Government pledge more land for Self Builders

SELF build and renovation specialists, BuildStore, has welcomed an announcement by Minister for Housing, Grant Shapps, in which he unveiled new measures to support people wanting to build their own homes, adding that self building “should be an option for all”.

In a speech at the Grand Designs Live Show in London today (3rd May 2011), Mr Shapps said he wanted the UK’s self build rates to catch up with Europe’s and to become a mainstream housing option.

Further to his announcement about the Government’s new ‘Build Now, Pay Later’ scheme last month, Mr Shapps said he wants public and private land to be made available for individual self builders, and community self build schemes. He called on housing associations and local authorities to show more support for the self build sector, and private landowners and investors to release more land to the growing self build community. He said he would soon reveal the first publicly owned sites to be made available to housebuilders with plots exclusively for self-builders.

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Mortgages paid off at record rate

Bank of England figures show homeowners paid off £7bn of mortgage debt in the last quarter of 2010

Homeowners paid off their mortgage debt at the fastest rate since records began in 1970, injecting £7bn of equity in the final quarter of 2010, according to the Bank of England.

This was well up on the net repayment of £6.6bn in the third quarter of 2010, as well as the £6.2bn seen in the first quarter, and represents the largest net injection of equity on record.

It also marks the eleventh successive quarterly net repayment of mortgage debt, meaning homeowners have been investing more in their homes than they have been taking out in loans – paying off a total of £57.4bn since the second quarter of 2008.

In contrast, there was persistent housing equity withdrawal between 1997 and the first quarter of 2008 – including a sizeable £13.8bn in the first quarter of 2007.

The trend for repaying mortgage debt is being fuelled by homeowners using extra money from lower mortgage interest payments to reduce the balance they owe on their houses, while extremely low savings rates make it far more attractive for people to use spare cash to reduce their mortgages.

Tight credit conditions have also made it more difficult for many people to withdraw housing equity.

Howard Archer, chief European and UK economist at IHS Global Insight, said: “The record figures highlight the strong desire and perceived need of many people to improve their personal balance sheets given high debt levels and serious concerns and uncertainties over the economic situation.

“The overall softening in house prices from their late-2007 peak has made housing equity withdrawal less attractive. And of course, house prices have fallen anew overall in recent months, which is likely to further encourage a net injection of housing equity in the near term at least.”

Housing equity withdrawal was used to support consumer spending during the boom years, but Archer said the ongoing net injection of housing equity is adding to the constraints on consumer spending, including high unemployment, negative wage growth and high debt levels.

Source: The Guardian

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Surprise fall in inflation cuts interest rate pressure

MORTGAGE payments could remain at rock bottom until the beginning of next year, experts have predicted, after a surprise drop in the rate of inflation in March reduced pressure on policymakers to raise interest rates.

New data showing a rise in inflation of just 4 per cent last month came as a shock to economists, who expected that the cost of living – measured by the Consumer Price Index (CPI) – would increase again, as it has done for nine months. The index stood at 4.4 per cent in February.

The falling cost of food and drink was the main driver of the lower CPI, the Office for National Statistics’ figures revealed.

The price paid for products including fruit, bread and cereals, slumped as supermarkets and grocery shops slashed costs amid falling consumer confidence in the wake of looming public sector job cuts and tax changes announced in the Budget.

Lower-than-expected inflation will weaken the prospect of an interest rate rise – which will come as welcome news for Scotland’s home-owners, but a disappointment for those with healthy balances in their savings accounts, who were hoping rates would begin an upturn.

Members of the Bank of England’s Monetary Policy Committee (MPC) have recently come under increasing pressure to raise interest rates – which have remained at 0.5 per cent for 25 months in an effort to kick-start the country’s flagging economy.

Source: News.scotsman.com

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First time buyers’ mortgage approvals increase

Chartered surveyors are reporting a sharp rise in mortgage approvals, suggesting that first-time buyers are finding it easier to get on the house price ladder once again.

Research from chartered surveyors eSurv showed that approvals rose by 4.3pc in March compared with February, while those with smaller deposits are finding it easier to take out a home loan.

The year-on-year comparison is more positive too, with decline slowing to 0.6 per cent compared to March 2010, the slowest year on year decline since it began falling in May 2010.

According to the survey, the volume of high loan to value mortgages has increased. The number of people buying with a deposit of 10 to 15 per cent grew a third faster than average. It is generally first-time buyers, with smaller deposits, who take out this type of loan.

Cheaper properties were also popular, with those up to £125,000 accounting for a third of all mortgage approvals. According to the Council of Mortgage Lenders (CML), the average first-time buyer mortgage is £100,000, while the average mortgage for a home mover is £130,000.

Richard Sexton, business development director of eSurv, said that more first-time buyers were jumping in thanks to record rents, and more high loan-to-value products on the market.

Source: The Telegraph

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£250m plan to get first-time buyers on to property ladder

First-time buyers struggling to raise a deposit received a budget boost with the announcement of a new scheme to help them get on to the property ladder.

The Government has earmarked £250m from the Bank Levy to help around 10,000 households with incomes of up to £60,000 buy a new-build property.

Under the FirstBuy initiative, buyers must save a deposit worth five per cent of the property’s value, with the Government and housebuilders putting up 10 per cent each through an equity loan, enabling people to qualify for 75 per cent loan-to-value mortgage. The equity loan will be interest-free for the first five years.

The Government hopes the scheme will also provide a boost to the construction industry and support up to 50,000 jobs, after the number of new homes that were built fell to their lowest peacetime level since 1923 last year.

The initiative is almost identical to the Homebuyer Direct scheme that was launched by the previous government in 2009. Around £275m of funding was made available for that project and it has helped 9,000 people to buy their first home.

The Council Of Mortgage Lenders welcomed the announcement, saying it would provide ‘modest help’ for first-time buyers.

A spokeswoman said: “Every little helps, but it is not going to fundamentally change the landscape.”

Claire Jarvis, sales manager for Persimmon Homes North West, said: “We recognise how important first-time buyers are in sustaining the property market and the prediction that FirstBuy is expected to help 10,000 families get on to the property ladder is welcome.”

John Cosgrave, managing director of Warrington-based, Arley Homes, said the policy will be some benefit to the market as a whole but would not impact Arley directly:

“The Government has made a commitment to help get the market moving, which is something we have long been calling for, and I’m glad to see it comes in the form of practical support for first time buyers who are in desperate need of help and are the foundation blocks of the housing market.

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