Docklands News

First-time buyers and home movers are increasingly opting for marathon mortgages lasting up to 40 years, as a way to bridge the gap between rising living costs and high property prices, according to UK Finance. The number of first-time buyers taking out a mortgage of more than 35 years doubled in 2022 to 17%, while 38% chose terms of 30 to 35 years. Two-thirds of mortgages now have a maximum term of 40 years, up from around 50% four years ago. Housing experts suggested longer mortgages were making it possible for younger people to become homeowners, despite an expensive and limited private rental market. David Hollingworth, an associate director at the broker firm L&C Mortgages, cautioned: "It's not healthy for borrowers to have to take longer and longer mortgages to try to afford a home. Ideally, the shorter the term, the better but buyers are looking for practical solutions to best manage their budget, and this can help."

The Guardian (22/04/2023)  

Homeowners who fixed their mortgages for two years when interest rates hit their lowest point in history are seeking legal action over the advice given by their brokers. Many are now arguing that they should have been advised to take out longer deals. Unlike other types of financial advisers, brokers are allowed to earn commission paid for by lenders who sell the mortgages, which means they get double the money for recommending shorter fixes. Interest rates fell to historically low levels in 2021 as a handful of banks launched sub-1% deals and the average two-year fix dropped to roughly 2%. A spokesman for the Financial Ombudsman Service told The Telegraph that someone who took out a two-year deal in 2021 could now complain and allege that they received bad advice on the back of changing interest rates. The ombudsman said it would consider both on what the consumer’s needs and circumstances were at the time, and also on the actual advice given. 

The Daily Telegraph (24/04/2023)  

House prices in east London have more than doubled in the past decade, according to research by Investing Reviews. Waltham Forest saw a 116% increase from £236,856 in 2013 to £512,508 in 2023. Meanwhile, Barking and Dagenham saw a 111% increase, while Newham and Havering had rises of 100% and 97% respectively. Sutton and Croydon also saw average house price increases of 83% and 92% respectively. By contrast, Kensington and Chelsea saw only a 20% increase in average prices. The trend has been driven by a combination of factors including transport improvements, the Olympics and tax policies, but primarily by affordability issues in more expensive parts of the capital. 

Evening Standard (17/04/2023)  

New analysis shows that housebuilding in London fell sharply in the second half of 2022, with private developers beginning work on just 4,640 residential units in the capital. According to a study by alternative-funding provider Wayhome, this is down from 10,950 in the previous six months and 7,030 in the same period the previous year. Experts say the end of the Help to Buy scheme, which closed to new entrants in October 2022 and required building work to finish by January 31, 2023, contributed to the fall. Meanwhile, figures collected by construction insight specialists Glenigan show that just 84 private housing projects started in London in the six months to the end of March 2023. This was down by more than a third from the previous six months, and by more than half from the same period a year earlier.

Evening Standard (20/04/2023)  

The number of low-deposit mortgage deals on offer is at the highest level since before Liz Truss' mini-budget. This week the number of available 95% deals had risen to 206, up from 161 at the start of March and the most since September, according to the data provider Moneyfacts. Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “If there is more choice of higher loan-to-value mortgages at reduced rates, then lenders are not unduly worried about what is going to happen to house prices.” Average rates on five-year fixed-rate mortgages for those with a 5% deposit fell to 5.25% this week, Moneyfacts said. This is down from 5.82% at the start of January. 

The Times (17/04/2023)  

Homeowners who rushed to buy properties before the COVID stamp duty holiday expired are facing moving on to sharply higher mortgage rates. Data from UK Finance show that 6,220 fixed-rate deals of up to two years were taken out in September 2021, just before the tax break introduced to bolster the property market during the coronavirus pandemic was fully withdrawn. Yet mortgage rates have soared in the past two years, meaning these borrowers face a steep jump in repayments. UK Finance says a total of about 800,000 fixed-rate deals are due to expire in the second half of this year. Martin Stewart, the founder of London Money, the mortgage broker, said there would be a “wave of wake-up calls regarding the new mortgage pricing landscape”. 

Daily Mail (15/04/2023)   The Times (15/04/2023)