Self build mortgage offers rise at Buildstore

Self build and renovation specialist BuildStore has announced a 30% increase in self build mortgage offers in the last three months to April, compared to the same period last year.

The company has also reported a similar year-on-year increase in the number of mortgage completions, signalling a growing trend for building your own home.

Whilst the wider housing market is still slowly recovering, the self build market is performing relatively well, especially with the Government’s pledge to grow the sector to the same levels of European countries, which are up to five times larger than the UK market.

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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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