning.

Housing and planning

Labour promised to “immediately” ban Section 21 evictions in its election manifesto, and criticised the previous Tory government for not doing so by failing to pass its Renters Reform Bill before the election.

It has also pledged to extend a series of building safety rules for social tenants, known as Awaab’s Law, to private renters.

In addition, the new government has vowed to put reforms to England’s planning system at the heart of the speech, although it is not yet clear how many new laws there will be in this area.

Fergus Charlton, a partner in law firm Michlemores’ planning practice, commented: “The new government has made it clear that planning reform and house building is a key strategy. The focus on streamlining planning processes, setting clear targets, and unlocking new land for development seems a strong foundation for boosting housing supply and infrastructure development.

“However, the re-branding of green belt to grey belt will be contentious. There are powerful lobbies who consider the green belt to be sacrosanct. To be effective re-brandings must be so persuasive that the public forget the previous incarnation. Whether this happens will depend on the details of policy. If new developments in the grey built are still required to show ‘very special circumstances’ to proceed then little will be gained.”

The reintroduction of mandatory housing targets for local councils is also very welcome, according to Charlton.

He continued: “This top-down approach has historically been effective at incentivising local authorities to approve more building. Setting clear targets could help overcome local opposition and NIMBYism that often blocks development. Reforming the payment of hope value under the compulsory purchase rules will make it cheaper for local authorities to acquire land for regeneration and affordable housing by compensating landowners based on current market value rather than potential future value with planning permission.”

Also looking ahead to the planning reform and the housebuilding bill, the CPRE director of policy, campaigns and communications, Elli Moody, commented: “We welcome Labour’s ambition to build the homes we urgently need. However, they should start with the 1.2 million new homes that could be built on shovel-ready brownfield sites in England alone.

“The Green Belt is the countryside next door for 30 million people in the UK and has huge benefits for food security, physical and mental health, and nature restoration. Protections for it must be maintained in the policy framework.

“New homes on the Green Belt have rarely been genuinely affordable and create car-dependent communities far from public transport networks and other essential infrastructure.

“We also need to see ambitious targets in policy for genuinely affordable and social homes close to where people already live, work and go to school. The definition of ‘affordable’ housing should be changed to reflect local incomes rather than market rates.

“The government should deliver a strategic land-use framework that makes the best use of our finite supply of land and safeguards the Green Belt for future generations.

“We support Labour’s focus on plan-led development. We would like to see Local Plans include ambitious net zero and environmental targets.”

Property transaction time ‘becoming increasingly tedious and lengthy’

coleharding — Fri, 12 Jul 2024 13:47:47 +0000

With the time taken to exchange contracts on a property continuing to lengthen, Propertymark has produced a new report, ‘A Dickensian legal process’, to explore the reasons for the growing delays.

Propertymark’s Housing Insight Report reveals that in March 2016, 78% of transactions progressed from offer acceptance to exchange of contracts within 12 weeks, whereas in March 2024, the figure was just 29%, representing a significant deterioration.

From the data gathered across the UK, it is clear there has been a growth in the number of exchanges taking 13–16 weeks and 17+ weeks, at the expense of those taking 5–8 weeks and 9–12 weeks. The number of exchanges taking 1–4 weeks is generally low and has been relatively stable throughout the last decade.

The impact of the increasing time taken to reach exchange is widely felt by buyers, sellers, and the many service providers that support the home buying process. Whilst there is an urgent need to address this problem, it has been a decade in the making and is extremely complex.

The solution will necessitate change in the realms of people, processes, and systems across multiple domains, each with differing views, resources, and appetites for change. However, the first tentative step, recognising that the problem exists, has been taken by this report, according to Timothy Douglas, head of policy and campaigns at Propertymark.

He said: “It is not new news that the amount of time taken to complete a purchase on a home is becoming increasingly tedious and lengthy. However, it’s imaportant more than ever considering that the time taken to complete is up to six months and longer in some cases, to understand the fundamental issues causing this.

“Our member agents are on the ground witnessing delays and have bought their concerns and thoughts to the fore. Policy makers and the new Government at Westminster need to address these in order to speed up the house buying and selling process to keep the wheels of the housing market turning as it’s a vital cog in boosting the economy.”

Hearing from agents across the UK, the industry body said the reasons for the elongation are multifaceted, interlinked and variable.

‘I think it’s a mixture… I think solicitors are under resourced and don’t get paid in line with doing what they do, so they take on too much work and have no sense of urgency. I think lenders are taking too long to send out mortgage offers. Generally, the whole system is much slower to the previous 30 years.’

However, agents identified key challenges and delays, which they believed accounted for the bulk of the problem. Firstly, agents reported that the sales process is outdated (‘Dickensian’) and administratively intensive. Furthermore, the administrative burden has been growing due to successive legislative changes:

‘Far more paperwork is now required due to increased legislation.’

This is problematic as the existing system was not designed to deal with large information flows:

‘The system of property transfer was designed for much smaller amounts of information to be considered. There is now so much information in the system. It arrives on the solicitors’ desk at different stages and takes time to cross reference the client best interest, lenders requirements and best practice as the conveyancer sees it.’

Agents noted that despite the existence of technology, which could be leveraged to streamline the process, the adoption and integration of these technologies was patchy at best:

‘The system is awfully dated with solicitors having different methods-some do digital, some don’t. It needs to be streamlined and digitised.’

Next, agents identified areas where they experienced regular delays in the production of the information required to progress to contract exchange. This included information flows from buyers, sellers, surveyors, and mortgage providers. However, most agents pointed to lengthy delays in the provision of local authority property searches as a key issue.

Agents posited several reasons for solicitor-based delays. Some suggested that solicitors had ‘slowed’ because of challenges in the operating environment, which had made them more risk averse.

More broadly, agents reported that there was a ‘shortage of solicitors’ meaning that firms were ‘under resourced’. In fact, 59 per cent of agents suggested that solicitor resource constraints were the key reason for extended exchange times.

As a direct impact of resource constraints, it was reported that ‘solicitors seem to be taking longer to action activities and respond than before.’

It should be noted however, that the perceived resource shortage extended beyond solicitors. One agent reported a ‘lack of manpower across stakeholders’, and another suggested:

‘Solicitors are most certainly under resourced… [However], the organisations that surround it are under resourced… The surveyors, banks, and local authorities.’

For balance, it should also be recognised that agents can also be responsible for delays, with some members highlighting that ‘agents also need to have their houses in order’. As one member reported, ‘some agents don’t use a PIQ at instruction’ or ‘fail to disclose material information’.

Mortgage shelf-life drops and lenders increase rates

coleharding — Tue, 11 Jun 2024 15:44:34 +0000

The average shelf-life of a mortgage has dropped to 15 days, down from 28 days a month earlier, the latest Moneyfacts UK Mortgage Trends Treasury Report data shows.

Month-on-month rises to the average two- and five-year fixed mortgage rates were more modest, with average mortgage rate rises up by 0.02%, the smallest monthly rises seen this year. These rates remain slightly lower compared to December 2023.

The overall average two- and five-year fixed rates rose between the start of May and the start of June, to 5.93% and 5.50% respectively. The average two-year fixed rate remains 0.43% higher than the five-year equivalent – the gap between these averages has not been higher than this since October 2023 (0.50%).

Meanwhile, the average ‘revert to’ rate or Standard Variable Rate (SVR) remained at 8.18%, just shy of the highest recorded (8.19%) during November and December 2023, while the average two-year tracker variable mortgage fell to 5.94%.

The data also reveals that product choice overall rose month-on-month, to 6,629 options, its highest level since February 2008 (6,760).

· The average shelf-life of a mortgage product fell to 15 days, its lowest since March, down from 28 days a month prior. The lowest shelf-life average on our records was 12 days in July 2023.

Mortgage market analysis
		Jun-22	Jun-23	Dec-23	May-24	Jun-24
Fixed and variable rate products	Total product count – all LTVs	4,987	4,967	5,694	6,565	6,629
	Product count – 95% LTV	347	229	253	347	353
	Product count – 90% LTV	672	636	718	791	792
	Product count – 60% LTV	546	635	623	748	733
All products	Shelf-life (days)	21	22	17	28	15
All LTVs	Average two-year fixed rate	3.25%	5.49%	6.04%	5.91%	5.93%
All LTVs	Average five-year fixed rate	3.37%	5.17%	5.65%	5.48%	5.50%
95% LTV	Average two-year fixed rate	3.46%	6.06%	6.34%	6.14%	6.20%
95% LTV	Average five-year fixed rate	3.54%	5.43%	5.73%	5.64%	5.73%
90% LTV	Average two-year fixed rate	3.27%	5.66%	6.01%	6.12%	6.15%
90% LTV	Average five-year fixed rate	3.35%	5.23%	5.71%	5.57%	5.61%
60% LTV	Average two-year fixed rate	2.91%	5.11%	5.59%	5.45%	5.45%
60% LTV	Average five-year fixed rate	3.05%	4.85%	5.20%	5.08%	5.06%
All LTVs	Standard Variable Rate (SVR)	4.91%	7.52%	8.19%	8.18%	8.18%
All LTVs	Average two-year tracker rate	2.54%	5.32%	6.16%	6.12%	5.94%
Data shown is as at the first available day of the month, unless stated otherwise.
Source: Moneyfacts Treasury Reports

Rachel Springall, finance analyst at Moneyfacts, said: “Borrowers may feel disheartened to see another consecutive month of rises to the average two- and five-year fixed mortgage rates. However, both rose by a modest 0.02%, the smallest month-on-month rise this year. The incentive to fix for longer remains, with the average five-year fixed rate standing 0.43% lower than its two-year counterpart, and the incentive to remortgage is prevalent, as the average Standard Variable Rate (SVR) stands at 8.18%. Lenders spent the first few weeks of May repricing, in reaction to a volatile swap rate market, but the latter end of the month was more subdued, around the time the Government announced there would be a general election in July.

“Despite the small uplift in rates, there was another rise in the overall product availability of residential mortgages, standing at its highest point in 16 years. As lenders reviewed their ranges, which included repricing, launches and withdrawals, the moves led to the average shelf-life of a mortgage plummeting to 15 days, down from 28 days at the start of May. Year-on-year the overall availability of mortgages has risen by 1,662 deals, and within that pool of products, there are 156 more at 90% loan-to-value (LTV) and 124 more at 95% LTV. These rises are good news for borrowers who may be struggling to build a big enough deposit to secure a new deal. On the other end of the spectrum, there are just 98 more deals at 60% LTV, and month-on-month, there was a slight fall of 15 deals.”