Housing & Mortgage Round Up: Mortgage approvals and house sales rise

Two positive stories for the housing market this week as we report that mortgage approvals and house sales are both on the rise.

However, the news is not so positive if you are a tenant, with average rents still higher than a year ago and a new survey showing the drastic measures forced upon some people simply to pay their rent.

Mortgage approvals rise to highest level since 2008

New figures show that mortgage lending dropped in January, compared to December, but was still up significantly on previous years.

The data, produced by the Council of Mortgage Lenders (CML), shows that 38,300 mortgages were advanced in January to people wanting to buy their home, down by 17% on December, but up by 11% on the same time last year.

The figure also represents the highest number of mortgages approved in any January since 2008.

The year on year increase was driven in part by a rise in the number of first time buyers; 15,900 loans were made to people buying their first home in January 2013, up by 24% on the same time 12 months ago.

Perhaps surprisingly, with mortgage rates at all-time lows, the number of remortgages advanced in January fell by 23% compared to the same time last year.

Reacting to the figures Paul Smee, Director General of the CML, said: Paul Smee said: “Seasonal factors clearly had an impact on lending figures in January, but it still remains the best start to a year since 2008. Mortgage finance is available and lenders are open for business, allowing more borrowers to take the step into homeownership or move house in line with their needs.”

House sales hit highest level for over two years

In further positive news for the housing market, the Royal Institution of Chartered Surveyors (Rics), has reported that house sales in February hit their highest level for two and a half years.

According to Rics an average of 17 homes were sold per surveyor in the three months to February and whilst the upward trend is expected to continue, prices remain relatively unchanged.

Peter Bolton, Global Residential Director at Rics, said: “It is encouraging to see that the housing market now appears to be picking up across most parts of the UK despite ongoing concerns about the health of the economy.”

“This may, in part, be down to the growing availability of mortgage finance through schemes such as Funding for Lending. However, even with activity running at its best level since the middle of 2010, it is still well down on its pre-crisis norm.”

Rental costs fall for fourth month in a row

In a sliver of good news for tenants, many of whom are would-be first time buyers saving hard for a deposit to buy their first home, the cost of renting a property fell in February.

The average rent has fallen for the last four months in a row and now stands at £731 per month according to LSL Property Services.

However, average rents are still 3.3% higher than this time last year, rising by around the same as inflation over the past 12 months but by more than wages.

David Newnes, Director of LSL Property Services, said: “The rental market has not yet burst into life, but we are seeing more vitality than last year’s timid February market, when tenant demand was impacted by the rush to buy homes before the stamp duty deadline.”

“In the longer-term, the supply of rental homes will have to increase considerably to prevent monthly rent rises when the rental market re-enters its traditional peak season.”

The survey also highlighted geographical differences, with the South-West the only region where rents have fallen over the past year, whilst property in London recorded the highest annual rise with an increase of 6.2% during the last 12 months.

Payday loans being used to pay rent

In the same week that the Office of Fair Trading (OFT) announced a clamp down on payday loan lenders, new research from a housing charity revealed that some tenants are using such loans to pay their rent each month.

Research from the housing charity, Shelter, shows that many tenants are struggling to keep up with increasing rents.

Shelter found that around two thirds, of the 4,300 who took part in the survey, are struggling to pay their rent each month or have already fallen into arrears. The drastic measures some people have to go to each month just to pay their rent are also revealed with one in 12 parents borrowing money from their children, one in seven using credit cards and one in 33 taking out a payday loan.

With rents rising by an average of £300 per year, the charity also revealed that calls to its helpline by people concerned about paying their rent, has risen by almost a third over the past 12 months.

Financial experts believe that the increased difficulties faced by tenants are in most part due to the rising cost of rents, despite the falls reported over the past few months, and stagnant wages, which are rising more slowly, coupled with the rising cost of other essential items such as utilities and fuel.

Reacting to the figures, Campbell Robb, Chief Executive of Shelter, said: “When families are forced to resort to taking money from their children’s savings or paying their rent on a credit card, it’s a clear sign that sudden rent rises are pushing many ordinary families to the edge.“

“If Government wants to make life easier for ordinary families, it has to reform our expensive, unstable rental market.”

Our mortgage adviser, Linda Wood, is here to help you. If you would like advice on your options or you are affected by any of the stories in this week’s housing round up please call  Linda today on 0115 933 8433, alternatively enquire online or email linda.wood@investmentsense.co.uk

Your home may be repossessed if you do not keep up repayments on your mortgage.

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