Mortgage approvals rise- A daily roundup of all the key property news
Posted by The Oracle Group on 30th July 2019 -
MORTGAGES
Mortgage approvals rise
The number of UK mortgage approvals hit 66,400 in June, up from 65,650 in May, according to the Bank of England's latest data, above economists’ expectations and the highest number since January. In addition to a small boost from dodging a no-deal Brexit in March, record employment, sustained wage growth and low interest rates have boosted demand. Hansen Lu, a property specialist at Capital Economics, said: “The outlook for mortgage lending is quite heavily dependent on the Brexit outcome. Assuming a no-deal Brexit is avoided, we expect mortgage approvals to end the year down by 1%, before recovering modestly in 2020 and 2021. Annual lending growth to UK consumers slowed to 5.5% in June however, from 5.7% in May, the slowest rate since April 2014.”
Mortgage product fees fall over past year
Mortgage product fees have fallen over the past year, amid increased competition from providers, data from Moneyfacts has shown - despite the Bank of England raising the base rate by 0.25% in August 2018. The average 2-year fix has dropped from 2.53% in July last year to 2.49% this month. “The mortgage market has recently boasted some of the lowest mortgage rates on record, which is fantastic news for borrowers, but our latest research into the average product fee charged in the popular 2-year fixed rate market has shown that this too has fallen over the past 12 months,” commented Darren Cook, finance expert at Moneyfacts.
Increase in ‘security deposit’ mortgages
The number of deposit mortgages available on the market has risen by 40% in the past two years, according to Defaqto. The financial services firm counted 28 such mortgages, which offer the parent or guarantor a less risky way to help the borrower afford a home, available on the market now than two years ago, and said that 13 providers now offer some form of security deposit mortgage, compared to eight providers in 2017. “With property prices so high, some young people are having to turn to family in order to get their first home. Not many people have the cash to put down a deposit for a relative’s home and security deposit mortgages can be a good alternative for them,” said Katie Brain, insight analyst at Defaqto.
FIRMS
CVAs and administrations hit Hammerson
Hammerson has reported net rental income at its UK flagship sites was down 6.8% in the half-year period, as retailers’ woes continued to dent the firm’s performance. In the first six months of the year, net rental income (NRI) across the company fell 0.1% year-on-year - while it fell 6.8% at flagship destinations, so-called premium outlets enjoyed an 11.1% NRI rise. Adjusted profit was down 10.5% at £107.4m. Chief executive David Atkins acknowledged that the UK retail landscape "is undoubtedly challenging" and that traditional high street fashion is under pressure, adding: “However, our focus on shifting our line-up towards categories with greater customer appeal and rental growth potential has resulted in over 90% of new leasing to leading consumer and food and beverage brands." Hammerson's announcement that it has sold a 75% stake in Parisian shopping centre Italie Deux for £423m brought its net debt to £3.1bn.
INDUSTRY
Southern house price growth weakest since 2012
The average price growth across for southern cities is now at its lowest level in seven years, according to the June Zoopla UK Cities House Price Index. The majority of the seven cities registering less than 1% in house price growth this month are located within southern England, with growth ranging between 2% in Bristol to -0.3% in Cambridge. “There is a clear imbalance between supply and demand for housing across southern cities and this explains why house price growth in these cities is at its lowest level since 2012,” said Richard Donnell, research and insight director at Zoopla.
Platform aims to accelerate searches
The Telegraph profiles SearchFlow, a new platform which aims to speed up the ordering and delivery of property searches for solicitors. Customer experience manager Katriona O’Hare explains: “Utilising Microsoft Power BI to bring together all our different inboxes, we created dashboards that provide real-time performance management. We can monitor orders, track KPIs and benchmark all activities against service-level agreements, even using our mobile phones."
COMMERCIAL
Lagging high street hits commercial rents
The British prime commercial property market has seen its largest quarterly slide in rents for a decade amid declining demand for high street shops and shopping centres, according to CBRE. Rents for high street shops, shopping centres and retail warehouses fell by 1.1%, 1.2% and 3.1% respectively in Q2 of 2019, CBRE said in its latest quarterly index. Retail warehouse rents fell by more than any other property asset class in the quarter.
INTERNATIONAL
EU watchdog: valuations are too high
The EU’s financial watchdog has warned that housing and commercial property are showing signs of being overvalued across the continent. "High investor demand and the search for higher yields, which have been a major source of the commercial real estate price increase, particularly in prime markets, have potentially made investors vulnerable to a repricing of risk premia," it warned, adding that that many countries within the block had experienced big commercial property increases in recent years and that signs of overvaluation had been present in prime markets in several of them.
PRIME
Decline in central London prime transactions
June saw a 13.1% year-on-year drop in annual transactions in prime central London, according to the LCPAca Resi Index for June. The figures also revealed that transactions are still 12.5% less than the very lowest point in the global financial crisis, but in the short-term there has been a marked quarterly increase of 23%.
ECONOMY
Threat of no-deal sends pound to 28-month low
A hardening of rhetoric from the Boris Johnson government over Brexit pushed the pound to a 28-month low against the dollar on Monday. Sterling dipped 1.1% to $1.2242 and €1.1004, with analysts at ING Group now assuming an early election will take place and that the pound will sink as low as $1.18 and €1.05.
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