First-time buyers support the property market
In a recent report, The Council of Mortgage Lenders (CML) said the market was “more favourable” for the first-time borrower. It was disclosed that 42% of home loans in January this year were to those first-time buyers. This high percentage has been maintained for the last three months and represents a higher percentage than the average rate for this type of borrower for the last ten years. Typically, first-time buyers have made up approximately 33% of the market place over the past ten years; however, prior to 2002 that figure was 50%. Whilst mortgage lending in the UK in January was down on December 2012, it was higher by 11% than in January 2012. There were 38,300 transactions in the first month of this year. One of the major factors in this increase in lending is the effect that the coalition government’s Funding for Lending Scheme (FLS) has had on the marketplace. This scheme has made cheap funds available to lenders and mortgage providers and has managed to push down borrowing costs for the first-time buyer and also increased competition in the lending market. As a result of this, lenders are scrambling to attract lenders and reducing the rates and margins they offer borrowers. With base rates at an all-time low of 0.5%, as they have been now for over four years, this is an ideal time for first-time buyers to enter the property market. Whilst this trend is encouraging news for first-time buyers, they still typically have to find deposits of 20% or more and until this financial barrier is reduced, many hopeful home-owners are going to be barred from the market. The Government’s new ‘Help to Buy’ scheme may be beneficial. UK property prices nationally rose by 1.0% over the past year, but there were, as usual, dramatic regional variations, with London prices rising by 7.1%, whist values in the North West declined by 4.2%.
Markets (March) (Data supplied by the Outsourced Marketing Department)
Leading international equity markets ended March on a generally firm note, some having faltered mid-month as the banking crisis in Cyprus put Europe’s bailout mechanisms under pressure and raised questions about the safety of bank deposits elsewhere. In the UK, further tax cuts for business promised in the Budget were overshadowed by the Chancellor’s weaker economic growth and deficit reduction forecasts, though his ‘Help to Buy’ proposals boosted house builders’ shares. Having exceeded 6,500, the FTSE 100 fell back, later recovering some ground to end the month 1.4% higher at 6,411.7. Meanwhile, The FTSE 250 put on 1.6% to close at 13,923.04 ahead of the Easter break. The AIM market, granted future freedom from stamp duty in the Budget, nevertheless lost 1.3%, ending on 731.11. Buoyed by encouraging labour market prospects and other economic data, the US markets shrugged off Eurozone concerns and moved ahead purposefully, with the Dow Jones Industrial Average gaining another 3.7% to reach a record 14,578.54 and the Nasdaq adding 3.4%, at 3,267.52. European bourses were naturally nervous about the problems in Cyprus, but stabilised towards the month-end, leaving the Eurostoxx 50 index a marginal 0.3% higher. In Tokyo, where the Bank of Japan has a new governor, the Nikkei index maintained the progress of recent months to finish another 7.25% higher, at 12,397.91. The Cyprus turmoil inevitably rubbed off on euro exchange rates. During March, the EU single currency weakened more than 2% against sterling and the US dollar, with closing rates of €1.19 and $1.28, respectively. Sterling firmed slightly against the greenback, to $1.52. There was little net movement in oil prices over the month, with Brent crude closing just under two cents lower at $110.02. An otherwise lacklustre gold market was given a fillip by the blow to confidence in bank deposits and the metal closed just over 1% higher at $1,599.30 a troy ounce. Download full report here