Bank of England
-
Latest property news
Housing market just about clinging on, reports Bank of England
The property market has been softening across the UK as homes take longer to sell in particular higher up the property ladder, the Bank of England has reported. Its latest quarterly assessment of the UK economy reveals fewer transactions and weaker house price inflation in many areas and a continuing shortage of stock. But the bank says that the housing market remains strongest in the north and in particularly Scotland, and that in general sales of newbuild homes are stronger than resales, helped at the lower end of the market by Help to Buy. The report also says that cheaper homes are selling best while more expensive properties are struggling, reflecting the impact of recent Stamp Duty changes on the housing market. “Some house builders reported slightly weaker demand and the need for greater use of incentives, especially for higher-priced properties,” the report says. The Bank of England also says the rate at which new homes are being built slowed in some regions, although the construction of homes for the student market remains strong. It also says sales of new cars, white goods and homewares have weakened significantly, which the bank blames in part on reduced housing market activity. “In…
Read More » -
Latest property news
Will today’s 0.25% base interest rate hike slow the property market even more?
Read property industry reaction to today's Bank of England base rate interest hike from 0.5% to 0.75%, the most recent hike since october last year.
Read More » -
Latest property news
Don’t blame flat property market on recent interest rate rise, says Bank of England
The impact of last November’s half-a-percent interest rate rise on home buyer confidence has been offset by the UK’s cheap and readily-available mortgages, the Bank of England (BoE) has revealed in its latest update on the economy. The report, which is compiled by its 12 agents across the country by talking to 700 businesses including estate agents, looked at the economy from late November last year until mid-January 2018 and compared business activity with the previous quarter and year. As well as increasing its base rate from 0.25% to 0.5% in early November last year, the BoE’s Monetary Policy Committee last week said another interest rate rise could take place as early as May. It also said that more interest rates are in the pipeline as the economy grows, signalling an end to UK homeowners’ reliance on cheap mortgages and credit. The BoE Agents’ Report also says that housing market activity remains subdued but steady, held down by both weak supply and demand, but that the new-build and rental sectors remain buoyant, pushing up new-build prices and rents. “Housing demand was particularly weak in London and the South East, especially for the most expensive properties,” it says. The BoE report…
Read More » -
Features
House price indices: why we’re Living on ‘Hope Terrace’
Designs on Property tracks and summarises the monthly property indices. Kate Faulkner says, “Lower rates of growth appear to be here to stay, but I don’t think the public or investors appreciate this major shift in property price growth fortunes; we need to be prepared for what happens when they do.”
Read More » -
Latest property news
Buy-to-let mortgage stress test shock
As mortgage approvals continue to fall – down to 60,058 in August from 60,925 in July – buy-to-let lending is also likely to decrease with the latest news from the BoE’s Prudential Regulation Authority (PRA) which has confirmed that a series of investors’ affordability checks and interest rate “stress tests” will be introduced from January 2017. Buy-to-let lenders will be required to verify that landlords can afford to pay the mortgage under potential future interest rates of 5.5 per cent, as the PRA recommended that the interest coverage ratio, a commonly used measure of the ratio of rental income to mortgage payments, does not fall below 125 per cent. Affordability assessments will need to take into account borrower’s costs, personal income and possible future interest rate increases, with lending to portfolio landlords to be assessed using a specialist underwriting process. “The PRA’s actions are intended to bring all lenders up to prevailing market standards and guard against any slipping of underwriting standards during a period in which firms’ growth plans could be challenged by the changing economic landscape and the impact of forthcoming tax changes,” it said. Peter Williams, Executive Director of Intermediary Mortgage Lenders Association (IMLA) said, “IMLA welcomes…
Read More » -
Latest property news
The Brexit effect
It’s that ‘turmoil’ word again, as the UK flounders in a mire of political pronouncements and predictions.
Read More » -
Latest property news
BoE: “Very volatile boom and bust conditions”
The Bank of England has announced plans to introduce more stringent checks on buy-to-let lenders amid concerns that the property investment market is moving into bubble territory.
Read More » -
Latest property news
BoE may curb credit growth
The Bank of England may consider introducing measures to improve financial stability if household debt grows faster than the rest of the economy, says the bank policymaker in charge of financial stability. British household debt, measured as a share of income, has fallen substantially from its peak during the financial crisis and has now stabilised around levels last seen in 2004. Deputy Governor Jon Cunliffe said he did not want a return to the situation prefinancial crisis, when credit grew twice as fast as the economy as a whole. “If credit began to grow faster than GDP, I would want to think very seriously about taking action to manage that sooner rather than later,” said Cunliffe.
Read More » -
Latest property news
Investors hung out to dry as BoE gets tough
The Bank of England has announced plans to introduce more stringent checks on buy-to-let lenders amid concerns that the property investment market is moving into bubble territory. The Bank’s Prudential Regulation Authority said it was putting in place a “guardrail” to prevent banks from making risky loans, warning that 20 per cent of lenders were not carrying out the necessary checks. The main concern is that a bubble in the buy-to-let market could cause a wider housing market slowdown, which would be bad news for millions of people who have invested in property, as part of their retirement. More than 1.7 million properties have buy-to-let mortgages, which represented 17 per cent of loans used to acquire residential properties last year. “You might form expectations about what the necessary long-term saving to support your retirement will be, which can then (if house prices fall) be transformed quite suddenly in ways that, frankly, are unwelcome,” Bailey said. Andrew Bailey (left), who currently heads up the Prudential Regulation Authority, told the press that the Bank of England has “nothing against” buy-to-let landlords, but believes that new restrictions on mortgages for buy-to-let investors will help reduce the risk of “very volatile boom and bust…
Read More » -
Latest property news
Bank of England to consult on buy-to-let ‘prudence’
The Bank of England has published a consultation paper (CP) which seeks views on its proposals which could result in strict limitations for buy-to-let mortgages. David Smith (left), the Residential Landlords Association’s Policy Director said, “The Bank needs to be careful that it does not over-react to the current surge in buy to let applications which are aiming to beat the tax increases coming in April. ‘These include a three percentage points extra levy on stamp duty and abolition of mortgage interest relief. It is likely that the impact of these will significantly reduce the demand for borrowing. “We would urge the Bank to tread carefully and avoid any premature moves that could stifle the supply of the 1 million rental properties the country desperately needs.” The consultation paper says: Underwriting standards for buy-to-let mortgage contracts – CP11/16 Background This consultation paper (CP) seeks views on a supervisory statement which sets out the Prudential Regulation Authority’s (PRA’s) proposals regarding its expectations of minimum standards that firms should meet when underwriting buy-to-let mortgage contracts. The proposals also include clarification regarding application of the small and medium enterprises (SME) supporting factor on buy-to-let mortgages. Summary of proposals The proposals seek to ensure…
Read More »
