There was much speculation during the height of the credit crisis that the Northern Rock and Bradford & Bingleys loan books would collapse under a huge default from various property backed securities. In fact these two bad banks have produced a pre-tax profit of over 1 billion pounds. This shows their profits up a rather incredible 145% some have attributed this to their investment tactic of purchasing back residential mortgage back securities RMBS’s. These have been trading at depressed capital values as the banking world have been quick to get out of the sector and repair their balance sheets. These bad banks have repaid over 2billion back to their government investors. Interestingly the Bradford and Bingley have seen arrears on their loan note below the average of the council of mortgage lenders. There figures suggest that things in the business world have been improving since the arrears peak of April 2011.
House builders and speculative property developers start to realise substantial profits
February 28, 2012
The good news for house builders is coming in thick and fast, Persimmons the York based house builder has seen profits up 55%. Redrow has seen profits rise by an amazing 80% with Barret developments turning a 9 million pound loss in to profits of over 12 million. So what is going on? The housing market is still in the doldrums but the profits for new build speculative developments are rising. Developers are increasing profits by carefully targeting the type of properties they build out. Some are readdressing planning applications for speculative development sites. Those companies that are cash rich are making money simply by buying speculative development sites at discounted rates, some from banks and liquidators and from other developers looking to liquidate their land banks. So those canny investors should watch the share prices of this out of favour stock sector. The recent return of the 95% mortgage has yet to fully filter through to the market place, so although the property sector is still fragile I am confident we are back on the upward part of the property cycle.
House buyers look to buy before the stamp duty holiday ends
February 18, 2012
Rightmove sees the best January ever as the pent up demand for houses continues to grow. The slightly improved availability of mortgage funding coupled with a record number of bargain properties is attracting more potential purchasers. Rightmove has reported an incredible number of hits nearly 800 million eclipsing its previous record in May of 2011. This is almost a million hits an hour, whatever spin economists may put on it certainly shows a large interest in property for sale. Interestingly this takes rightmove to number seven on the most viewed website chart. With the end to the stamp duty holiday for first time buyers in sight many are looking to lock in that saving before it is too late.
Home owner mortgages rises to nearly 60,000
February 14, 2012
Great news for the property and construction industry as the number of new mortgages in January hits nearly 60,000. The increasing number of mortgages available to home owners with smaller deposits and a fresh appetite to mortgage back securities has boosted these figures. The figures are very encouraging as they show an increase on mortgage lending for the same period last year of 29 percent and an increase of 11 percent on December’s figures. The numbers show the pent up demand from first time buyers many who have homes in mind and are simple unable to finance their dream homes.
Buy to let booming as banks back landlords again
February 3, 2012
Although young home owners are struggling to obtain suitable mortgage finance experienced buy to let landlords are enjoying an ever increasing pool of mortgage capital. It’s all about the banks mitigating risk, why lend to young first time buyers with a limited track record when you could lend at a lower gearing to experienced investors with a proven track record and other security in the back ground? There is said to be a hundred more deals on offer than there was a year ago and the increased competition is leading to better deals. In the last year the average buy to let rate has dropped from 5% to less that 4.8% which on typical buy to let margins has a great affect on landlord’s bottom line. This is like a self fulfilling prophecy as first time buyers struggle to get mortgage funding they are forced to rent and that’s another tenant for the buy to let landlords.
Commercial property transaction volumes drop by over 6% from 2010 to 2011
January 25, 2012
The values of commercial property transactions have dropped from just short of 36 billion to just less than 33 and a half billion. In 2011 there were just over 1700 sold mainly by banks or the customers of banks under pressure to stay within their facility agreements. University research estimates that a quarter of all commercial property has 100% outstanding property loans. They estimate that a further 35% are at 70% or more, this mean that 60% of all commercial property will not be re-financeable at the end of their facility terms. This has the knock on effect that banks cannot clear property backed loans off their balance sheets. So they have little or no appetite for speculative property development and new commercial property loans.
Buy to let mortgages just got easier
January 23, 2012
Increased competition in the buy to let mortgage arena shows with looser lending criteria. The Yorkshire building society has expanded its range of mortgage products to include properties with a value of less than a £100,000 and for applicants with incomes of £20,000 rather than the £35,000 previous figure. Although house prices have stagnated the growth in rent inflation has encouraged both landlords and banks to place their funds back into the property sector. The Co-operative bank has also pledged to increase funds to the buy to let mortgage sector by another third. All this has lead to triple the number of buy to let mortgage products available to landlords.
HSBC pledges 15 billion to UK mortgages market
January 19, 2012
Last year the HSBC lent approximately 6.7billion to home owners so this represents a large increase, which could tempt other lenders to compete. The new money to the mortgage market is thought to be enough to help a further 150,000 home buyers. The new funding promise will defy economists who have remained pessimistic about the future of the UK property funding market. It is thought that at least 3billion of this property funding will be reserved for first time buyers. This come at a time when many mortgage brokers are expecting a sizable increase in interest from first time buyers.
Yorkshire capital home to housebuilding cash
January 12, 2012
The York based popular house builder and property developers Persimmon Homes have announced that 2011 matched the performance of 2010. The company has benefitted from improved conditions in the world of speculative development funding with this having a positive impact on margins and profits. While the business has reduced borrowings it has also enlarged its land bank. A very impressive performance considering market conditions and the troubles of many of its competitors. The company should be further bolstered this year as the whole of the property and construction industries look forward to the effects of 95% loan to value mortgages.
Tenants get poorer as home owners pay less to live
January 2, 2012
Tenants are paying more in rent than their home owning counterparts are paying in mortgage payments. This come as little shock too many as interest rates stay at these historic lows and rent inflation soar skyward. At the beginning of 2011 it was cheaper to buy a home than rent in 80% of the biggest towns and cities. During 2011 the figure jumped to 94% this is a depressing statistic for those stuck in rented accommodation by the mortgage drought. With banks and big lending institutions happily rebuilding their capital reserves and balance sheets things look unlikely to change direction soon.
