More first-time buyers took out mortgages in 2017 than in any year since the financial crisis. There were 365,000 first-time buyers in the UK, the highest number since 2006 and an increase of 7.4% compared with 2016, UK Finance said.
Yet this growth is expected to cool in 2018, the lenders’ trade body said. The buy-to-let market was also “less buoyant”, it said. Separate official data shows UK house prices rose by 5.2% in 2017.
The figures, from the Office for National Statistics (ONS), showed that the 4.8% rise in the price of properties bought by first-time buyers was a slower rise than elsewhere in the market.
The average first-time buyer taking out a mortgage was aged 30 and had an annual household income – either one individual or jointly as a couple – of £41,000, UK Finance said, “Although the [mortgage] market remains competitive [for first-time buyers], there is no room for complacency, with weaker December figures consistent with our market forecast of subdued growth this year,” said Paul Smee, head of mortgages at UK Finance.
The figures show that the average home mover was aged 39 and had an annual income of £55,000. However, the numbers of those moving dropped by 3% in 2017 compared with the previous year.
The number of new buy-to-let mortgages dropped by 17% year-on-year, while the number of landlords remortgaging was down by nearly 12%. Landlords have faced more stringent tax demands.
The average home in the UK costs £226,756, according to the ONS. This value rose faster than prices in general, as measured by inflation, in 2017.
Accountancy firm PwC said that the figures showed UK house prices had increased by 22% more than earnings between 2012 and 2017.
“This shows that house price growth has outpaced average earnings growth for the fifth consecutive year, further ratcheting up the affordability challenge,” said Richard Snook, senior economist at PwC.
However, the picture is very mixed across the country.
London, where the average property still costs significantly more than elsewhere, at £484,173, saw the slowest annual house price growth of 2.5%, according to the ONS. This slowdown was showing some signs of shifting to the South East commuter belt, where house prices dropped by 0.5% in December compared with November.
Scotland saw the fastest year-on-year rise in prices, up 7.7%, taking the average house price to £149,000.
Another set of ONS data shows that rent paid by tenants in Britain to private landlords rose by 1.1% in the year to January 2018, down from a 1.2% annual rise the previous month.
Britain’s exports in financial and professional services had a record-breaking year in 2017, according to figures released today by TheCityUK.
Exports in the sector jumped 15.8% from £82.6bn to £95.7bn, breaking away from four years of relatively sluggish growth, when exports edged up by 0.9% each year on average.
The UK remains the world’s top exporter of financial and professional services, with a trade surplus of £57bn, far ahead of the US, which has net exports of £31bn. The figures included exports in finance, insurance, accountancy, legal services, management consultancy and business services.
Unsurprisingly, London topped the list for financial exports. Financial exports from the capital totalled £46.6bn in 2017, growing 17.7% from £39.7bn in the prior year. Of this total figure, over £36.7bn came from financial services, with £9.9bn from related professional services.
The South East’s exports grew 10t from £10.5bn to £11.6bn, making it the second most important region for financial services.
Anjalika Bardalai, chief economist at TheCityUK, said: “While London is an important piece of the puzzle, over half the industry’s exports come from other parts of the country.
“In 2017, industry exports saw double-digit growth in nearly every part of the UK. It’s this collective national contribution which helps to make the UK the world’s leading international financial centre.”
The North East is now the fastest-growing part of the UK for financial services, although its overall contribution remained relatively small in 2017. Exports came to £1.7bn, a growth of 29% year-on-year.
Hundreds of thousands of homeowners could be at risk of losing their homes by ignoring how they will pay off their mortgage, a regulator has warned. Nearly one in five mortgage-holders have an interest-only home loan, meaning they would need savings or other funds to pay off the capital sum. The Financial Conduct Authority (FCA) said the end of these mortgage terms would peak in the next 10 to 14 years.
Many borrowers were ignoring letters from lenders, it found. Interest-only deals allow borrowers to pay off the amount borrowed only when the mortgage term ends, usually after 25 years, but there is concern that a host of homeowners do not have plans in place to pay the final bill.
The FCA said that 1.67 million full interest-only and part-capital repayment mortgages were still outstanding, representing 17.6% of all mortgages in the UK.
One peak of these final bills have come in the past year or so, for those who took out endowment policies in the 1990s and 2000s. Less affluent, middle-aged homeowners who often converted to interest-only deals in 2003-09 will see their final repayment demand come in 2027-28.
The regulator said that lenders had improved their communications with customers at risk since its initial report on the issue five years ago. However, there were still concerns that some customers may have been incorrectly reassured about their plans by non-specialist staff.
The FCA had more concerns over the reaction of borrowers who, for a variety of reasons, were ignoring letters from their lender. Some believed that they had an adequate repayment plan in place, while others were simply burying their head in the sand. Some had little trust in their lender, so were suspicious of the letters. The FCA urged these borrowers to talk to their lender as early as possible.
“We are very concerned that a significant number of interest-only customers may not be able to repay the capital at the end of the mortgage and be at risk of losing their homes,” said Jonathan Davidson, executive director of supervision at the FCA.
Hannah Maundrell, from comparison service Money.co.uk, said: “You may be able to remortgage your property, extend your mortgage to give you time to raise the money to pay it back or look into taking out another mortgage from a different lender.”
For those at risk of losing your home, there are government schemes that could help, she adds. “The key thing is to pick up that phone and talk to your lender.”
2018 could be the year in which Britain’s dysfunctional housing market for first-time buyers and tenants.
Interest rates will stay low
Another 0.25% hike is expected in late spring, taking the Bank of England base rate to 0.75%. That will add £22 to the typical £175,000 tracker mortgage, but with more than half of all borrowers on fixed rates, it will probably go unnoticed by most homeowners. With the economy weak, the market does not expect any further hikes across the year. Mortgages will remain cheap although, with inflation outpacing wage rises, will still very much feel like a burden.
House building will rise
New home building has picked up with 217,000 homes coming on to the market in 2016-17, up 20% on the year before. But that only brings the total back to levels seen before the financial crash, and a long way short of the 300,000 target set by the government. If “Brexodus” migration numbers continue to fall and construction activity picks up further, the supply side of the housing equation will be less pressing than in previous years.
Landlords will lose out to first-time buyers
First-time buyers should be in the ascendant in 2018, with lending for buy-to-let in retreat. As recently as 2015 landlords snapped up 120,000 houses using buy-to-let finance, but the Council of Mortgage Lenders expects this to fall below 80,000 in 2018. Rising taxes and tougher lending criteria are slowly tipping the balance in favour of homebuyers rather than property speculators.
Stamp duty cut and help to buy will continue propping up developers
Philip Hammond abolished stamp duty for all properties up to £300,000 bought by first-time buyers with immediate effect in the budget. The move will save four out of five first-time buyers up to £5,000. But the Office for Budget Responsibility predicts that it will raise prices by 0.3%, with the increase coming in 2018. Meanwhile, the help-to-buy scheme has been given another £10bn boost, providing financing until 2021, although critics say it has been squandered in chasing up the price of new-builds.
Tenants may find some relief, at last
After years of galloping rent increases, landlords are finding they can’t squeeze tenants any further. Average UK rents rose by less than 1% in 2017 and fell in London. With salaries under pressure from inflation, few expect real rent increases in 2018. Tenants will applaud the new ban on letting agency fees – when it eventually arrives. There is still no date fixed for the ban to come in, but the government insists it will happen sometime in 2018.
The rich will go higher and higher
The 56 storey’s of One Nine Elms will race up London’s skyline during 2018, with the first buyers (prices started at £800,000 at launch) moving in in 2019. But it’s crown as the city’s highest residential tower will be swiftly grabbed by the Spire in Docklands. It will have 67 storey’s housing 861 suites (many at £2m-plus) and will be completed in 2020.
Buying and selling a home in the UK without the need for paper deeds is one step closer after the Government approved changes to the land registration rules to pave the way for the introduction of digital land registration.
The changes, which will come into effect on 06 April 2018, are central to the Land Registry’s ambition to become the world’s leading land registry for speed, simplicity and an open approach to data.
The changes have been announced following a public consultation last year and chief land registrar Graham Farrant said that the process will become simpler, faster and cheaper while at the same time the integrity and security of the register against threats from cyber-attacks and digital fraud will be strengthened.
The rule changes will allow the land registry to introduce fully digital conveyancing documents such as mortgages and transfers, in response to customers’ needs.
‘Our customers are central to everything we do and we want to make dealing with us quicker and simpler by providing more services through digital technology. These changes are an important enabler for our digital transformation and I want to thank our customers for their positive responses to the consultation,’ Farrant explained.
Changes were required to the Land Registration Rules 2003, with the revocation of the Land Registration (Electronic Conveyancing) Rules 2008 and the Land Registration (Proper Office) Order 2013, in order to allow the land registry to continue with its digital transformation programme, and modernise and simplify its services.
Farrant also pointed out that the changes will benefit customers by allowing the land registry to build new and more flexible statutory services that have been called for by the industry, and other electronic services will improve the assistance offered to them throughout the application process.
The land registry will be contacting customers in the coming weeks to explain any changes that will affect the way they submit applications, though these are expected to be minimal, and will only affect a small number of customers.
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