Housing & Mortgage round up: Concerns mount over Help to Buy, whilst housing market picks upThis week saw the IMF join an increasingly long line of critics of the Government’s Help to Buy Scheme. However, there were also signs the housing market is recovering, with news that both mortgage lending and house prices have risen.

Read on for all this week’s mortgage and housing news.

IMF warning over Help to Buy

The government’s Help to Buy Scheme, designed to kick start the housing market by helping borrowers buy a new home, was criticised this week by the International Monetary Fund (IMF).

The scheme was announced in George Osborne’s March Budget, with the first part, a shared equity loan, being launched in April. The second part, which will see the Government helping to underwrite the risk of mortgage lending, will be launched in early 2014.

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However, the IMF has joined a growing band of critics, warning that the scheme could push house prices up whilst undermining the ability of would-be homeowners to get onto the housing ladder.

Following a review of the UK economy, the IMF said: “This measure may temporarily help boost confidence in the housing market, but there is a risk that, in the absence of an adequate supply response, the result would ultimately be mostly house price increases that would work against the aim of boosting access to housing.”

The criticism comes after outgoing Bank of England Governor, Mervyn King, also revealed reservations. King said:  “We do not want what the US has, which is a government-guaranteed mortgage market, and they are desperately trying to find a way out of that position. We mustn’t let this scheme turn into a permanent scheme.”

Housing market picking up?

New figures have pointed to a pickup in activity in the housing market, with the number of mortgage approvals rising.

Council of Mortgage Lenders (CML) figures have shown an increase in mortgage approvals of 4% in April, compared to the previous month and by a whopping 21% on the same month last year.

The CML said April was one of the “strongest months” for lending since 2008.  But also warned meaningful comparisons were difficult, as April 2012 was the first month after the end of the stamp duty holiday for first time buyers and saw a significant reduction in activity, as buyers brought forward their purchase to benefit from the holiday.

Bob Pannell, Chief Economist at the CML, said:  “Our forward estimate is that gross lending in April was £12.1 billion. This would have been 4% up on March. The comparison with April last year, 21% higher, is flattered by the temporary dearth of house buying activity immediately following the closure of the stamp duty concession.”

Pannell continued: “The true underlying position is that April is likely to have been one of the strongest months for lending activity since late 2008, but not as strong as the year-earlier comparison suggests. Gross lending on a seasonally adjusted basis has been running comfortably above £12 billion for several months, but this is still barely half the average level of lending seen in 2003-4.”

Property prices on the rise too

In a further sign that the housing market is perhaps picking up, the Office for National Statistics (ONS) has reported a rise in UK house prices of 2.7% in the 12 months to March.

Experts warned though, that the recovery in the housing market remains patchy, with the growth in the UK market being driven by price rises in England and Wales; whilst house values in Scotland and Northern Ireland have fallen.

According to the ONS, house prices in England have risen by 3% over the past year and by 1.2% in Wales. Unsurprisingly, prices in London showed the largest increase, rising by 7.6% over the past 12 months.

The ONS report the average house in the UK is now worth £235,000; significantly higher than the estimates given by the Nationwide, Halifax and Land Registry.

Nationwide gains market share

New figures from the Nationwide Building Society have shown their share of the mortgage market has risen to record levels.

Already the UK’s largest building society, the Nationwide has now said it accounts for 15.1% of the UK mortgage market, whilst gross lending also rose by 17% over the past 12 months to over £21 billion.

20% of homebuyers regret their mistakes

A new survey from consumer organisation, Which? has shown 20% of people have regrets about some aspect of the home buying process.

Which? surveyed 1,000 people and found common reasons for regret included, paying too much for the property, failing to check for defects, applying for the wrong type of mortgage or being missold a mortgage related product.

Many homeowners, who later had regrets, felt they made decisions which were too hasty, keen to secure their dream home.

James Daley of Which? Money, said: “Buying a house is constantly topping the list of the most stressful life events, and it’s likely to be the biggest purchase you’ll ever make.”

Daley continued: “It can even age you by up to two years, according to some studies – so it’s important to get it right, and not live to regret your choice.”

Good news for 1,200 Bank of Ireland customers

The Bank of Ireland has previously announced some 13,500 customers with tracker mortgages will face a rate rise, despite the fact Bank of England base rate remaining unchanged for four years.

Although the move is subject to an on-going legal challenge, the Bank of Ireland has now announced 1,200 borrowers will be exempt from the change.

The first group of borrowers, numbering around 1,000 people, have Flexible mortgages. The second group, with only 200 borrowers, are those customers who had previously switched to a base rate tracker mortgage.

Des Crowley, Chief Executive of Bank of Ireland, said: “We have said from the outset that we will review all customer complaints individually and that we are committed to treating customers fairly throughout the process, it is on this basis that we have removed these customers.”

Bank of Ireland will now write to the 1,200 customers who will no longer be affected by the rise, whilst it looks as though the remaining 12,000 people will be forced to accept significantly higher mortgage payments.

Do you need mortgage advice?

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

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