Can You Trust House Price Index Data?

Can you trust House Price Index stats?

Can you trust House Price Index stats?

A House Price Index… is it worth the paper it’s written on?

It seems that every month the property industry, and the general public, is bombarded with another statistic relating to average house prices. The headlines usually heap a lot of importance on these statistics, either stating that it highlights the impending burst of the “property bubble”, its continued inflation or using it to show people are being priced out of the market.

But each House Price Index uses different measurements and covers different sample sizes, areas and date ranges. Many can indicate a national average property price that varies greatly from the consumers experience.

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Mortgage Market Review: What you need to know

Mortgage Market Review: What you need to know

Mortgage Market Review: What you need to know

What was the MMR?

The Mortgage Market Review (MMR) was a comprehensive analysis of the mortgage market. Following on from the MMR new regulations were implemented by the Financial Conduct Authority (FCA) on April 26.

Why was the MMR needed?

The MMR set out reforms to the current mortgage market to ensure its continued recovery and sustainability in the wake of the credit crunch.

Policy makers believed that the current regulatory framework was ineffective in keeping high-risk lending and borrowing in check. The policies stemming from the MMR will ensure that those who can afford mortgages can access them, while preventing a return to the poor practices of the past.

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Capital Gains Tax Targets Overseas Investors

HM Revenue and Customs

HM Revenue and Customs

This article is for information purposes only and in no way constitutes advice.

From April 2015 there will be changes to the current Capital Gains Tax (CGT) rules for overseas sellers. Currently the disposal of UK property by a non-resident individual is not normally subject to UK CGT, while UK residents pay 18% of the profits for basic rate tax payers and 28% for higher rate payers.

However, it is not yet clear exactly how the new rules will be implemented as the Her Majesty’s Revenue and Customs (HMRC) have yet to release the consultation documents. Until then, we will not know exactly what is being proposed.

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Overhaul of Bank interest rate policy

Bank of England

Bank of England

Mark Carney, governor of the Bank of England (BoE),  has overhauled his guidance policy on interest rates as part of his latest inflation report. The governor had originally stated that a rate rise would not happen until there had been a fall in unemployment, but this policy has now been reviewed after the jobless level fell faster than expected.

The governor has reiterated that the BoE will take into account a number of economic factors before raising interest rates, these indicators would include wages, productivity and spare capacity within the economy.

Mr Carney was quick to point out that when rates increase, they will “only increase gradually”.

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Economic Roundup

David Mackenzie, DIrector of Asset Management

David Mackenzie, DIrector of Asset Management

With the year coming to a close I thought I would take this opportunity to use the last PRSupdate of 2013 to focus on headline economic data and PRS statistics, and look at their implications for 2014.
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The Libor Crisis Explained

Barclays Bank

Barclays Bank

Not so long ago Barclays Bank paid out the City’s biggest ever fine – £290million – for manipulating the key lending rate of Libor. This scandal cost the Chief Executive, Bob Diamond, his job and has further increased public mistrust and dislike for banks. 

In this article we’re going to take a brief look at Libor and why it’s so important.

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Funding for Lending: a Panacea?

Image: George Osborne - Conservative Party

Image: George Osborne - Conservative Party

In his Mansion House speech on 14 June, chancellor George Osborne announced a £100bn new government programme called ‘Funding for Lending’.  The theory goes that by cutting banks’ funding costs – in exchange for more extensive lending commitments – lenders will become more active and that competition in the marketplace will drive the cost of borrowing down.  The Treasury goes as far to say that the new scheme could support up to £80bn in new mortgage loans.

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Why Shouldn’t an Englishman Rent his Castle?

The Water Gardens

Image: The Water Gardens - Young London

The saying goes that an “Englishman’s home is his castle” and with this in the forefront of our cultural psyche we are told that the sooner we can get our foot on the property ladder, the better. But is it really as black and white as that?

You can’t open a newspaper, turn on the TV, tune into a radio station or walk into a public house without, at some point, reading or hearing about “How much houses cost these days…” or “How hard it is to get onto the property ladder” and “How more people these days are now stuck renting…” Then it will be mentioned how it was better decades ago; how a standard two up, two down house used to be much more affordable. There will be nods of agreement and everyone will feel just a little annoyed about the whole situation. But statistics recently released by Lloyds TSB, to coincide with the Queens Diamond Jubilee, brought to light some interesting information…

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EU Sees Sense on Buy-to-Let Lending

European Parliament Building

European Parliament Building, via loungerie

We’ve been closely following developments at the European Parliament regarding new legislation applying to Credit Agreements Relating to Residential Property (CARRP) and the impact that the proposals could have on the UK’s housing market and, more specifically, the Private Rented Sector.

This week (07/06/12), after months of deliberation, The European Monetary and Economic Affairs Committee (ECON) finally voted through its draft proposals.  The committee had struggled to reach agreement on the proposals to regulate the mortgage market across the EuroZone and had delayed a vote on the draft proposals five times since December last year. Read more of this post

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LIBOR’s Relationship with Base Rate

Perfect post for a Monday morning; here’s some analysis that I thought might interest you.Bank of England

It looks at the relationship between  3month LIBOR and the Bank of England Base Rate (BBR) since 1 Jan 1998:

  • LIBOR was greater than BBR for 85% of the days during that period (3,135 days out of 3,748 days)
  • Average daily LIBOR is 0.2841% higher than BBR
  • Average where LIBOR is greater than BBR is 0.3374%
  • Average where LIBOR is less than BBR is 0.0976%
  • Greatest difference between LIBOR and BBR over this period was on 10th October 2008: 1.785%

Interesting stats – what conclusion do you draw?

 

 

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Tendering, New Business & Austerity

Francois Hollande
Francois Hollande

David Cameron is currently being bashed for focusing too much on austerity and not enough on growth.

Francois Hollande, the new French President, came to power with a promise to focus more on growth than austerity.

FTSE 100 companies are being criticised for hording cash and not investing for future growth.

There is a clear theme here, do you cost-cut, sit tight, and hope all is well. Or, try and grow your way out of an economic slowdown? Read more of this post

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New Build Property Becomes More Favourable to Lenders

 

New Build Property at The Retreat, SW18

Good news at last regarding UK Mortgage lenders’ attitudes to new build property.

HSBC, a big-name lender with around 15% of the mortgage market, has confirmed that they believe the perceived risk in the new build market has stabilised and receded.  HSBC has shown its confidence by increasing the loan to value criteria on new build residential property purchases from 75% to 85%. Read more of this post

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EU Mortgage Directive to Stifle Housing Availability

The European parliament will hear the first reading of the Credit Agreements Relating to Residential Property (CARRP) on 25 April 2012 and the proposed changes to the mortgage regime could be in force as early as the end of this year.

Despite the Treasury deciding more than two years ago that no further intervention in the housing market is justified, it could be railroaded by the EU into enforcing a new policy which says Buy-to-Let lending should be regulated in the same way as residential mortgages for owner occupation.

Once in place, the legislation could mean that banks and building societies would be forced to evaluate BTL mortgage applications based upon the owner’s other income, without taking account of the rental income generated by the property. Read more of this post

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FSA Seeks Feedback on Mortgage Market Shakeup

In December 2011, the Financial Services Authority (FSA) unveiled initial details of proposals to change the rules on mortgage lending. The Mortgage Market Review consultation paper outlines the FSA’s initial thoughts, which will be finalised in summer 2012 before being implemented from 2013.

The thrust of the proposed new rules is a stronger focus on evidence of affordability and the ability to repay the mortgage. The FSA maintains that loans should only be advanced where there is a ‘reasonable expectation that the customer can repay without relying upon future house price rises’.

This means an end to self-certification mortgages as income will need to be verified in every mortgage application. Borrowers should expect to provide payslips and evidence of regular commitments such as loan and credit card bills. Read more of this post

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Financing for Overseas Property Purchases in London

More and more overseas based investors are looking to invest in UK property, specifically London, as it is deemed an attractive asset class with relatively low risk, providing a hedge against both inflation and currency.

Working in the portfolio management division in our main hub in Canary Wharf, I have noticed the high level of interest from overseas based buyers in recent months.

I receive many mortgage enquires from overseas, especially expats of the UK, asking what their finance options are. There are UK lenders we have access to who can cater to this rather niche market. Another route is through international lenders, they seem to have a healthy lending appetite, especially within the new build market. Read more of this post

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