The Mortgage Broker Newsletter Issue 106

Welcome to the November 2009 Issue of the Mortgage Broker Newsletter

Dear all,

We hope you like the new layout and version of our newsletter, your comments, suggestions and criticism would be appreciated so we know if we are providing you with information that you want to read and find useful. This months newsletter covers articles such as fixed rates vs variable rates, commercial mortgages, income protection and buying properties below market value.

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We hope you like the new layout and would appreciate your feedback. Please email me your comments to darren.pescod@tmblgroup.co.uk

The recovery in the mortgage lending market appears to be gathering pace, after the Bank of England revealed approvals had risen to their highest level since March last year. The number of loans approved for house purchase amounted to 56,215 in September, up from 52,970 in August and significantly higher than the 6 month average of 48,221. The suggestion a meaningful recovery might be under way was reinforced further by the latest data from the Building Societies Association (BSA). It revealed that the value of mortgages approved by building societies had increased to £1,565 million in September, almost 24% higher than the amount lent in August. "Lending activity has recovered in recent months when compared to the start of the year, as buyers and sellers tentatively return to the market," said Adrian Coles, BSA director-general. "However, lending is still at levels much below that of previous years, and the slight recovery remains fragile." In contrast, the size of the remortgage market has continued to contract, with the Bank of England confirming the number of remortgage loans approved last month dropped to 25,528, down from 28,348 in August. With base rate remaining at an all time low and a rise not anticipated in the near future, borrowers still appear content to remain on their lenders' reversion rates.

The average UK house price is higher than it was this time last year, the first annual rise for 19 months, figures from Nationwide show. Property prices were 2% higher in October than in the same month in 2008, with the average house costing £162,038. Martin Gahbauer, chief economist at Nationwide, says “although house prices rose for a 6th consecutive month in October, the strong upward momentum in property values seen over the summer is showing some signs of moderating as we head into the autumn months. A moderation in the rate of house price inflation was to be expected, as the very strong monthly increases seen over the summer months were unlikely to be sustainable over the long run. Slower house price inflation is also consistent with developments in housing market activity, as industry figures have shown that the pick-up in mortgage approvals for house purchases has lost some momentum in recent months. Although too early to tell for sure, it may also reflect a more natural level of stock available for sale coming to the market, alleviating some of the extreme shortages of property on the market seen during most of this year."

Demand from first time buyers has continued to rise after RICS revealed new buyer enquiries in August registered a positive net balance for the 11th consecutive month. Surveyors reported that 13% of new enquiries derived from first time buyers with a balance of 28% reporting that first time buyer enquiries had increased over the past 3 months. "House price falls and lower interest rates have gone some way to tempting first time buyers back into the market," said Simon Rubinsohn, RICS chief economist. "However, buyers still need to have greater deposits to access the market with lenders remaining generally cautious. This is making it hard to translate this interest into hard transactions."

Buy-to-let landlords who have weathered the storm of the last 18 months are being rewarded with rising rents and a dramatic reduction in stock levels, according to FindaProperty.com. With the 'accidental landlords' who flooded the rental market returning to an improving sales market and seasonal demand rising as students look for low cost accommodation, October saw the number of rental properties on the market plunge by 10%, following a 6% fall the previous month, bringing supply back to a level last seen almost a year ago. "Despite the fact that the economy remains uncertain and unemployment is still rising, the oversupply of rental properties is correcting itself almost as quickly as it occurred," said Michael O'Flynn, the website's director.

Research by the Association of Residential Letting Agents has found that landlords have increased their property portfolios over the past 12 months to take advantage of falls in house prices. The average number of properties owned by landlords has increased from 6.3 to 7 in the last year, bringing an end to the trend of shrinking portfolios in the buy-to-let sector, which began in early 2008. Chris Norris, Policy Manager at the National Landlords Association, said figures showed the resilience of the private rental sector: "The reported 11% increase in average portfolio size, from 6.3 to 7 properties, is good news for the private-rented sector and, crucially, means that more homes are being made available."

Darren Pescod

Sales Director

• Mortgage Deals of the Month

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• More People Turning Their Backs On The Banks For Financial Advice
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• First-Time Mortgage Outlook Not Too Bad
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• 2009
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