First-time buyers up 38% The Council of Mortgage Lenders (CML) announced in March that January saw a 38% year-on-year increase in the number of loans to first-time buyers. In value terms, £3.1bn was lent in January, which was a 55% increase on the previous year. Given the current buoyancy in the property market, it was not surprising to see that the earnings/price ratio also increased, to 3.39 times gross salary. This translates as the typical first-time buyer having to utilise 19.3% of their gross income to service their mortgage. The impact of the Government’s ‘Help to Buy’ initiative is clearly being seen now with the average loan-to-value for this group being 82%, up from 80% in December 2013. About 95% of these buyers also opted for a fixed-rate mortgage deal. Buy-to-let mortgages were also higher, with 15,700 loans approved, up 8% compared to the previous month and 37% higher than in January 2013. In value terms, this represented £2.1bn, an increase of 11% on the month and 40% on the year. Looking at the bigger picture, total gross mortgage lending in January was estimated at £15.5bn. Whilst this was down 8% from December 2013, it was nearly 30% higher than the previous January’s figure of £11.6bn. Bob Pannell, the chief economist at the CML, stated: “Housing market indicators in the UK continue to be positive, although seasonal factors are likely to have affected activity levels. Monthly approvals for house purchase averaged 70,000 in the final quarter of 2013, the strongest for six years. “The Bank of England envisages that approvals may climb to 90,000 a month in the second and third quarters of 2014. This would seem to imply property transactions running at an annualised rate of one and a half million or so. We think this may be over-optimistic, given the growing anecdotal reports of a shortage of prospective sellers.”
Markets (March) (Data supplied by the Outsourced Marketing Department) Despite positive economic data, including lower inflation and unemployment, the UK stock market continued to be weighed down by geopolitical issues in Eastern Europe and a series of homegrown problems that confronted certain market sectors. Insurers suffered in the wake of pension annuity reforms announced in the Budget, banks lost ground as the Government offloaded a further 7.5% stake in Lloyds Banking Group and the energy sector fell as regulator Ofgem proposed referring the major gas and electricity suppliers to the Competition and Markets Authority. At the end of March, the FTSE100 was 3.1% lower at 6598.37. Mid-cap companies also slipped, with the FTSE250 dropping 2.7% to 16,273.72. The junior AIM market was lower, too, by 4% at 850.94 at the month-end. The mood in New York was more positive, with the Dow Jones finishing 0.8% higher, at 16,457.66, though the Nasdaq ended 2.5% down at 4,198.99 after its near-5% February gain. European bourses held up well overall despite the possible impact of the Ukraine crisis on the flow of Russian gas, with possible implications for industrial production. The Eurostoxx 50 closed a modest 0.4% higher at 3161.60. In Tokyo, the Nikkei225 made a good start to March but drifted after a mid-month correction, ending just 0.1% down at 14,827.83. On the foreign exchanges, sterling held onto the previous month’s gain against the US dollar, closing virtually unchanged at $1.67, and likewise at €1.21 against the euro. Thus the euro remained at $1.38 against the dollar. Oil prices saw limited movement in dollar terms, with Brent crude ending 1.5% down at $107.42, whilst lower UK pump prices also reflected ongoing benefit from sterling’s recent strength versus the dollar, which helped trim inflation. In early March, gold was firm, passing $1,380 mid-month but falling back thereafter to end down a net 4.6% at $1,284. Download full report here 

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