Life is too short to watch every move the property world makes. Here's what happened during January.
Base rate
The Bank of England left the base rate of interest unchanged at 4.75%.
The mortgage market
Figures from the Council of Mortgage Lenders show that gross mortgage lending fell marginally in December, to £21.3 billion compared with £21.7 billion in November, and was 13% lower than the December 2003 figure. Total lending in 2004 reached just under £292 billion — 5% up on 2003. Out of a total 1.2m loans for house purchase in 2004, 31% were to first-time buyers, up a little from 29% in 2003. This means there were around 369,000 loans to first-time buyers in 2004, compared to 367,000 in 2003. These figures are both low by historical standards. The typical first-time buyer borrowed 86% of the value of the property, down from 89% 2003. As house prices have risen, buyers have needed to come up with higher deposits, which has accounted for this fall. In parallel, typical income multiples have risen, with first-time buyers in 2004 borrowing an average of 3 times their income.
CML Director General Michael Coogan says: 'Going into 2005, we expect the slowdown to continue into the spring. Over the year as a whole we anticipate a stable market, with a healthy level of activity but without the dramatic increases in house prices and lending volumes experienced in 2004.'
The property market
UK house prices fell further in December, but at the slowest pace in three months according to The Royal Institution of Chartered Surveyors (RICS)' monthly housing survey. This stability is based on expectations that interest rates have peaked. The flow of available property coming onto the market continues to rise and the increase in new instructions has resulted in higher levels of unsold property on surveyors' books. These hit a one and a half year high in December and have risen 17% over the past year. Surveyor confidence in price prospects for the next three months remains subdued with further moderate price falls predicted. Almost all regions report a drop in agreed sale prices. Southern England and the Midlands see the most significant declines, with London prices little changed, indicating that the market's downturn is likely to have bottomed out. Only in Scotland are prices still rising, but at a significantly reduced rate compared to last summer.
RICS spokesperson, Ian Perry comments: ‘Speculation that interest rates have peaked seems to have given encouragement to buyers during a period which is traditionally quite weak. With the economy sustaining moderate growth, the conditions for a mild pick-up in the housing market are in place for 2005.'
Buy to let
Paragon Mortgages' January 2005 Buy-to-Let Index shows landlords earning total annual returns of over 31% in the year ended 31st December 2004, realising a return of £38,560 on an average property bought 12 months ago at £123,372. This compares with total annual returns of 20% or £22,137 in December 2003. John Heron of Paragon Mortgages, comments: 'Landlords had a very good year in 2004 with their overall returns outstripping most other forms of investment. The average total return is over 31%, while in some regions it is significantly higher: 57% in Wales, 51% in the North and 44% in Yorkshire and the East Midlands.'
And finally....
People in the UK are spending less time at the cinema or down the pub socialising and more time socialising at home according to research by home insurer More Th>n. Just over a third of us spend every night in the home, and six out of ten of Britons go out on a Saturday night only once a month or less. This new 'staying in' culture is driving increasing spending on home improvement and entertainment systems within the home. Many people in the UK have set up home cinemas with plasma screen televisions, satellite television and DVD players. Over 7 million homes have Sky channels and 3.3 million have cable channels.
New products
• Bradford & Bingley launched its new mortgage broking proposition, consisting of a mortgage panel of 25 lenders, a flat rate client fee of £199 and a commitment to consistently offer market-leading deals. The structure and size of the new panel, offering a wide variety of products and services, has been based on the results of extensive consumer and adviser research and lender analysis.
• Alliance & Leicester has launched a new range of mortgages, available from Tuesday 25 January and includes a Long Term Base Rate Tracker (Fully Flexible) - 4.75% (5.5% APR) for one year then Bank of England Base Rate plus 0.55% for life of the mortgage; New Three Year Fixed Rate - 4.89% (5.7% APR) fixed until 30 April 2008 then Bank of England Base Rate plus 0.75% for life of the mortgage and New One Year Fixed Rate — Switcher Special - 4.79% (5.8% APR) fixed until 30 April 2006 then Bank of England Base Rate plus 0.75% for the life of the mortgage.
• Bank of Ireland Mortgages (BIM) has launched (14/01/05) a new range of mortgages including 4.99% Standard 2 year discount to 30/04/2007; 5.29% Standard 3 year discount to 30/04/2008; 5.60% Buy-to Let 2 year base rate tracker to 30/04/08 and 5.59% Self-Certification 3 year discount to 30/04/2008
• Highlights from the new Bristol & West Mortgages range include standard 2 year fix 4.89% fixed until 31/03/07; offset tracker 5.40% variable (BBR + 0.65% for term); self-cert 3 year discount 5.75% variable (1.09% off SVR) until 31/03/08.
• Chelsea Building Society has launched a new 3-year fixed-rate, 5-year fixed-rate and 5-year fixed-rate plus. The existing 2, 3, 5 year fixed rate and 5 year fixed rate plus Cashback mortgages have been withdrawn.
• The Mortgage Works, a subsidiary of Portman Building Society, launched a range of adverse credit mortgages with fixed and discounted rates and no extended early redemption charges.
• Paragon's buy to let mortgages include a 2 year fixed rate of 5.45% until 31 st May 2007 and a 2 Year discounted tracker at 3 month LIBOR +0.55% for the first 2 years, thereafter LIBOR +1.25%
• Portman Building Society unveiled a raft of fees free deals: 2 Year Fixed Rate - 4.85%; 3 Year Fixed Rate - 4.95%; 5 Year Fixed Rate - 4.99%; 2 Year Discount - 1.75% discount. Compare 1000s of mortgages here
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