Posts Tagged ‘Newbuy Guarantee’

Affordable home loans to put a spring in the buyer’s step

Tuesday, February 21st, 2012

 

As 2011 drew to a close and we welcomed the start of 2012 with open arms, our general feeling was that this year would see plenty of change for the better within the property market. The good news is that this already seems to be the case.

Last week’s news that experts have predicted another five years of the Bank of England’s 0.5 per cent base rate certainly put a smile on my face, and I hope to see the nation’s buyers and movers go about their business with a spring in their step too. Prospects for those looking to buy have been given a huge boost, thanks to the combination of this extended period of the record low base rate and falling inflation.

Admittedly, the news could be better for savers, but we have said for some time now that positivity was what the housing market needed, and we now appear to be making headway in this respect. The old adage that property is the best investment has faced the wrath of the doubters over recent years, but it seems even those with a glass half empty have reason to be positive over the coming years.

Consumer confidence is growing and we are truly seeing some of the most affordable mortgage deals for new borrowers for some time, particularly given the government’s recent unveiling of the NewBuy mortgage guarantee scheme. This, coupled with purchase incentives such as FirstBuy, geared towards the cornerstone of our property market – the first time buyer – means buying that new home will be a reality rather than a pipedream for a greater number of people this year and beyond.

By Victoria Finch, National Marketing Manager

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Construction Industry Forecasts – good news for developers and house hunters alike!

Tuesday, February 7th, 2012

As a new homes developer, keeping our fingers on the pulse and making sure we’re on top of the latest trends and predictions is essential. With this in mind, I recently read the Construction Industry Forecasts for 2013-2015 – an annual analysis of the pressures facing industry and the drivers likely to influence it over the next five years.

Now, typically after reading this report I wouldn’t feel the need to share its findings in blog form, but this one was packed with such positive predictions of things to come over the next 3 years (especially as it comes amidst what has been a difficult period) I couldn’t help but feel the need to share my edited highlights.

We are likely to see a 29% growth in private sector housing starts between 2013 and 2015.

Yes, really!

According to the authors of the report, housing starts will climb a very modest 2% this year before “more certainty over economic recovery, combined with measures in the housing strategy”, boost a housing recovery.

The report points to a number of critical factors influencing its predictions – most notably Mortgage Indemnity or as it is now called, NewBuy Guarantee.

For those that didn’t know – Newbuy Guarantee is a scheme backed by both house builders and the government which encourages lenders to increase the availability of mortgages to purchasers with relatively small deposits of 5%. The new scheme, heralded as a way to get First Time Buyers back into the market, offers 95% loan to value mortgages that will be available to people spending up to £500,000 on a new-build property. It is envisaged that up to 100,000 buyers will benefit from the underwritten loans, with the Government’s liability capped at a hefty £1billion. Miller Homes have already been confirmed to be able to offer the 95% mortgage.

This isn’t the only piece of good news for house hunters (and builders) either.

According to the report, a modest growth in earnings – coupled with static (or falling) house prices -has improved affordability right across the UK.

For first time buyers this means that the average house price to earnings ratio has moved from 4:5 in 2003 to 4:4 in 2011.

On top of all that, low interest rates have driven average monthly mortgage payments down to an eight year low.

In a nutshell, according to the Construction Product Association, the new homes industry should be building (or at least starting to build), 130,000 homes a year by 2015 – an increase of 43% on 2010.

Obviously, this is good news for home developers but more importantly it’s good news for the house hunter too.

Confidence is creeping back into the market, the Government is committed to helping first time buyers – and it’s all beginning to work.  Britain is building again.

Over time, the new homes industry will create more jobs; raise more revenue for the treasury through stamp duty and the like, increasing the country’s housing supply and alleviating the risk of another housing bubble.

In short, all this is good for the economy – and what is good for the economy is good for all of us.

By Victoria Finch, National Marketing Manager

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2012- The return of the investor?

Monday, February 6th, 2012

Buzz around the property market at the moment only suggests one thing – the return of the investor.

Right across our regions, we’re expecting a second buy-to-let boom in 2012, with  rental values in many areas reaching a historic high and void periods (when rental properties are unoccupied) becoming a thing of the past.

Already, according to recent data from the LSL Property Services Buy-to-Let Index, the average rent in England and Wales has never been higher.  As a result, demand for quality rental properties is continuing to soar and there is fierce competition among rental tenants to secure a home – particularly in some of the prime locations.

Indeed, here at Miller Homes, we began to see a marked increase in the number of landlords towards the tail end of 2011, and we expect this upward trend to continue throughout 2012.

We’re not alone in this thinking either.  Recent research from specialist buy-to-let lender, Paragon Mortgages, suggested that more than 22 per cent of landlords expected to buy additional properties in the New Year, while just eight per cent were considering reducing their stock in comparison.

All in all, thanks to low interests rates coupled with the worst housing shortage since the Second World War, property is once again being seen as pretty much the soundest option for long term financial investment.

But where does this leave First Time Buyers? Well, according to the most recent Zoopla Rent vs. Buy index, buying is now more affordable than renting in 47 of the 50 largest towns across the country.

Buying is obviously the most sensible option – but that hinges on getting a mortgage, and that hinges on raising a deposit, naturally.

Or does it?  There is a raft of options available to First Time Buyers and Second Steppers alike in the form of equity loans – where a new homes developer (and the Government in the instance of FirstBuy) lend buyers up to a maximum of 20% of the purchase price (based on the open market value). This means that qualifying house hunters only need to fund the balance of the purchase price (as little as 80%) by means of a conventional mortgage (from a Qualifying Lending Institution), savings and any deposit where required.

As well as FirstBuy, by March this year, the Government Backed Mortgage Indemnity scheme, NewBuy Guarantee, will become available, helping purchasers get on to the property ladder responsibly. The new scheme, heralded as a way to get First Time Buyers back into the market, offers 95% loan to value mortgages that will be available to people spending up to £500,000 on a new-build property.

All of this paints an interesting picture.  When the recession first hit, back in 2009, the availability of buy-to-let mortgages dried-up overnight and investors all but disappeared from the marketplace. The recent return of the investor is no doubt a positive sign that property is once again being seen as a sustainable investment and crucially, would-be landlords are finding it easier to raise the necessary funds.

Add to this the help available to First Time Buyers, 2012 looks set to be a milestone year in residential property, with the potential to be a real turning point for the industry, investors and buyers alike.

Watch this space!

By Chris Endsor, Chief Executive of Miller Homes

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