Housing & mortgage round upThe latest house price survey shows a small fall, whilst the buy to let market continues to boom, especially in Nottingham and the East Midlands as the number of buy to let mortgages available rises.

In other news the government has announced more details on the NewBuy scheme designed to help kick start the housing market.

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House prices show small decline

The Nationwide house price survey showed a slight fall in the first month of the New Year.

The UK’s largest lender has said that prices in January fell by 0.2% compared to December, taking the average UK house price to £162,228.

The survey also revealed that the annual rate of growth, which was 1% in December, has now slowed to 0.6%.

Responding to the figures the Nationwide’s chief economist, Robert Gardner, said: “Given the challenging conditions prevailing in late 2011, with the UK economy contracting in the final three months of the year, it is not surprising that house price growth softened at the start of 2012,” said Robert Gardner, Nationwide’s chief economist.”

Gardner continued: “The economy is not expected to gather much momentum until the second half of 2012 at the earliest, which suggests that labour market conditions and buyer sentiment may be slow to improve.”

Financial experts have been saying for some time that the housing market is subdued due to tight mortgage lending criteria, which is making it harder for some groups, particularly first time buyers, the self employed and people with a small deposit, to get a mortgage.

Until recently the number of mortgages available for people with smaller deposits were extremely limited, however data from Moneyfacts shows that those people with small deposits now have more choice. At the beginning of February the number of mortgages available for people with just a 10% deposit had increased to 343 from 280 in the previous month.

NewBuy Mortgage Guarantee Scheme launched

The government have released more details about its mortgage guarantee scheme which was first announced late last year.

The NewBuy Mortgage Guarantee Scheme, as it is now known, is designed to help kick start the housing market and will provide guarantees to lenders for mortgages of up to 95% loan to value.

The NewBuy scheme will be available to both first time buyers and home movers, but as the name suggests is restricted to new build properties, with a maximum purchase price of £500,000.

The government hopes that many leading lenders will sign up to the NewBuy scheme, the Nationwide Building Society have already agreed to take part, which will see the government underwriting losses should a property be repossessed by a lender and sold at loss. The government and taxpayer will meet the cost of the scheme.

Unveiling the scheme Mr Shapps said he wanted to “go the extra mile” to help people get on the housing ladder.

He continued: “The pattern of the past has been to produce endless policies and initiatives that simply gather dust on Whitehall shelves and lead to inaction and inertia.”

“But with the prime minister putting housing centre stage on the road to economic recovery, I am determined we shall not repeat these mistakes of the past.”

East Midlands buy to let landlords see rents rise the fastest

This week saw good news for buy to let investors in Nottingham and the wider East Midlands as a new survey showed that properties in the region are achieving the highest yield across the UK.

What is the average buy to let yield in your region?

1. East Midlands: 6.4%

2. South East (excluding London): 6.1%

3. South West: 6.0%

4. London (outer): 5.9%

5. North West: 5.9%

6. Wales: 5.8%

7. East of England: 5.7%

8. West Midlands: 5.7%

9. London (central): 5.6%

10. North East: 5.2%

11. Scotland: 5.2%

12. Yorks & Humber: 5.2%

The research, produced by buy to let lender Paragon Mortgages, showed that the average rental yield in the East Midlands was 6.4% in the last three months of 2011.

Yields compare the rental income with the value of a property, are important for buy to let landlords when considering whether to purchase a property.

The next two regions were the South East (excluding London) and the South West, which saw yields of 6.1% and 6.0% respectively.

Interestingly the survey also revealed that detached properties produced the best yields giving an average yield of 6.6%, terraced houses were second at 6.1% and houses of multiple occupancy (HMO) third at 6.0%.

Paragon Mortgages Managing Director, John Heron, said:

“The yield a landlord’s rental property generates is a key indicator of how well the property is performing and is an essential part of the landlord’s overall business plan.”

Mr Heron continued: “It is interesting to see the shift in the regions that are taking the top spots in the yield table and the fact that the East Midlands took first place from the West Midlands.

“As we progress into 2012 I suspect we will continue to see changes in yield patterns and how different regions fair against each other, with demand still at a peak I believe landlords will continue to achieve healthy yields in the coming months.”

Number of buy to let mortgage deals rise

New figures, released by Moneyfacts, have shown that the number of buy to let mortgage deals has jumped from 386 last February to 486 at the same time this year.

Interest rates have also dropped with the average rate now 4.79% compared to 5% a year ago.

Tight mortgage lending criteria has forced many people to remain in rented accommodation, causing a boom for buy to let landlords, something which  mortgage lenders are clearly trying to take advantage of with lower interest rates and extending their range of buy to let mortgages on offer.

Louise Holmes of Moneyfacts, said: “During the peak of the credit crisis the number of buy-to-let deals shrank considerably as lenders saw it as a high risk area of the market. “

Holmes continued: “Many aspiring home owners have had their property dreams dashed due to strict lending criteria and large deposits, meaning the only option left is to rent. This increase in demand for rental properties has resulted in a degree of competition returning to the buy-to-let sector, giving it a well-needed boost.”

“These latest figures, particularly a reduction in the average rate, should make pleasing and encouraging reading for landlords and property investors.”

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

For providing mortgage advice we will charge an application fee of £299 and we may also be paid a fee from the lender, any fee paid by the lender will be disclosed to you. Alternatively we will charge an arrangement fee of 0.5% of the loan and refund to you any payment received by us from the lender.

The Financial Services Authority does not regulate some forms of buy to let mortgages.