Weekly Round-up, 26th February, 2016.
Average house prices have increased by more than the average employees net earnings in more than a quarter of local authority districts across the UK – 108 out of 380 (28%) – over the past two years, according to the latest Halifax research.
The number of areas where house prices are outpacing earnings over the last two years has increased significantly over the past year: from 73 out of 384 (19%) a year ago to 108 out of 380 (28%). The vast majority of these areas are in London, the south east, and east of England with these three regions representing 97 of the 108 (90%).
The biggest gap between rising property values and earnings was in Three Rivers in Hertfordshire, where house prices increased by an average of £147,990 over the last two years, exceeding average take-home earnings in the area by £97,992. Seven London boroughs appear in the top 10 districts.
The top performers outside southern England were Warwick in the West Midlands and South Northamptonshire in the East Midlands, with house price gains in excess of earnings of £24,723 and £14,837 respectively during 2014 and 2015.
New analysis from the Council of Mortgage Lenders shows that mortgage repayment terms are continuing to get longer. Nearly 60% of first-time buyers now take out a loan lasting for more than 25 years. The trend towards borrowing over longer terms also extends to movers and those remortgaging.
Although pension freedoms and the fact that we are living longer will be influences, the main reason for lengthening terms appears to be related to borrowers stretching their incomes to get on the housing ladder.
There are other ways of coping with affordability problems, including borrowing at higher income multiples. But when the Financial Policy Committee introduced new limits on this, there was an immediate lessening of lender appetite to advance mortgages at higher income multiples.
Cover that pays.
VitalityLife this week announced it paid a record amount in claims during 2015, with more than £28m paid in claims on its Life, Serious Illness and Income Protection products. VitalityLife paid 98% of Life claims, 95% of Serious Illness claims and 96% of Income Protection claims in 2015 with 790 claims paid in total across all products.
Other statistics from claims paid in 2015 indicate that the average age for claimants was 59 for Life Cover and 46 for Serious Illness Cover, 63% of Life Cover claimants were male, 52% of Serious Illness Cover claimants were female and 790 claims were paid with a combined total of £28,654,324.
According to the latest statistics from the British Banking Association, the start of the year saw a significant rise in mortgage borrowing. It seems that this has been driven, in part, by borrowers looking to get ahead of the increases in stamp duty for buy-to-let and second home buyers scheduled to come into effect in April.
Net lending to non-financial companies saw the biggest monthly jump since July 2008 as businesses take advantage of record low interest rates. Demand from the transport, storage and communication and construction sectors was particularly strong.”
Gross mortgage borrowing of £13.6 billion in January was 38% higher than a year ago and the highest since mid-2008, the number of mortgage approvals in January was 33% higher than a year ago, with remortgaging up 42% and house purchase up 27%. Borrowing by non-financial companies increased fairly strongly in January, after declining in December, particularly in the transport, storage and communication and construction sectors.
He does exist.
The Advertising Standards Authority (ASA) have published 2015’s Top 10 most complained about ads and it was all about themes and issues that people found offensive. This, despite the fact the majority of complaints to us are about misleading ads.
Moneysupermarket.com tops the list with 1,513 complaints. The ad featured a man walking down a street and dancing in high heels and denim shorts, which some members of the public considered to be offensive.
Filling three slots in the Top 10 was Booking.com, at numbers two, four and seven, with their play on the word ‘booking’ which was thought to be in place of a swear word. The third most complained about ad (Paypal’s Christmas campaign) drew complaints because it cast doubt over the existence of Santa.
Featuring prominently in the Top 10 list are charity ads and public health messages (British Heart Foundation and Department of Health) which can sometimes prompt complaints due to their sensitive content and handling of hard-hitting issues.
Weekly Round-up, 19th February, 2016.
You’ve got friends.
Stress is one of the most common mental health conditions, with a third of people experiencing it, followed by anxiety and depression. For those suffering with anxiety, over a quarter cited money as the main cause, with money worries also topping the list for those suffering with depression. What happens if it leaves them unable to work? Protect+ income protection cover can replace a proportion of your client’s income if they are off work due to a mental health condition. The financial and emotional support it can provide means they’ll have one less thing to worry about so they can concentrate on getting better.
According to Friends Life, mental health conditions accounted for 35% of claims during 2014, making them the main cause of an income protection claim. The average length of a claim was 8 years and the average age of a claimant was 45.
Time to move.
Despite significant changes to the house buying market in 2015, the number of people moving home saw little movement from the previous year, according to the latest Lloyds Bank Homemover Review. Although stamp duty changes provided a savings boost for many homemovers and rising house prices helped to increase equity levels for those already owning their own property, the number of people moving house in 2015 stood at 365,0001 – slightly behind the 366,400 who moved in 2014.
Whilst the 2015 levels are 16% higher than the 2009 market low of 315,800, they are just half of the 2006 peak level of 712,000. Over the past five years, the average price paid by homemovers has grown by 30% from £210,252 in 2010, to £273,4912 in 2015 – an increase of £63,239, equivalent to a monthly increase of £1,054. This was a marginally faster rise than the increase in average house prices across the whole market (29%).
The average deposit put down by a homemover has increased by 22% in the past five years, from £74,649 in 2010 to £91,020 in 2015 – this is equivalent to 33% of the average price paid by homemovers.
8 years on.
The Council of Mortgage Lenders (CML) estimates that gross mortgage lending reached £17.9 billion in January. This is 9% lower than December’s lending total of £19.8 billion, but 21% higher than the £14.8 billion lent in January last year. This is the highest lending total for a January since 2008 (£25.2 billion).
The trade body representing the majority of Lenders in the UK has suggested that lending has started the year on a positive note. Their monthly estimate is 21% higher than a year ago, with the current growth rate in lending similar to the closing months of 2015.
The CML believe the UK market fundamentals are helping to underpin this recovery, with real wage growth, an improving labour market, competitive mortgage deals, and government schemes all supporting household demand. They still only see limited upside potential going forward, as the number of properties for sale on the market remains low and affordability pressures weigh on activity. It appears that the upcoming tax changes in the buy-to-let sector are also adding an element of uncertainty to the market.
The Office for National Statistics has released its latest survey results which shows UK house prices having increased by 6.7% in the year to December 2015, down from 7.7% in the year to November 2015. House price annual inflation was 7.3% in England, 1.0% in Wales, -0.2% in Scotland and 1.5% in Northern Ireland.
Annual house price increases in England were driven by an annual increase in the East (9.7%), London (9.4%) and the South East (8.8%). If you exclude London and the South East, UK house prices increased by 4.6% in the 12 months to December 2015.
On a seasonally adjusted basis, average house prices decreased by 0.2% between November 2015 and December 2015. In December 2015, prices paid by first-time buyers were 6.4% higher on average than in December 2014. For owner-occupiers (existing owners), prices increased by 6.9% for the same period.
Back to school.
Britons urgently need to brush up on their biology as a new study released this week highlights the worrying number of people who confess to not having a basic understanding about how some of their most vital organs work, or the best food and drink we should be feeding our bodies.
Commissioned by Bupa UK, the study revealed that nearly two-thirds (63%) of Brits don’t know the main functions of their kidneys; over three-quarters (79%) don’t know the main functions of their liver; whilst over two-thirds (44%) don’t know the main functions of their lungs, not realising that they help rid the body of carbon-dioxide.
This worryingly low body IQ extends to not understanding the best types of food needed to fuel our bodies. Nearly a quarter (23%) of respondents don’t know that milk and dairy products are good sources of calcium, and over half of the nation (52%) confess to being clueless about which food groups provide the best nutrients for their vital organs.
When it comes to knowing how different organs impact and affect our health, the study of 2,000 respondents highlighted some factors that might explain this current lack of body intelligence. Even when people are looking for help or advice with a personal health issue or concern, only 3 in 10 of us (32%) will typically turn to a doctor in the first instance and nearly one-fifth of the nation (18%) will first turn to their partner. This dependence on advice from friends and family could be due to the fact that an alarming 47% of people struggle to understand medical language and terminology.
The job just got easier.
A conscientious “wanted thief” left a handwritten note for police urging them to give the suspect a call. Officers working a local beat for West Midlands Police tweeted a picture of the message they found taped to a door, with the comment that their persistence in tracing the individual appeared to have paid off.
Police working the Bushbury and Oxley neighbourhood patch in Wolverhampton said: “The team’s persistence paid off with a little note left on a door from a wanted thief.” The letter writer also left a name and contact telephone number – both redacted in the image posted to Twitter. The officers said the matter would be resolved by Thursday.
In the note, its writer stated they would like “to meet you, like before, OK?” It continued: “A friend in the street said you had been (officers, anyway). Ok – call me and I will come down and sort whatever out! After I finish work is best.”
It ended: “So yes, just call me. Thanks.”
Weekly Round-up, 12th February, 2016.
Fixed rate mortgages fell to their lowest levels in 2015, whilst the standard variable rate remained static, meaning the potential savings for borrowers improved significantly over the course of the past two years, according to the latest research from Halifax.
The average interest rate on a new fixed rate mortgage fell a further 0.59% over the past 12 months, whilst there was no change in the standard variable rate over the same period. This means that the average fixed rate now stands at 2.66% compared with the average standard variable rate of 4.49%, with the gap between the two widening by 1.81 percentage points since August 2012.
As a result the amount homeowners could be saving by switching to a fixed rate deal has increased by 50% in the past two years. In November 2013, the average monthly payment of a homeowner who took out a two-year fixed rate on a £100,000 mortgage would have been £485. At the same time, the payment on a standard variable rate mortgage would have been £551 – a monthly saving of £66. A borrower taking out a fixed rate in November 2015 would be paying £457 a month on a £100,000 loan compared with £555 on the average standard variable rate – a saving of £99 a month; 50% higher than two years’ earlier.
One in a thousand.
Fewer than one in 1,000 mortgages ended in repossession in 2015, according to the latest update from the Council of Mortgage Lenders. And, with fewer than 1 in 100 mortgages in any sort of arrears, at 0.92% the annual arrears rate is also at its lowest for more than a decade.
Beneath the headline figures, the CML quarterly data shows home-owner mortgage arrears running at 1.03% of all loans at the end of 2015, with buy-to-let at a lower rate of 0.31%, continuing the recent trend of a lower prevalence of arrears in the buy-to-let market. However, the picture is reversed on repossessions, with around 1 repossession per 2,500 mortgages in the buy-to-let market in the fourth quarter of the year, compared with 1 in 5,000 in the home-owner market.
Across the whole market, most Lenders had relatively modest levels of arrears (under 5% of the mortgage balance). The number of loans with arrears in the most severe band, representing 10% or more of the mortgage balance, was 23,700 – down from 24,200 at the end of 2014. The modest decline in the most serious arrears band may partly reflect distortions in the timing of possessions, but the overall arrears trend is clearly down.
The latest Royal Institute of Surveyors UK Residential Market Survey has seen a modest rise in new instructions in January. However, with buy-to-let investors rushing to get into the market ahead of the stamp duty hike, the near-term pressure on prices is intensifying despite a higher level of supply.
RICS are still waiting to see how the tax changes planned for the buy-to-let sector over the next few years play out, but there are concerns raised in the survey that existing landlords will look to either gradually scale back on their portfolios or exit the market altogether as the more penal regime begins to bite. Against this backdrop, it is perhaps not surprising that their key indicators point to further rent — as well as house price — increases.
New buyer enquiries rose for the tenth successive month in January, with the pace of growth in enquiries accelerating for a second consecutive report. Feedback to the survey continues to suggest that the recent increase in demand is due to a rush of buy-to-let investors looking to buy before the 3% stamp duty surcharge comes into effect in April. Critically, 74% of respondents expect there to be an increase of purchases by buy-to-let investors prior to the changes.
Nothing to smile about.
Employees missing work due to oral health problems costs the UK economy an estimated £36.6 million each year, according to a leading health organisation.
The British Society of Dental Hygiene and Therapy (BSDHT) have drawn attention to the statistics as part of National Toothache Day this week to highlight the impact that preventable dental problems have on the UK economy. A nationwide study of UK employees has discovered an estimated 415,000 people miss at least a day of work each year due to oral health problems while one in five say they would be prepared to call in sick because to a toothache.
The Chartered Institute of Personnel and Development have calculated that the average cost of missing a day’s work in the UK is £80.20 per person.
With Valentine’s Day this weekend, a new study has revealed that many relationships start in the office, with one in five people meeting their partner at work. A survey of 1,600 adults by the TUC showed that one in three have had a relationship with a colleague.
A fifth of those questioned who are married or in a civil partnership met their partner at work. The TUC warned office romances can cause problems, especially if one partner has a senior job. The union organisation suggested workers should tell their boss about an office relationship, or check for any company policies on in-house romances.
TUC general secretary Frances O’Grady said: “It’s hardly surprising that relationships start around the water cooler – after all, we work longer hours than anyone else in Europe. Of course it is right to be careful and think through all the implications, but heavy-handed rules and blanket bans fail to understand human nature and are unnecessary. A bit of common sense from employers is all that’s required.”
Is short-termism the answer?
You may have seen in the trade press this week that Bridging Loans to the over 40’s or Short Term Loans to the Trade Body would, on the face of it, seem to be playing a significant role in the UK Mortgage Market.
The Association of Short Term Lenders says its members are now writing £2.5bn-worth of loans a year and they suggest the true size of the regulated sector stands at £4bn. Of course the Mortgage Market Review has helped the sector with more customers who are looking to buy property having to avail themselves of advice, and that need is being satisfied by Intermediaries who truly understand the market both long and short. What was once a “computer says no” can now be achieved with a little imagination and a lot of knowledge on criteria.
The Chancellor has also helped the sector by imposing deadlines such as a stamp duty rise in April. If you are a Landlord looking to grow your portfolio by one to more “units”, especially if you need to hit the magic 15, then it’s going to be virtually impossible to raise equity and complete on a purchase before the deadline and an additional 3% stamp duty is added through the typical 1st charge mortgage route.
But, of course, no-one is stopping the speedy short term loan provider from stepping in and helping purchase the investment property with a remortgage after April as the exit strategy. The short term loan market, on the face of it, is still the one sector that is showing a level of invention, a little imagination and plenty of innovation. Many professional Landlords are coming to the conclusion that, with the Chancellor appearing to have a desire to rebalance the books between renters and first time buyers, they have found short term loans as a flexible friend giving them access (those of you old enough will get the pun) to portfolio growth.
The market has come a long way since the days of using bridging to avoid chain break, especially as many of us now choose to Let to Buy and not just Buy when we compare rental yield and property value growth against savings rates. Of course the value of investments can go down as well as up – the recent turmoil in the stock market has proved that it’s not easy to pick the right place to put your money or even when is the right time to take a dip. When time is pressing, short-termism can be a winner.
Neil Hoare, Commercial Director, HLPartnership.
Weekly Round-up, 5th February, 2016.
According to the Halifax, the quarterly rate of change of House Prices increased following two successive months is below 2.0%. The annual rate has been in a narrow range between 8% and 10% for nearly the whole period since the start of 2015. Monthly house price changes can be volatile. The quarter on quarter change is a more reliable indicator of the underlying trend. Despite declining steadily since last May, house price optimism (HPO*) in the final quarter of 2015 continued to show that a majority of people believe that average UK property prices will be higher 12 months from now (+61 compared to +68 in May 2015).
UK home sales totalled 1.23 million in 2015; marginally higher than the 1.22 million recorded in 2014. Sales picked up during the year with transactions in the second half of 2015 6% higher than in the same period in 2014. (Source: HMRC, seasonally-adjusted figures).
The volume of mortgage approvals for house purchases – a leading indicator of completed house sales – increased by 1% between Quarters 3 and 4 of 2015. Approvals in the final three months of 2015 were 18% higher than in the same period a year earlier. (Source: Bank of England, seasonally-adjusted figures) New instructions by home sellers increased slightly in December for the first time since January 2015. This, however, could not prevent the stock of homes available for sale declining to a new record low as sales also rose. (Source: Royal Institution of Chartered Surveyors’ (RICS) monthly report).
Bank rate no change.
When the Bank of England’s Monetary Policy Committee met this week they highlighted the scale of recent commodity price falls means would most likely keep inflation below 1% until the end of the year but then start to rise as the drags from energy and other imported goods unwind. The range of views among MPC members about the balance of risks to inflation were presented in the February Inflation Report. As a result, at its meeting ending on 3 February, the MPC judged it appropriate to leave the stance of monetary policy unchanged. The MPC judges it more likely than not that Bank Rate will need to increase over the forecast period to ensure inflation remains likely to return to the target in a sustainable fashion.
All members agree that, given the likely persistence of the headwinds weighing on the economy, when Bank Rate does begin to rise, it is expected to do so more gradually and to a lower level than in recent cycles. This guidance is an expectation, not a promise. The actual path Bank Rate will follow over the next few years will depend on the economic circumstances.
World Cancer Day.
Cancer death rates in the UK have fallen by nearly 10 per cent* over 10 years according to the latest analysis released on World Cancer Day by Cancer Research UK this week. This now means that in 2013, 284 out of every 100,000 people in the UK died from cancer – around 162,000 people. A decade ago this was 312 in every 100, 000**.
The rate of cancer deaths has fallen, and this is largely due to improvements in detection, diagnosis and treatments. Without these research-led advances, the rate of cancer deaths would undoubtedly have risen.
Further encouraging news is seen in the narrowing gap between men and women’s cancer death rates. Men’s death rates have fallen by 12 per cent from 397 for every 100,000 in 2003 to 349 per 100,000 in 2013. This compares to an eight per cent drop in women – falling from 259 per 100,000 women in 2003 to 240 in 2013. This equates to around 85,000 men and 77,000 women dying from cancer each year in the UK.
Four cancers – lung, bowel, breast and prostate – cause almost half (46 per cent) of all cancer deaths in the UK. The combined death rate for these four cancers mirrors the overall fall, dropping by around 11 per cent over the last 10 years, from 146 people per 100,000 in 2003 to 131 people per 100,000 in 2013.
But it’s not all good news. For some cancers, such as liver and pancreatic, the rates of people dying from the disease have increased over the last decade. As the population is growing and more people are living longer– and cancer is primarily a disease of old age – the total number of cancer deaths has increased. Around four-fifths of cancer deaths occur in people aged 65 and over, and more than half occur in those aged 75 and older. Globally, there are an estimated 8.2 million deaths from cancer – 4.7 million in men and 3.5 million in women.
The continued confidence in the UK property market was highlighted with new research revealing that half of UK homeowners anticipate an increase in the value of their property over the next 12 months.
The annual Housebuyers Research from Clydesdale and Yorkshire Banks underlines the stability and levelling out of the market as the latest figures show confidence has doubled since 2013 and is only slightly less (4%) than it was in 2015.
The new findings also show that only 2% of the population are concerned that their home will decrease in value while 48% anticipate no change London remains the key property hot spot with almost three quarters of those surveyed (73%) confident in escalating prices in the capital and no-one predicting a downturn in property prices.
In contrast only a third of respondents in the North West (33%) believe their property will increase in value in 2016, with 65% believing there will be no change and 2% fearing a decrease.
Is there something I’ve forgotten?
A prosthetic leg, a life-sized Spiderman doll and “enough musical instruments to form a band” have been lost on London’s travel network. More than 300,000 items were left on the capital’s trains and buses last year as Transport for London received a record haul of missing goods.
Aside from the more peculiar finds, thousands of tablets, umbrellas and wallets were also handed in to TFL’s lost property office – described as a “wonder emporium” by manager Paul Cowan.
Alongside the daily haul of around 150 mobile phones, the office has received a full-size house carpet, a judge’s wig and a hoard of musical instruments including drum kits.
Last year 22% of the 302,714 items handed in were returned to their rightful owners including a brown envelope containing £15,000 and an urn of ashes that had been kept by workers at the lost property office for almost seven years.
Mr Cowan, who calls his job “one of the best”, said the number of items lost on the network would increase as more passengers used the service. “We’ve had urns of ashes come through, bundles of notes, we’ve got enough musical instruments, guitars and trumpets and flutes and clarinets, even drum kits to start our own band.”
All items handed in to TFL end up at the three-storey building next to Baker Street station and are stored for three months before being donated to charity, sent to auction or recycled.
Each year thousands of umbrellas, items of clothing and bags are donated to the British Red Cross, Scope and the Salvation Army through the scheme.