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Personal Loans: Money At Its Best
By Mary Jones
While applying for loans, there are a number of issues that needs to be taken care of. For instance, the amount you want to avail, repayment schedule, etc. If you are looking for loans that provide you answer to all these issues, then you should consider availing personal loans. These loans are flexible and can be used to take care of any personal need such as home improvement, debt consolidation, purchasing a car, wedding, vacation, pursuing higher education and a host of other needs.

You can avail the loans in the usual format of secured and unsecured form. Secured forms of the loans are collateral based and are beneficial for those individuals who are willing to pledge one of their valuable asset as collateral. Through this form of the loans, you can derive a bigger amount, as lenders advance the loans on the basis of equity value present in the collateral. As the amount is insured against a valuable asset, the levied is comparatively low. Usually, you can borrow amount that varies in the range of £5000-£75000. The repayment tenure is convenient and spans over a period of 5- 25 years.

On the contrary, borrowers who are not having any collateral or do not want to pledge any can opt for unsecured form of the loans. The amount advanced under this loan option is small and is in the range of £1000-£25000. You have to repay the amount within a period of 6months- 10 years. Being advanced without any collateral, levied on the loans are slightly higher.

Borrowers with a history of bad credit such as CCJs, IVA, arrears, defaults etc can also apply for the loans. Although the levied will be comparatively higher, ensuring timely repayment of the amount will assist the borrower to mend their credit score.

These loans now are also available online. All you have to do is to fill a simple application with details like amount required, repayment schedule along with your personal information. The lenders will then contact you and provide their quotes. Once you have compared the quotes and finalized the deal, the loan amount gets approved instantly.

Personal loans

Government will miss affordable housing target, its own figures reveal
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/30374?ns=guardian&pageName=Government+will+miss+affordable+housing+target%2C+its+own+figures+reveal%3AArticle%3A1240612&ch=Business&c4=Construction+industry+%28Business%29%2CHousing+%28Society%29%2CBusiness%2CSociety%2CMoney%2CPolitics%2CProperty%2CFirst-time+buyers&c6=Kathryn+Hopkins&c8=1240612&c9=Article&c10=News&c11=Business&c13=&c25=&c30=content&h2=GU%2FBusiness%2FConstruction+industry" width="1" height="1" /></div><p>New home construction will fall more than 13,000 short of long-standing 70,000 target</p><p><strong></strong>The government is certain to break its long-standing promise to be building 70,000 affordable homes a year by 2010/11, the Guardian has learned.</p><p>As Gordon Brown unveiled his party's relaunch document, entitled Building Britain's Future, this week with a pledge to build more affordable homes over the next two years, a breakdown of the government's own figures shows that the housing target now falls short of plans outlined two years ago.</p><p>In 2007, the then housing minister Yvette Cooper pledged to provide more than 70,000 affordable homes a year by 2010-11. But detailed figures issued in a briefing this week show that the government is failing to meet its original target by at least 13,550 a year: it plans to deliver only 56,450 dwellings in 2010-11, after building 55,500 in 2009-10.</p><p>In a further change from its original programme for 2010-11, only 13,500 of the 56,450 homes will be council housing. Two years ago, the government said that 45,000 out of the 70,000 affordable homes promised would be for social renting.</p><p>A spokesperson for the Department of Communities and Local Government said: "Our focus is on keeping affordable housing going in the current climate: that's why we're increasing investment, kick-starting new housing projects and protecting jobs. We know our long-term targets are extremely challenging right now, but we're determined to take the action necessary to build for Britain's recovery."</p><p>Lord Oakeshott, the Liberal Democrats' Treasury spokesman, said: "You couldn't make it up. We all knew that Building Britain's Future contained a string of re-announced targets, but this is something else ? to announce a lower target after you have failed and pretend it's progress. It's surreal. This is a real slap in the face to the 3&nbsp;million people in desperate housing need on our council house waiting lists."</p><p>Shadow housing minister Grant Shapps said: "Gordon Brown's dog-whistle politics on British homes for British people can't disguise the fact that his government has failed to tackle the British's housing crisis. After a succession of housing ministers and glossy reports, housebuilding is at its lowest level since 1947. Targets come, and targets go, exposing a continued failure to deliver."</p><p>The Construction Products Association (CPA) has also discovered that despite the government building fewer houses, the programme will cost more money. The government said this week that an additional £1.5bn would be spent over the next two years to deliver 20,000 new homes, which will be part of the approximate total of 110,000 affordable homes now being promised over the next two years.</p><p>Michael Ankers, chief executive of the CPA, said: "It is difficult to understand why they need additional money to deliver fewer houses. The last comprehensive spending review allocated the necessary funds to deliver the government's programme to the end of 2010/11. So why do they now need to divert money from other capital programmes to deliver a lower target that should be costing less? It sounds very much like the government is promising less for more."</p><p>He added that if the funds required for this housing were being reallocated from elsewhere, then the government would need to explain which other capital projects will not now go ahead. "The sooner this is clarified, the better," he said.</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/business/construction">Construction industry</a></li><li><a href="http://www.guardian.co.uk/society/housing">Housing</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=12466848719012388100448675780663"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=12466848719012388100448675780663" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Labour manifesto: extra 20,000 affordable homes over two years, but questions remain
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/90106?ns=guardian&pageName=An+extra+20%2C000+affordable+homes+over+two+years%2C+but+questions+about+who%3AArticle%3A1239617&ch=Society&c4=Housing+%28Society%29%2CGordon+Brown%2CLabour%2CSociety%2CPolitics%2CUK+news%2CPublic+services+policy+%28Society%29%2CCommunities+%28Society%29%2CProperty%2CFirst-time+buyers%2CHouse+prices+%28Money%29%2CMoney&c6=Alan+Travis&c8=1239617&c9=Article&c10=News&c11=Society&c13=&c25=&c30=content&h2=GU%2FSociety%2FHousing" width="1" height="1" /></div><p>? Budget will be tripled, Brown tells Commons <br />? Critics call scheme 'British homes for British workers'</p><p><strong></strong>Gordon Brown's pledge to pump £2.1bn into building affordable homes will mean an extra 20,000 will be built over the next two years on top of the 90,000 already in the pipeline.</p><p>The prime minister told the Commons today he was tripling the £600m announced in the last budget for new council and housing association homes. Half the extra £1.5bn will come from the Department of Communities and Local Government, and the other half will be redirected from other parts of Whitehall. The Home Office and Department for Transport were identified by the business secretary, Lord Mandelson, as the most likely targets for further savings.</p><p>Brown said the 110,000 homes being built over the next two years would allow councils to give greater priority to local residents whose names had been on the waiting list "for far too long".</p><p>Critics branded this policy "British homes for British workers", but it was unclear how many extra council and housing association homes would actually be reserved for local residents. Housing minister John Healey made clear that priority would continue to be given to those with "serious housing needs", and only then would extra priority go to those who have spent a long time on the waiting list, have local or family connections, or are moving to the area to take up a specific job. "We need to make sure people think they have a fair chance of getting new homes as they are built," said Healey.</p><p>The strategy document published by Downing Street reads: "There is a perception that allocation policies for social housing are unfair, inflexible and act as a barrier to people being able to move when they need to ? We will pursue reforms to tackle these problems."</p><p>The document says the rules will be changed to give more priority to local people who have spent a long time on the waiting list. The small proportion of homes known as "choice-based lettings", which are reserved for those who are moving into key jobs from elsewhere in the country, is to be expanded.</p><p>The housing minister is also to announce the details of a consultation to allow councils to keep all the proceeds of council house sales and the revenue they receive in rents. The ban on local authorities spending council house receipts has been a longstanding complaint since sales were introduced by the Tories in the early 1980s.</p><p>The breakdown of how the extra £1.5bn will be spent shows 15,500 new affordable homes are to be built, of which 11,000 will be for social rental. A further 4,000 affordable homes will come from extending the Kick Start programme, which gets stalled housebuilding sites back on track.</p><p>The move to change the housing allocation rules was criticised by immigration welfare groups, who accused ministers of pandering to the far right.</p><p>Two recent research studies have "exploded the myth" that newly arrived foreign workers have been able to jump the local housing queue, they said. A joint study for the Equality and Human Rights Commission and the Local Government Association recently found that 60% of new migrants who had come to Britain over the last five years were living in the bottom end of the private rented sector. A further 18% were living as owner-occupiers, with only 11% in social housing. Those who had come from Poland and other eastern European countries made up less than 1% of public sector lettings.</p><p>Most newly arrived migrants are banned from joining the waiting list for council or housing association accommodation.</p><p><strong></strong></p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/society/housing">Housing</a></li><li><a href="http://www.guardian.co.uk/politics/gordon-brown">Gordon Brown</a></li><li><a href="http://www.guardian.co.uk/politics/labour">Labour</a></li><li><a href="http://www.guardian.co.uk/society/policy">Public services policy</a></li><li><a href="http://www.guardian.co.uk/society/communities">Communities</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/money/houseprices">House prices</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Society&spacedesc=rss&system=rss&transactionID=12466848719087835442328667961280"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Society&spacedesc=rss&system=rss&transactionID=12466848719087835442328667961280" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Empty properties? How a disused car park was recycled into this des-res
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/6871?ns=guardian&pageName=How+a+disused+car+park+was+recycled+into+this+des-res%3AArticle%3A1238729&ch=Money&c4=Property%2CMoney%2CHousing+%28Society%29%2CSociety%2CLondon+%28News%29%2CFirst-time+buyers&c6=Huma+Qureshi&c8=1238729&c9=Article&c10=News&c11=Money&c13=&c25=&c30=content&h2=GU%2FMoney%2FProperty" width="1" height="1" /></div><p>Boarded-up properties, abandoned shops and disused car parks may not sound like pleasant places to live, but one housing association thinks these derelict spaces could help first-time buyers take an affordable leap on to the property ladder. </p><p>Notting Hill Housing (NHH), one of the largest housing associations in the country, has just spent nine months converting a disused, dark and dingy car park in Putney, south-west London, into 10 spacious and bright apartments which no longer betray any sign of their former dilapidated existence.</p><p>The development in Cambalt Road is part of Wandsworth council's Hidden Homes scheme - a project which scouts out disused properties such as sheds, garages and old boiler rooms on local authority land and transforms them into apartments. </p><p>Mark Vaughan, director of home ownership at NHH, says: "This idea of recycling existing buildings could be rolled out as a model across the country."</p><p>The Empty Homes Agency, an independent charity which highlights the waste and inefficiency of derelict properties in England, is also encouraging local communities to work together and make more efficient use of wasted space in neighbourhoods. </p><p>Henry Oliver, policy adviser at Empty Homes, says: "A lot of new developments end up wasting space, and it is far more efficient to maximise what is already available. There is a huge amount of space going begging everywhere - places such as empty offices and upper floors above shops which could have a residential use."</p><p>To date, Hidden Homes conversions have only been available as social housing stock from local authorities; Southwark council has also earmarked empty launderettes and unused offices as spaces to be converted and remodelled into residential properties. But the 10 properties in Cambalt Road are the first to be available to first-time buyers via the New Build HomeBuy scheme.</p><p>Full market prices start from &pound;213,000, but under the shared-ownership scheme first-time buyers can purchase a minimum 25% share worth &pound;53,250 on which they must take a mortgage, and pay a rent on the remainder. </p><p>Providers offering mortgages on New Build HomeBuy schemes include HSBC, Abbey and Leeds building society.</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/society/housing">Housing</a></li><li><a href="http://www.guardian.co.uk/uk/london">London</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719138123380099867453998"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719138123380099867453998" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Thousands face first-home despair after HomeBuy funding shortfall
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/51804?ns=guardian&pageName=%3Cb%3EThousands+face+first-home+despair%3C%2Fb%3E%3AArticle%3A1238728&ch=Money&c4=First-time+buyers%2CProperty%2CMoney%2CHousing+%28Society%29%2CSociety&c6=Jessie+Hewitson&c8=1238728&c9=Article&c10=News&c11=Money&c13=&c25=&c30=content&h2=GU%2FMoney%2FFirst-time+buyers" width="1" height="1" /></div><p>No sooner had buyers' hopes been raised by the lure of government funding than they were dashed, writes Jessie Hewitson</p><p>As many as two-thirds of first-time buyers who thought they were purchasing through a government-backed scheme have had their dreams crushed because it ran out of funding.</p><p>Cash broke the story about MyChoice HomeBuy following April's budget, but the number of people who have been affected is only just coming to light - and it looks like running into thousands. </p><p>Many are first-time buyers but others are those further up the chain who have seen their buyer disappear, and so have missed out on a new home.</p><p>MyChoice HomeBuy allows buyers to choose any home on the market - old or new - and have the government fund as much as 50% of the purchase price with a low-interest loan. </p><p>Paul Robson was one such buyer who thought he was on the road to completing on his first home. </p><p>After receiving the nod from his local housing association's financial adviser that he was eligible for the scheme, the 31-year-old company director found a new flat he loved in Stevenage, Herts, and paid a &pound;1,000 deposit to secure it. </p><p>Shortly after, he found out that the funding for MyChoice HomeBuy had run out in the local area, so he wouldn't be able to buy after all. "It was massively disappointing," he says. </p><p>"It has wasted a great deal of my time, and now I'm back to square one. I have a verbal agreement from the developer to refund my &pound;1,000 deposit, but I won't fully relax until I get it. In my mind it feels like the government came up with a great idea and got the hopes of thousands of first-time buyers up, only to rip it out from underneath us."</p><p>Robson's is not an isolated case. Richard Stone, of SPF Sherwins, one of the biggest affordable housing mortgage brokers, has carried out more than 1,400 assessments for first-timers eligible for MyChoice HomeBuy. Of these, only 100 were able to buy. </p><p>"It's another nail in the coffin of the affordable system," he says. "It's a fantastic scheme, but this is bad PR. I'd say at least two-thirds of the people I have seen have walked away disgruntled." </p><p>Different regions of the country ran out of money for the scheme at different times, but for some it was just three weeks after the April 2009-April 2010 funding came into effect. </p><p>By the middle of last month, most housing associations had nothing more to give. The reason the money was spent so quickly was that there wasn't enough to meet demand in the first place - perhaps because the government was trying to shepherd buyers away from MyChoice HomeBuy and towards another initiative, HomeBuy Direct. </p><p>This latter scheme has proved less popular with first-timers because it only allows for the purchase of new-build properties. Nevertheless, it received an extra &pound;80m in funding in the last budget, money many hoped would go towards MyChoice HomeBuy.</p><p>This enthusiasm for HomeBuy Direct can be accounted for by the fact that developers share the financial burden with the government, so public money goes further. It also kills two birds with one stone, points out Sue Cocking, head of affordable housing for Knight Frank. </p><p>"Because there is a problem with new properties not selling, it makes better use of resources for the government to encourage first-time buyers to purchase these empty new homes," she says. "There's a wider economic benefit." </p><p>A spokeswoman for Communities and Local Government said that &pound;350m has been spent on Open Market HomeBuy - MyChoice HomeBuy is one of two schemes that come under this umbrella term - since April 2006, allowing 11,100 completions on house purchases.</p><p>"We have had a very positive response to our HomeBuy products, especially those available through Open Market HomeBuy, but it is just one way we are ensuring that first-time buyers have a range of options to help them on to the housing ladder. This includes HomeBuy Direct," she added.</p><p>The biggest problem with all these affordable schemes, according to Cocking, is their complicated nature. </p><p>"At the last count there were nine initiatives being offered - there's shared-equity, shared-ownership, HomeBuy Direct, Rent to HomeBuy, Immediate Rent, to give a few examples. </p><p>"People have to get their heads round all these before making an informed choice, and it isn't easy."</p><p>For an indication of just how complicated, the discussion board of the Metropolitan Home Ownership website is littered with posts from a slew of confused and frustrated first-time buyers. </p><p>Many people express the hope that they will receive funding for their new homes; others seem to be totally baffled by the system. </p><p>Paul Robson's only remaining hope is to buy the flat that he has set his heart on through yet another affordable initiative, the OwnHome Scheme (<a href="http://www.ownhome.co.uk">ownhome.co.uk</a>). This is run jointly by Co-operative Bank and the property management and development company Places for People. </p><p>"I may still be able to purchase this way, but I have been told that there is every likelihood that will run out money, too," he says. </p><p>"I should hear in the next few weeks. If that does happen, I'm facing the prospect of being let down by government schemes twice."</p><p>? Have you successfully bought through a government-funded ownership scheme? Has it worked out well or do you regret your decision? Contact us at <a href="mailto:cash@observer.co.uk">cash@observer.co.uk</a> or write to Cash, The Observer, Kings Place, 90 York Way, London, N1 9GU.</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/society/housing">Housing</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719148316623364325885665"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719148316623364325885665" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Fears grow that Northern Rock could saturate the mortgage market
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/37943?ns=guardian&pageName=Fears+grow+that+Northern+Rock+could+saturate+the+mortgage+market%3AArticle%3A1236531&ch=Business&c4=Northern+Rock+%28Business%29%2CBanking+%28Business%29%2CEurope+%28Business%29%2CBusiness%2CMortgages+%28Money%29%2CUK+news%2CProperty%2CMoney%2CFirst-time+buyers&c6=Jill+Treanor&c8=1236531&c9=Article&c10=News&c11=Business&c13=&c25=&c30=content&h2=GU%2FBusiness%2FNorthern+Rock" width="1" height="1" /></div><p>Government plans to split bank await EU investigation into effect of state aid on rivals</p><p><strong></strong>Concerns that Northern Rock will be able to abuse its government-owned status to beat rivals are mounting ahead of the publication next week of an EU investigation into state aid for the Newcastle-based lender.</p><p>The much-anticipated document on the government's plans to split Northern Rock into a "good" bank, bolstered with £14bn of taxpayer funds to fuel mortgage lending, and a "bad'" bank, containing most of the troublesome legacy loans, will be followed by a month when interested parties can lobby the European commission.</p><p>The Building Societies Association is concerned that Northern Rock might be able to abuse its position to squeeze out its members, many of which are already struggling in the downturn in demand for home loans.</p><p>Adrian Coles, director general of the association, is also on the alert for evidence that Northern Rock will be able to attract savers more easily than rivals. Savers are currently a crucial form of finance for building societies, which use the deposits to lend in the mortgage market.</p><p>As a result, Coles said the BSA is hoping Northern Rock will focus its lending on parts of the mortgage market where it is currently difficult to obtain loans.</p><p>"We would expect Northern Rock to concentrate on those parts of the market where the private sector is reluctant to lend at the moment, for example high loan-to-value and first-time buyers," said Coles.</p><p>"We would be very concerned if it were to saturate the market where there is already sufficient supply and competition. If Northern Rock lends in competition with private-sector lenders it should not abuse its privileged, state-funded, position by squeezing margins to a level at which the private sector cannot compete," he said.</p><p>Coles said he would be "looking for assurances" that Northern Rock will not compete unfairly for savings.</p><p>The EU has been forced to extend its investigation into Northern Rock by the government's decision to use it to rejuvenate mortgage lending rather than pull it out of the home loans market to enable it to repay taxpayer loans.</p><p>Brussels is examining whether the changes will enable Northern Rock to return to long-term viability while avoiding "undue distortions of competition".</p><p>Before the new plan for Northern Rock was proposed, the lender had already agreed to a number of measures designed to help it avoid abusing its government- supported status. It promised to keep off the top of the "best buy" tables for its financial products, for instance.</p><p>A European commission spokesman on competition said: "The publication of details of the revised UK scheme and the invitation for third parties to comment has not yet been published. It should be published some time next week. Interested parties will have one month to comment and then the UK government will have an opportunity to comment on the comments from third parties."</p><p>The Treasury said: "We are working with the commission. Things are proceeding the way we expected to and we are committed to the new lending by Northern Rock."</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/business/northern-rock">Northern Rock</a></li><li><a href="http://www.guardian.co.uk/business/banking">Banking</a></li><li><a href="http://www.guardian.co.uk/business/europe">Europe</a></li><li><a href="http://www.guardian.co.uk/money/mortgages">Mortgages</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=12466848719191014766306235846826"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=12466848719191014766306235846826" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Mortgage lending falls again in May
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/6087?ns=guardian&pageName=Mortgage+lending+falls+again+in+May%3AArticle%3A1233946&ch=Money&c4=Mortgages+%28Money%29%2CFirst-time+buyers%2CProperty%2CMoney%2CMortgage+lending+figures+%28Business%29%2CBusiness%2CUK+news&c6=Hilary+Osborne&c8=1233946&c9=Article&c10=News&c11=Money&c13=&c25=&c30=content&h2=GU%2FMoney%2FMortgages" width="1" height="1" /></div><p>Mortgage lending fell for the second consecutive month, dropping 2% in May, the Council of Mortgage Lenders says</p><p>Mortgage lending fell for a second consecutive month in May, dropping by 2% to £10.3bn, according to figures published today by the Council of Mortgage Lenders (CML).</p><p>The figure is almost 60% down on May last year when gross lending totalled £24.7bn, and 70% lower than in the summer of 2007 when the housing market was at its peak.</p><p>The drop seems to quash the idea that the mortgage market might be starting to recover, after an increase in March took lending to £11.5bn. However, the CML said the headline figure could disguise a moderate improvement in lending for house purchases, which had been offset by a sharp fall in remortgages.</p><p>Separate figures released today by the Bank of England appear to back this up. The Bank's latest <a href="http://www.bankofengland.co.uk/publications/other/monetary/trendsinlending.htm" title="Bank of England Trends in lending report">Trends in lending report</a> shows the fall in gross lending since early last year has been concentrated in remortgaging activity.</p><p>Its research, which is based on figures from major lenders representing 80% of the mortgage market, showed that for the second month running the value of mortgages for house purchases outstripped that for remortgages in May.</p><p>Firm numbers are not available, but it looks like they could be in line with those for April when the number of <a href="http://www.guardian.co.uk/money/2009/jun/02/mortgage-approvals-bank-of-england" title="Mortgage approvals continue to rise">remortgage approvals dropped to 31,800</a> against a six-month average of 41,054. "As gross mortgage lending includes both lending for house purchase and remortgage, then even if house purchase activity is showing a slight lift it will not be fully reflected in overall gross lending when remortgaging is declining ? as indicated in recent approvals data from the Bank of England," the CML said.</p><p>Remortgaging has dropped sharply since last autumn as swingeing cuts to the Bank of England base rate have brought down many lenders' standard variable rates (SVRs) ? the rates most fixed and tracker deals revert to.</p><p>With credit conditions still tight borrowers have increasingly found it is cheaper to pay the SVR than to switch to a new special offer rate, or that tougher lending criteria mean they are unable to switch lender.</p><p>In recent weeks brokers and lenders have started to encourage borrowers to move off SVRs and on to fixed-rate deals before interest rates start to rise again, with Nationwide reintroducing 90% mortgages for existing customers.</p><p>However, rates on fixed deals have <a href="http://www.guardian.co.uk/money/2009/jun/11/mortgages-rates-inflation-nationwide" title="Buyers face hike in mortgage rates as inflation fears mount">also started to rise</a>, making them much less attractive in the short term.</p><p>First-time buyers are also struggling to get loans, with research published at the weekend showing the number of deals available at 90% loan-to-value had <a href="http://www.guardian.co.uk/business/2009/jun/13/mortgage-first-time-buyerd" title="Mortgages for first-time buyers slow to a trickle">slumped over the past two-and-a-half years</a>.</p><p>The CML said it did not anticipate an upturn in mortgage lending any time soon. The group's economist, Paul Samter, said: "While recent signs from the housing market have been more encouraging, we do not anticipate a significant recovery in activity in the coming months.</p><p>"Lending volumes appear to have stabilised at extremely low levels, but the weak labour market and lenders' limited access to funding will constrain activity for some time yet."</p><p>The Bank's lending report showed borrowers have not been taking advantage of low interest rates to clear their mortgage debts more quickly. Lenders reported no significant change in the value of lump sum or regular repayments since the base rate fell to its historic low of 0.5% earlier this year.</p><p>It said: "Lenders have reported that, while some households may have used part of the gain from lower interest payments to increase the rate at which they are paying off their mortgages, others may be making lower repayments because they are experiencing financial difficulties or are more uncertain about their future financial position."</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/mortgages">Mortgages</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/business/mortgage-lending-figures">Mortgage lending figures</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719239210280168700327424"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719239210280168700327424" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Economic recovery: 10 signs to look for
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/22305?ns=guardian&pageName=Economic+recovery%3A+10+signs+to+look+for%3AArticle%3A1233266&ch=Money&c4=Consumer+affairs+%28Money%29%2CHouse+prices+%28Money%29%2CBorrowing+and+debt%2CRedundancy+%28Money%29%2CNegative+equity+%28Money%29%2CFamily+finances%2CMoney%2CRecession+%28UK%29%2CCredit+crunch+%28Business%29%2CBusiness%2CProperty%2CFirst-time+buyers%2CEconomic+recovery+%28Green+shoots%29&c6=Laura+Howard&c8=1233266&c9=Article&c10=&c11=Money&c13=&c25=&c30=content&h2=GU%2FMoney%2FConsumer+affairs" width="1" height="1" /></div><p>Are we really seeing the green shoots of recovery, or is the optimism misplaced? Laura Howard examines the facts behind the headlines<br /><br /><a href="http://www.guardian.co.uk/money/blog/2009/jun/18/alternative-green-shoots">10 alternative signs the recession is over</a></p><p>The news last week from the National Institute of Economic and Social Research that <a href="http://www.guardian.co.uk/business/2009/jun/10/uk-industrial-production-recession" title="Recession is at an end, says leading economics thinktank">"the recession is over"</a> raised more eyebrows than champagne glasses. While GDP (gross domestic product) may have grown slightly in April and May, most commentators agree the UK is still in a downturn. So how will we recognise the green shoots of recovery when we see them? Here are 10 signs that the economy may be on the up. <h2>1. GDP is in consistent growth</h2><p> A well-used definition of a recession is two consecutive quarters of negative growth, but that doesn't mean that two consecutive quarters of positive growth shows the economy is out of the woods, says Martin Gahbauer, chief economist at Nationwide building society. "The quarter after that may be negative again. Ideally we need GDP to be growing at around 2.5% annually." GDP <a href="http://www.guardian.co.uk/business/2009/apr/24/uk-economy-recession-gdp-falls" title="British economy shrinks at fastest rate for 30 years">fell by 1.9% in the first quarter of 2009</a> and was 4.1% down on the first quarter of 2008.</p><h2>2. First-time buyers return</h2><p> Mortgage lenders have talked a good game when it comes to helping first-time buyers get on the property ladder, with a greater number advertising loans at 90% of a home's value. But credit scoring on these deals is incredibly high, Melanie Bien at broker Savills Private Finance says. "Even if the buyer can get the deposit together there is every chance their application will still be rejected."</p><p>According to Peter Bolton-King, chief executive of the National Association of Estate Agents, a healthy property market requires between 25% and 33% first-time buyers. "Currently there is nothing like that level and, as second-time buyers need first-time buyers to sell to, the market can't recover until lending improves."</p><h2>3. House prices rise sustainably over a longer period</h2><p> While both <a href="http://www.guardian.co.uk/money/2009/jun/04/house-prices-halifax" title="House prices rise by 2.6% in May">Nationwide and Halifax reported house price rises in May</a>, of 1.2% and 2.6% respectively, homeowners shouldn't get too excited. "Average house prices fell by 11% during 1991 and 1992, but there were five monthly price rises in this period," Nitesh Patel, an economist at Halifax, says. "It is important not to put too much weight on any one month's figures."</p><p>Ray Boulger at broker John Charcol says: "It took six to seven years for average property values to fall around 15% in the last recession and recovery was also slow. The 20% fall we have seen in the space of 21 months could mean a more rapid recovery."</p><h2>4. Inflation climbs back up to normal levels</h2><p> Inflation should be pegged at around 2% a year to see the economy "chugging along", according to Martin Ellis, chief economist at Halifax. But <a href="http://www.guardian.co.uk/business/2009/jun/16/inflation-remains-above-target" title="Latest inflation figures">the RPI (retail prices index) measure of inflation is negative</a> at -1.1%. "So-called deflation can be beneficial in the short term as it makes things cheaper for people who are struggling," Ellis says. "But if it becomes persistent it causes a delay in consumption and investment; people adopt an 'it will be cheaper tomorrow' approach."</p><h2>5. Mortgage approvals hit 100,000 a month</h2><p> The headlines are alone in painting a rosier picture for mortgage approvals. In April, lenders granted 43,200 mortgages, according to the Bank of England. This compares with 40,000 in March and surpasses expectations of a rise to 41,000. However, the earliest records ? dating from April 1993 when the UK was recovering from the last recession ? show mortgage approvals at 87,291, the Bank says.</p><p>Healthy activity is around 100,000 approvals month, according to Boulger, but he adds: "We may not see this for some time." It took until October 1996 for approvals to hit 100,000 after the last recession ? almost four years after it had officially ended.</p><h2>6. Interest rates come up from the floor</h2><p> Rock-bottom interest rates are a blessing for homeowners paying variable rate mortgage deals. "In the early 1990s recession, the base rate soared from 7.5% to 15% in a matter of months, which no homeowner budgets for and so was a major cause of repossessions," Boulger says. "With base rate at 0.5% today's homeowners have a much better chance of meeting the mortgage even if their circumstances do change."</p><p>But rates of 0.5% do not spell a healthy economy in the longer term. "In any history that is recent enough to be relevant rates average around 5%, which they will climb to again," Boulger says.</p><h2>7. Negative equity is just a memory (for most)</h2><p> There are an estimated 900,000 homeowners with a <a href="http://www.guardian.co.uk/money/2009/apr/17/mortgages-negative-equity-recession" title="900,000 homeowners pushed into negative equity, says mortgage body">mortgage debt larger than the value of their home</a>, the Council of Mortgage Lenders says, which is still a far cry from the 1.5 million in 1993.</p><p>According to Boulger, homeowners who are on a typically priced repayment mortgage and borrowed 90% of the property value when house prices started to fall should be out of negative equity in the next 18 months if house prices recover just 5% from today's levels.</p><h2>8. Confidence returns to the stock market</h2><p> At Christmas 2007 the FTSE 100 stood at 6,500 points. It fell to a six-year low of <a href="http://www.guardian.co.uk/business/marketforceslive/2009/mar/09/marketforces-ftse" title="Oil stocks help FTSE 100 regain early losses">3,500 in early March</a> this year but has now climbed to around 4,500 points. Jason Witcombe, an adviser at Evolve Financial Planning, says: "The stock markets accurately reflect what the world thinks. Having risen 25% since March the outlook for the next year or two is much better than it was." He adds that investor confidence needs to grow further but the FTSE does not need to return to 6,500 to see a recovery.</p><h2>9. The pound gathers strength</h2><p> Last Friday, sterling reached 1.18 against the euro ? the highest level since 3 December 2008. Robin McEwen, managing director of foreign exchange specialist Foremost Currency, says: "Positive news from the housing market and reports of GDP growth in both April and May, have contributed to the stronger pound. Providing returned confidence in the British economy continues we can expect to see healthier rates of 1.3 against the euro and 1.7 against the dollar (currently 1.64) towards the beginning of 2010." But McEwen adds that a return to the pre-recession 1.45 against the euro and 2.0 against the dollar is doubtful.</p><h2>10. Unemployment falls and jobs are secure</h2><p> Job losses ? especially within the financial and manufacturing sectors ? continues and there are now <a href="http://www.guardian.co.uk/business/2009/jun/17/uk-unemployment-rises" title="Unemployment rises by another 230,000">2.26 million people out of work</a>.</p><p>Ellis says job security is the key to any recovery. "Unemployment lags behind the rest of the economy. It might be that technically we are coming out of recession, but people won't feel like that if they haven't got a job."</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/consumer-affairs">Consumer affairs</a></li><li><a href="http://www.guardian.co.uk/money/houseprices">House prices</a></li><li><a href="http://www.guardian.co.uk/money/debt">Borrowing & debt</a></li><li><a href="http://www.guardian.co.uk/money/redundancy">Redundancy</a></li><li><a href="http://www.guardian.co.uk/money/negative-equity">Negative equity</a></li><li><a href="http://www.guardian.co.uk/money/family-finances">Family finances</a></li><li><a href="http://www.guardian.co.uk/business/recession">Recession</a></li><li><a href="http://www.guardian.co.uk/business/credit-crunch">Credit crunch</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/business/economic-recovery">Green shoots</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719335074786104355132538"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719335074786104355132538" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
10% deposit boost for first-time buyers
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/19458?ns=guardian&pageName=10%25+deposit+boost+for+first-time+buyers%3AArticle%3A1231328&ch=Money&c4=First-time+buyers%2CProperty%2CMortgages+%28Money%29%2CBanks+and+building+societies%2CMoney&c6=Lisa+Bachelor&c8=1231328&c9=Article&c10=&c11=Money&c13=&c25=&c30=content&h2=GU%2FMoney%2FFirst-time+buyers" width="1" height="1" /></div><p>Lisa Bachelor says that you can snap up a good deal ... but you will have to be quick</p><p>First-time buyers have been given a glimmer of hope as a couple of lenders introduced deals that will need only a 10% deposit.</p><p>Britannia Building Society, which is soon to merge with the Co-operative Bank, launched its product last Tuesday. The interest rate of 5.09% is fixed for two years once a &pound;599 fee is paid, though there is a fee-free option if borrowers go for a higher rate of 5.49%.</p><p>A repayment mortgage of &pound;150,000, would cost &pound;884.77 a month on the &pound;599 fee option.</p><p>The society has also launched a three-year fixed rate loan at 5.59% with the same fee, or 5.99% without, and a five-year fix at 5.69% with the fee, or 6.09% without, also both on loans of up to 90% loan-to value (LTV). </p><p>"These deals are really good but, with other lenders putting up rates, how long will they last?" said Richard Morea of brokers London & Country. </p><p>The smaller Saffron Building Society also reached out a hand to first-timers, with 90% LTV and a rate of 5.65%. It is only available in Saffron's catchment area. This is mainly East Anglia but also includes any London postcode starting with E (not EC), so includes Hackney and Walthamstow. </p><p>It comes with a relatively low fee of &pound;495, reduced by a further &pound;200 if a relative of the borrower has &pound;1,000 or more in savings with the building society. </p><p>Britannia and Saffron are amongst what is still only a handful of higher loan-to-value mortgages on offer.</p><p>A few weeks ago Lloyds TSB launched its Lend A Hand, which allows first-time buyers 95% LTV. But to take advantage of the deal you will not only need the minimum 5% deposit, you will have to find another 20% from parents, grandparents or friends. This money must sit in a Lloyds TSB account held under legal charge for 42 months earning 3% interest.</p><p>Most lenders still require deposits of at least 20% or more, though there have been some encouraging signs for those with less. "There are certainly more lenders offering higher LTVs than there were, and some, like Abbey, have started offering their best rates on higher LTVs," said Morea. </p><p>"However, swap rates - the market rates which fixed rate prices are based on - have been going up, so borrowers can expect fixed-rate deals to become more expensive."</p><p>There was already evidence of this last week. Nationwide announced deals on Wednesday, only to pull them and replace them with higher rates on Friday. </p><p>Yorkshire Building Society, West Bromwich, HSBC and Scottish Widows also all put up the price of their fixed-rate mortgages. Two of the best for those wanting 75% LTV - from the Melton Mowbray and Market Harborough building societies - were pulled. </p><p>The Mansfield Building Society bucked the trend, however, and has reduced the interest on its three-year fixed rate - on up to 75% LTV - from 4.09% to 3.95%, with a &pound;999 fee.</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/mortgages">Mortgages</a></li><li><a href="http://www.guardian.co.uk/money/banks">Banks and building societies</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719391448858668024075664"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719391448858668024075664" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Scales tipping as demand outstrips supply again
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/12775?ns=guardian&pageName=Scales+tipping+as+demand+outstrips+supply+again%3AArticle%3A1231305&ch=Business&c4=Housing+market+%28Business%29%2CEconomic+recovery+%28Green+shoots%29%2CFirst-time+buyers%2CHome+information+packs%2CBuying+to+let%2CRecession+%28UK%29%2CProperty%2CBusiness%2CUK+news%2CMortgages+%28Money%29&c6=Kathryn+Hopkins&c8=1231305&c9=Article&c10=News&c11=Business&c13=&c25=&c30=content&h2=GU%2FBusiness%2FHousing+market" width="1" height="1" /></div><p>Estate agents are finding buyers at last. Now they need something to sell, says Kathryn Hopkins</p><p>'All I want is a happy balance," says David McKillop of independent estate agents McKillop & Gregory in Salisbury, Wiltshire.</p><p>Last year, his problem was that too many people wanted to sell their homes but there were no buyers walking through the door, as banks tightened lending conditions. This time, however, the tables have turned. "There are no shortage of buyers. My worry is there's a shortage of instructions," he says. "People are sitting on the fence. I wish I knew why."</p><p>First-time buyers are "back in force" as their parents are helping them with deposits, claims McKillop. He also says buy-to-let investors are coming back, which has led to an increase in sales at the bottom end of the market. "In the last three months sales have exceeded last year, but instructions are bad. More people were selling last year but prices were inflated."</p><p>McKillop says the lack of instructions has slowed business down: "We have some very good buyers at present, but they cannot find anything." </p><p>He believes Home Information Packs (Hips) have deterred some people from testing the market because of the cost and extra hassle. "Nobody wants to look at them or read them."</p><p>In general though, he believes things are looking up for the housing market. "I'm much happier now," he says. "The financial situation has settled down. Last year, we kept being hit by more bad news and that hit people's confidence. People are more confident now."</p><p>Keith Spencer at Newland Rennie Wilkins in Abergavenny in Wales is having the same problem as McKillop. He says there is a "reasonable level of buyer inquiry, but lack of new instructions, especially given that this should be the busy time of year. Prevailing sentiment is that it is not a good time to be selling, and lack of confidence of vendors in their employment position means that they are not looking to trade up." </p><p>As for house prices, Spencer believes it is rather early to say that they have reached a bottom. "At the moment there are transactions taking place. I think it's too soon to say that prices are rising, but we are now at a point where we have two or more people competing for the same property. </p><p>"People are increasing their bids, but they are still not paying as much as the asking price. Few properties are making more than the asking price."</p><p>He is now worried about the lack of new stock coming onto the market. For Newland Rennie Wilkins, June is traditionally a month where a "flood" of properties are put up for sale, but so far they have only had a "steady trickle".</p><p>Chris Baker, director of Cambridge-based estate agents Pocock and Shaw, said he also has very little stock coming on to the market, which has created a "vacuum". "People who sold over the last few months, and rented instead of buying, are now keen to get back into the market." </p><p>Baker believes a lot of people now reckon the market has bottomed out and "don't want to miss the boat", but that stock levels have been depleted and there is not enough choice. Nonetheless, he believes the housing market is now in a much better state than it was a year ago. "If a house is priced correctly, we are back to the market of two or three years ago. We are making more sales but we just need more houses to sell."</p><p>Michael Fisher, of estate agents Fisher and Wrathall in Lancaster, says that there has certainly been quite an increase in buyer interest, but he too believes that it is too soon to call a recovery in the housing market. </p><p>"I'm fairly cautious because of a few issues on the horizon, such as the imminent likelihood of an increase in mortgage rates.</p><p>"I also have a lot of concern that because agents have seen their stock of property go down over the last few months, there's a temptation for agents to talk the market up again.</p><p>"Sales have lifted up again, marginally, but we have to see this in the context that we're still in the national average of sales down by 66%. So the fact that we sold two more houses this week is fine - but we're still more than 50% down."</p><p>Fisher says his agency is seeing more houses going out than coming in and believes this is an early indicator that there will be a shortage over the next few months. He also says that Hips are putting off less-committed would-be sellers from entering the market. "If you are going to pay &pound;350 or whatever it is for a Hip, then you've got to be serious."</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/business/housingmarket">Housing market</a></li><li><a href="http://www.guardian.co.uk/business/economic-recovery">Green shoots</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/money/homeinformationpacks">Home information packs</a></li><li><a href="http://www.guardian.co.uk/money/buying-to-let">Buying to let</a></li><li><a href="http://www.guardian.co.uk/business/recession">Recession</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/mortgages">Mortgages</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=12466848719445957719811002313939"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=12466848719445957719811002313939" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
UK's housing needs new foundations
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/28168?ns=guardian&pageName=%3Cb%3EUK%27s+housing+needs+new+foundations%3C%2Fb%3E%3AArticle%3A1231304&ch=Business&c4=Housing+market+%28Business%29%2CProperty%2CBusiness%2CMortgages+%28Money%29%2CMoney%2CHouse+prices+%28Money%29%2CFirst-time+buyers%2CHome+information+packs&c6=Kathryn+Hopkins%2CAshley+Seager&c8=1231304&c9=Article&c10=Feature&c11=Business&c13=&c25=&c30=content&h2=GU%2FBusiness%2FHousing+market" width="1" height="1" /></div><p>However house prices may be moving, a new generation is signalling an end to Britain's passion for property</p><p>Talk that the housing market may be bottoming out after 18 months of falling prices may cheer the chattering classes of existing homeowners, but for young people it is no cause for celebration.</p><p>Jonny Scott, aged 24, from Winchester, says that one day he would like to buy a house or a flat but, despite a 20% drop in prices across the country, that still "seems millions of years away. I don't even see it as a possibility at the moment".</p><p>He adds that he cannot see himself getting on to the property ladder for at least another 10 to 15 years: "I kind of hope by 35 there will be a child or two in the equation, but that might have to come before I'm able to buy a house."</p><p>Jack Mitchell, 24, doing temporary work in Surrey after graduating from Birmingham University, is not even considering buying at the moment because it is just not "viable", adding : "I don't know anyone my age who owns a house."</p><p>Bianca Gill, 22, from London has moved back in with her father because she believes having fewer outgoings will allow her to find a job with fewer hours, so she has more time to look for jobs in her chosen field. "It's difficult because I've lived by myself for a few years, but the prospect of buying a house is so far away."</p><p>These are by no means isolated cases and may reveal that Britain's love affair with property is gradually fading. Research from the Chartered Institute of Housing out tomorrow will show that only a third of young people (18-to-24s) now aspire to own their own home. There has also been a big change in attitudes among the 25-to-34 age group; only 69% think home ownership is a good thing, down from 83% before the credit crunch struck.</p><p>CIH chief executive Sarah Webb says: "We've driven too many people into unsustainable owner-occupation and need to do a far better job of putting renting and owning on a level playing field. We need to get serious about the number of houses we are prepared to build and have to look at renting as a more attractive alternative to owning."</p><p>Evidence from the front line is that the stabilisation in the housing market is not driven by young people: the fall in prices so far has done little to help them gain a foothold on the housing ladder.</p><p>Julia Lodge, sales manager at estate agents Barnard Marcus in Hammersmith, west London, says first-time buyers are still struggling to get mortgages: "Most of our buyers are either cash or European buyers. There are first-time buyers looking, but the vast majority of them are getting help from their parents. There are hardly any that can do it on their own any more."</p><p>For buyers wielding sacks of euros, the UK market must now seem really cheap given the 20% fall in prices from the peak and the fact that the pound is down so far against the euro over the past year. The British raids on the French and Spanish property market of recent years, fuelled by the strong pound, seem to have gone into reverse. </p><p>Lodge says the London market, which often leads the rest of the country, has really turned around and she is run off her feet. "Last year was terrible, but now it's very exciting. I wouldn't say prices are heading up yet, but activity has really improved."</p><p>Her experience is mirrored across Britain, although often less strongly than in London, according the recent monthly survey from the Royal Institution of Chartered Surveyors. It showed buyer inquiries at their highest for 10 years. </p><p>Property website Rightmove enjoyed its busiest day ever recently and said that asking prices in May showed the largest rise since records began in 2003, and, after many months of sharp declines, both the Nationwide and Halifax monthly surveys suggested prices rose strongly last month.</p><p>Given that the Bank of England cut interest rates to an all-time low of just 0.5% over the winter, perhaps a levelling out of the housing market should not be a surprise. So does that mean the end of the slump is upon us? Can the "good" times of rising prices be about to return? The picture is somewhat confusing, but experts advise caution on assuming the slump is over.</p><p>"We are certainly not talking the market up," says Simon Rubinsohn, RICS chief economist, who thinks prices may still have further to fall. "There are still plenty of headwinds against it, such as the fact that first-time buyers still find it difficult to get a mortgage and job losses are still rising rapidly."</p><p>The problem most agents report is that there is too little property on offer. The RICS survey shows that the number of houses and flats has shrunk by a third over the past year, probably as sellers unable to find buyers in the depths of last year's market meltdown have let their property instead. Lettings surveys show there has been a big increase in supply of rentals, with a resultant downward pressure on rents.</p><p>Rightmove's survey also recorded the lowest number of new properties coming on to the market during May. Professor Steve Nickell, a former member of the Bank of England's monetary policy committee and now chairman of the National Housing Planning and Advice Unit, is puzzled that house prices seem to be bottoming out given that first-time buyer access to mortgages on reasonable terms is restricted by a still dysfunctional banking system.</p><p>"The market does look to be bottoming out, and if the mortgage market loosens up then prices will go up again. If it doesn't loosen up, then prices will just be flat for a long time," he says.</p><p>It is true that new mortgage approvals - a good indicator of where prices will be in a few months - have been picking up in the recent months. But figures from the Council of Mortgage Lenders last week showed approvals in April rose 16% from March to 35,600. That sounds impressive, but the figure was 28% below last April's already depressed level and 60% below the 88,000 April average over the previous seven years.</p><p>"Despite the recent pick-up, mortgage activity is still down at a level that is normally associated with falling house prices," says Howard Archer, an economist at IHS Global Insight. </p><p>And last week several lenders started to raise their fixed-rate mortgage offers, for the first time in a year, in line with movements in money market interest rates. </p><p>Ray Boulger, of mortgage brokers John Charcol, says: "If interest rates continue to rise, then the current recovery in the housing market, which is based primarily on much-improved affordability as a result of a combination of lower house prices and lower interest rates, may well wobble."</p><p>Professor David Blanchflower, who recently left the Bank of England's monetary policy committee, wrote last week that we should not get carried away. "House prices still have a long way to fall. It should be remembered that during the period of declining house prices of the early 1990s, approximately one month in three house prices actually increased."</p><p>The underlying long-term picture is that there is a shortage of supply: and that means the pattern of high house prices and market booms and slumps will be hard to break.</p><p>Nickell says that the long-running shortage of housing that the British property market suffers has not gone away just because prices have slumped. "There is a shortage in the sense that not enough houses have been built to keep pace with the number of new households being formed," he adds. "And that has been the case since about 1998."</p><p>Britain's birth rate has been relatively strong, people are living longer and there is a steady flow of immigration, all of which puts upward pressure on demand. Britain is estimated to need nearly a quarter of a million new homes a year just to keep up. This year, though, experts expect fewer than 100,000 to be built - the smallest number since the second world war - as a result of the market slump.</p><p>Nickell is worried that social housing waiting lists have risen to 700,000 households since the turn of the century: "And it is continuing to rise very strongly. This is putting pressure on the private rented sector."</p><p>Britain, along with Spain, has the highest levels of owner occupancy in Europe, at something over 70%. In Germany, by contrast, only about 40% of people own their homes, although prices there have not risen in real terms for decades because of a declining population. This lack of house price inflation reduces the attraction of buying and explains why the majority of Germans rent.</p><p>But many other European countries, such as Ireland, Spain and France, as well as the United States, have seen very similar property booms this decade, driven by cheap and plentiful credit. Those markets have also bust spectacularly. But in the spring the International Monetary Fund warned that house prices were still overvalued in many countries and that the correction probably had "a considerable distance left to run".</p><p>Lack of housebuilding means Britain looks destined to live with relatively high house prices lurching from boom to bust as they have done for decades.</p><p>There are campaigners who argue that Britain should deal once and for all with its damaging boom-bust cycle in house prices by reaching for a radical policy known as annual land value tax (LVT), which would be levied on the value of land up to its maximum permitted development value. </p><p>The tax would be levied on property owners at, say, 1%, of the land's value every year, with the proceeds used to replace council tax and reduce income tax, thus rewarding work rather than property speculation. LVT would also encourage, for example, an elderly person living in a large family house to move to a flat and free the house for a family in a country where space is limited. It would also discourage developers from sitting on empty sites and buildings.</p><p>"This tax-shifting vision would release billions into the pockets of millions of working people and their families to spend and make the economy work for them and not landowners, speculators and bankers," says Louanne Tranchell, chair of the Labour Land Campaign.</p><p>LVTs are used elsewhere in the world and the idea goes back at least two centuries. "With the financial crisis, the time is ripe to introduce a system to collect the unearned income from the value of the land, which arises from community activity and services, and through investment in transport and infrastructure funded by the public purse," Tranchell adds.</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/business/housingmarket">Housing market</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/mortgages">Mortgages</a></li><li><a href="http://www.guardian.co.uk/money/houseprices">House prices</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/money/homeinformationpacks">Home information packs</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=12466848719492235095883100038983"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=12466848719492235095883100038983" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Young people 'giving up on the property dream'
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/73663?ns=guardian&pageName=Young+people+%27giving+up+on+the+property+dream%27%3AArticle%3A1231293&ch=Business&c4=Housing+market+%28Business%29%2CProperty%2CMortgages+%28Money%29%2CBusiness%2CFirst-time+buyers&c6=Ashley+Seager&c8=1231293&c9=Article&c10=News&c11=Business&c13=&c25=&c30=content&h2=GU%2FBusiness%2FHousing+market" width="1" height="1" /></div><p>Young people are increasingly falling out of love with the idea of owning their own home, new research shows, as prices remain too high for most to afford.</p><p>A study of 2,000 people by the Chartered Institute for Housing, to be released tomorrow, shows that only a third of 18-to-24-year-olds now think owning a home is right for them.</p><p>Over the past 12 months an estimated 2.4 million people, most of them young, have changed their opinion about home ownership, when asked their ideal living situation before the credit crunch compared with their ideal living situation now.</p><p>The biggest change in attitudes has come in the 25-to-34 age range, with a fall from 83% to 69% of respondents wanting to own their home.</p><p>CIH chief executive Sarah Webb said: "A generation has grown up believing it has to own at any cost - in part because we haven't provided them with decent information about the alternatives. We can't repeat this mistake with future young people." </p><p>Webb believes Britain not only needs to build many more flats and houses, but to come up with more viable and affordable forms of tenure such as shared equity. She also wants the government to consider using the tax system to prevent house prices from booming again.</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/business/housingmarket">Housing market</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/mortgages">Mortgages</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=12466848719626387848680438581751"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=12466848719626387848680438581751" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Mortgages for first-time buyers slow to a trickle
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/20373?ns=guardian&pageName=Mortgages+for+first-time+buyers+slow+to+a+trickle%3AArticle%3A1231124&ch=Money&c4=First-time+buyers%2CBanking+%28Business%29%2CMortgages+%28Money%29%2CProperty%2CBorrowing+and+debt%2CCredit+crunch+%28Business%29%2CUK+news&c6=Hilary+Osborne&c8=1231124&c9=Article&c10=News&c11=Money&c13=&c25=&c30=content&h2=GU%2FMoney%2FFirst-time+buyers" width="1" height="1" /></div><p>There are only 3% of the products available to property ladder newcomers that there were two and a half years ago</p><p><strong></strong><strong></p><p></strong>First-time buyers who want to get on the housing ladder have seen the number of mortgages available to those without a large deposit slump by 97% over the last two and a half years, according to new research released today.</p><p>Figures from the price comparison service Moneysupermarket show there are 102 mortgages on offer to borrowers with a 10% deposit, compared with a choice of 3,148 in January 2007.</p><p>Rates have also started rising after a year of falls. Yesterday, a number of big lenders put up the cost of their fixed-rate mortgages and experts suggest other lenders will follow suit.</p><p>First-time buyers are already paying a high price for their borrowing ? in January 2007, the base rate stood at 5% and the average interest rate on a 90% home loan was 6.2%. Today, the average rate on a first-time buyer loan stands at 6.23%, 5.73% above bank base rate.</p><p>Ray Boulger, of mortgage broker John Charcol, said the increase in price had been driven by a lack of competition and by new rules under which lenders have to set aside more capital to cover high loan-to-value mortgages. "The cost to the lender of making one 90% LTV loan available can be four or five times the cost of offering a mortgage at 60% LTV," he said. "We're in a situation where the more lending a lender does at 90% the less lending they are able to do overall."</p><p>This week, Britannia Building Society re-entered the first-time buyer market with a market-leading two-year fixed rate of 5.09%. However, borrowers have reported problems obtaining the loan. One first-time buyer said he had been turned down by Britannia because a large chunk of his deposit had come from his parents.</p><p>"A secondary problem to the lack of mortgages available at 90% is that these deals are extremely hard to qualify for," said David Hollingworth, of mortgage broker London & Country. "Lenders are looking for people who can pass their credit score with flying colours."</p><p>Boulger said tightened lending criteria meant first-time buyers applying for a large loan had a two-in-three chance of being rejected, with lenders only interested in "squeaky clean" borrowers with perfect credit records.</p><p>Although figures this week from the Council of Mortgage Lenders showed a rise in new borrowers in April, numbers remain low by historic standards and experts say the market cannot recover until first-time buyers can find loans.</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/business/banking">Banking</a></li><li><a href="http://www.guardian.co.uk/money/mortgages">Mortgages</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/debt">Borrowing & debt</a></li><li><a href="http://www.guardian.co.uk/business/credit-crunch">Credit crunch</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719651843017308279505192"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719651843017308279505192" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Mortgage completions rise by 16%
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/95046?ns=guardian&pageName=Mortgage+approvals+rise+by+16%25%3AArticle%3A1229839&ch=Money&c4=Mortgages+%28Money%29%2CProperty%2CMoney%2CFirst-time+buyers%2CMortgage+lending+figures+%28Business%29%2CBusiness%2CUK+news&c6=Hilary+Osborne&c8=1229839&c9=Article&c10=News&c11=Money&c13=&c25=&c30=content&h2=GU%2FMoney%2FMortgages" width="1" height="1" /></div><p>The CML says 35,600 loans were completed for purchases in April, but the figure is down 28% on the same month last year</p><p></p><p>The number of mortgages taken out by homebuyers increased by 16% in April, but remains well below the historical average, the Council of Mortgage Lenders (CML) said today.</p><p></p><p>A total of 35,600 loans for house purchase were completed during the month compared with 31,000 in March. However, the figure was down 28% on April last year and less than half the average of 88,000 loans approved in the month of April over the past seven years.</p><p></p><p>The majority of mortgages were taken out by existing homeowners planning to move, who accounted for 22,100 of the total and £3.1bn of the total £4.5bn approved for purchases. However, first-time buyer numbers were also up over the month rising by 11% to 13,500.</p><p></p><p>The average first-time buyer put down a 25% deposit and borrowed 2.96 times their income, compared with 2.99 in March. In April last year the average deposit size was 11% and borrowers were typically taking on loans 3.33 times their earnings.</p><p></p><p>The change reflects both falling house prices, with recent indices showing prices are <a href="http://www.guardian.co.uk/money/2009/jun/09/rics-house-prices" title="House prices rise by 2.6%, says Halifax">still down by around 16% year-on-year</a>, and the insistence of lenders on large deposits.</p><p></p><p>The mortgage market for new buyers has improved slightly in recent weeks, with lenders introducing a number of higher loan-to-value deals, but lenders are likely to remain cautious as long as house prices continue to fall.</p><p></p><p>Recent monthly increases, reported by Halifax and <a href="http://www.guardian.co.uk/money/2009/may/29/house-prices-nationwide" title="House prices rise for second time in three months">Nationwide</a>, have been ascribed to a lack of available properties, and there are concerns that if sellers start to flood the market again prices will take another nosedive.</p><p></p><p>The CML's head of research, Bob Pannell, said: "There are tentative signs of house purchase lending stabilising, but we need to see considerably higher transaction levels to underpin house prices."</p><p></p><p><h2>Remortgage misery</h2></p><p>The CML's figures showed the slump in remortgages continued in April with completions for those switching deals falling by 22% to 31,000. This is the first time since December that remortgage numbers have fallen below house purchase numbers.</p><p></p><p>The change has been driven by cuts to the Bank of England base rate at the start of the year, which made many lenders' standard variable rates (SVRs) looks more attractive than the short-term deals available to borrowers approaching the end of a special offer rate, and tightened lending criteria which have made it more difficult for borrowers to switch loans.</p><p></p><p>The months of falling interest rates have driven the base rate to an historic low, and persuaded borrowers to lock into deals before rates start to rise again. The CML said 69% of borrowers taking loans in April had opted for a fixed-rate deal ? the highest share since last year.</p><p></p><p>Pannell said: "With the interest rate cycle now at its floor, an increasing proportion of borrowers are taking out fixed rates, including for longer-term periods of five to 10 years. With expectations for rates to remain low in the near future, shorter term fixed-rate deals are less appealing than attractively priced variable rate deals.</p><p></p><p>Andrew Montlake, director of independent mortgage broker Coreco, said it was a relief that the majority of borrowers were choosing to fix their rates. "Lenders are now hiking their fixed rates, partly because swap rates have increased dramatically over the past few days, partly because lenders have too many applicants and too little to lend, and partly because they can.</p><p></p><p>"What concerns me is that many people coming to the end of their existing mortgage products are still reverting to, or being forced to revert to, the SVR which could come back to bite them should rates rise sharply."</p><p></p><p>The UK's largest building society, Nationwide, will increase the cost of its fixed-rate mortgages tomorrow. The lender is to increase rates on two-year deals by up to 0.61%, while five-year rates will go up by up to 0.86%.</p><p></p><p>Ray Boulger of mortgage broker John Charcol said: "Such large and varied increases indicate that either Nationwide wants to rebalance its mix of business or it has reassessed the relative risks of different types of business, or perhaps both. It may also indicate that it wants to reduce the overall amount it lends."</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/mortgages">Mortgages</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/business/mortgage-lending-figures">Mortgage lending figures</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719685058680587252959827"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719685058680587252959827" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
House prices buoyed by property shortage
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/17681?ns=guardian&pageName=House+prices+stabilised+by+property+shortage%3AArticle%3A1228598&ch=Money&c4=House+prices+%28Money%29%2CProperty%2CFirst-time+buyers%2CMoney%2CHousing+market+%28Business%29%2CBusiness%2CUK+news&c6=Jill+Insley&c8=1228598&c9=Article&c10=News&c11=Money&c13=&c25=&c30=content&h2=GU%2FMoney%2FHouse+prices" width="1" height="1" /></div><p>A combination of rising buyer inquiries and a shortage of homes for sale is supporting house prices, Rics says</p><p>Increasing interest from new buyers plus a shortage of properties for sale is helping to stabilise house prices, according to the latest housing market survey from the Royal Institution of Chartered Surveyors (Rics).</p><p>Rics's members said buyer inquiries increased for the seventh month in a row in May, and at the fastest rate since 1999. Estate agents also saw a rise in sales, albeit from very depressed levels. The average number of properties sold over the past three months rose to 11.8, up from 10.6. Fewer surveyors also reported a fall in house prices.</p><p>At the same time new instructions have continued to fall: the average number of properties on estate agents' books has dropped in the past month to 58.4 from 69.4, and by more than a third over the past year.</p><p>Rics said the lack of new supply coupled with the increase in activity is providing some support for house prices, but warned there could be further price falls to come. Spokesman Ian Perry said: "The housing market does appear to be close to bottoming out with activity picking up in a material way and prices at last stabilising.</p><p>"However, it is important to remember that the lack of supply has been as important in underpinning prices as the rise in demand. Moreover, with the economic backdrop still quite uncertain, unemployment set to continue increasing sharply and finance for first-time buyers still in short supply, there are a number of significant obstacles for the market to overcome over the coming months."</p><p>The findings from Rics were supported by house price figures published today by the government's communities department , which showed prices rose by 1.1% month-on-month in April, after dropping 1.3% in March. This means the year-on-year fall in house prices narrowed to 13% in April from 13.6% in March.</p><p>In London, the improving market is being driven by first-time buyers who have built up equity over the past two years, or who have been lent deposits by their parents, taking advantage of lower prices, according to estate agent <a href="http://www.ludlowthompson.com/" title="Ludlow Thompson website">Ludlow Thompson</a>.</p><p>Director, Stephen Ludlow, said: "Sentiment has changed considerably ? at the end of last year nobody could see a floor for prices. Whilst prices may not have reached the very bottom buyers are no longer worried that the market is still in meltdown mode.</p><p>"The pickup in demand in May was so sudden that it has been the lack of supply of properties actually on the market that caused the bounce in prices. We've had to move lettings staff on to sales to deal with the surge in activity."</p><p>However, Howard Archer, chief UK and European economist for IHS Global Insight, said he remained sceptical that house prices had bottomed out.</p><p>"It is not uncommon for there to be months of rising prices when house prices are still trending down. Most recently, the Halifax reported that house prices rose by 2% month-on-month in January but then fell sharply during February-April before rising again in May.</p><p>"Housing market activity is still very low by past norms and at a level consistent with falling house prices, and despite markedly rising buyer interest we believe that the pickup in actual house purchases is likely to be gradual and fitful for some time to come."</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/houseprices">House prices</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/business/housingmarket">Housing market</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719733990103950695731323"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719733990103950695731323" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Property expert: Are we eligible for another first-time buyer scheme?
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/71610?ns=guardian&pageName=Property+expert%3A+Are+we+eligible+for+another+first-time+buyer+scheme%3F%3AArticle%3A1221749&ch=Money&c4=First-time+buyers%2CProperty%2CMoney&c6=Virginia+Wallis&c8=1221749&c9=Article&c10=&c11=Money&c13=Ask+the+experts%3A+homebuying&c25=&c30=content&h2=GU%2FMoney%2FFirst-time+buyers" width="1" height="1" /></div><p><strong>Q</strong> My husband and I purchased a shared-ownership property in May last year. However, the flat and the area have not lived up to our expectations and we really don't want to live there any more. We were thinking of selling our share and looking for another place. We have seen many great flats for first-time buyers in other areas. The rent and buy schemes are also very appealing. The issue is: if we sell our share of the flat, can we still obtain first-time buyer status? We do not have any other properties. <strong>ZA</strong></p><p><strong>A</strong> I'm sorry to say it is highly unlikely you will still be treated as first-time buyers. So it is also unlikely you will be eligible for any of the government-sponsored HomeBuy schemes. On a more positive note, in terms of getting a good deal on a mortgage, being a first-time buyer no longer gives any particular advantage. Having as big a deposit as possible to put towards buying a home is currently what gets the best mortgage deals.</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719787984163912586910151"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848719787984163912586910151" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />

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Government will miss affordable housing target, its own figures reveal
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/1653?ns=guardian&pageName=Government+will+miss+affordable+housing+target%2C+its+own+figures+reveal%3AArticle%3A1240612&ch=Business&c4=Construction+industry+%28Business%29%2CHousing+%28Society%29%2CBusiness%2CSociety%2CMoney%2CPolitics%2CProperty%2CFirst-time+buyers&c6=Kathryn+Hopkins&c8=1240612&c9=Article&c10=News&c11=Business&c13=&c25=&c30=content&h2=GU%2FBusiness%2FConstruction+industry" width="1" height="1" /></div><p>New home construction will fall more than 13,000 short of long-standing 70,000 target</p><p><strong></strong>The government is certain to break its long-standing promise to be building 70,000 affordable homes a year by 2010/11, the Guardian has learned.</p><p>As Gordon Brown unveiled his party's relaunch document, entitled Building Britain's Future, this week with a pledge to build more affordable homes over the next two years, a breakdown of the government's own figures shows that the housing target now falls short of plans outlined two years ago.</p><p>In 2007, the then housing minister Yvette Cooper pledged to provide more than 70,000 affordable homes a year by 2010-11. But detailed figures issued in a briefing this week show that the government is failing to meet its original target by at least 13,550 a year: it plans to deliver only 56,450 dwellings in 2010-11, after building 55,500 in 2009-10.</p><p>In a further change from its original programme for 2010-11, only 13,500 of the 56,450 homes will be council housing. Two years ago, the government said that 45,000 out of the 70,000 affordable homes promised would be for social renting.</p><p>A spokesperson for the Department of Communities and Local Government said: "Our focus is on keeping affordable housing going in the current climate: that's why we're increasing investment, kick-starting new housing projects and protecting jobs. We know our long-term targets are extremely challenging right now, but we're determined to take the action necessary to build for Britain's recovery."</p><p>Lord Oakeshott, the Liberal Democrats' Treasury spokesman, said: "You couldn't make it up. We all knew that Building Britain's Future contained a string of re-announced targets, but this is something else ? to announce a lower target after you have failed and pretend it's progress. It's surreal. This is a real slap in the face to the 3&nbsp;million people in desperate housing need on our council house waiting lists."</p><p>Shadow housing minister Grant Shapps said: "Gordon Brown's dog-whistle politics on British homes for British people can't disguise the fact that his government has failed to tackle the British's housing crisis. After a succession of housing ministers and glossy reports, housebuilding is at its lowest level since 1947. Targets come, and targets go, exposing a continued failure to deliver."</p><p>The Construction Products Association (CPA) has also discovered that despite the government building fewer houses, the programme will cost more money. The government said this week that an additional £1.5bn would be spent over the next two years to deliver 20,000 new homes, which will be part of the approximate total of 110,000 affordable homes now being promised over the next two years.</p><p>Michael Ankers, chief executive of the CPA, said: "It is difficult to understand why they need additional money to deliver fewer houses. The last comprehensive spending review allocated the necessary funds to deliver the government's programme to the end of 2010/11. So why do they now need to divert money from other capital programmes to deliver a lower target that should be costing less? It sounds very much like the government is promising less for more."</p><p>He added that if the funds required for this housing were being reallocated from elsewhere, then the government would need to explain which other capital projects will not now go ahead. "The sooner this is clarified, the better," he said.</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/business/construction">Construction industry</a></li><li><a href="http://www.guardian.co.uk/society/housing">Housing</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=12466848729366684966389468497265"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=12466848729366684966389468497265" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Labour manifesto: extra 20,000 affordable homes over two years, but questions remain
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/75736?ns=guardian&pageName=An+extra+20%2C000+affordable+homes+over+two+years%2C+but+questions+about+who%3AArticle%3A1239617&ch=Society&c4=Housing+%28Society%29%2CGordon+Brown%2CLabour%2CSociety%2CPolitics%2CUK+news%2CPublic+services+policy+%28Society%29%2CCommunities+%28Society%29%2CProperty%2CFirst-time+buyers%2CHouse+prices+%28Money%29%2CMoney&c6=Alan+Travis&c8=1239617&c9=Article&c10=News&c11=Society&c13=&c25=&c30=content&h2=GU%2FSociety%2FHousing" width="1" height="1" /></div><p>? Budget will be tripled, Brown tells Commons <br />? Critics call scheme 'British homes for British workers'</p><p><strong></strong>Gordon Brown's pledge to pump £2.1bn into building affordable homes will mean an extra 20,000 will be built over the next two years on top of the 90,000 already in the pipeline.</p><p>The prime minister told the Commons today he was tripling the £600m announced in the last budget for new council and housing association homes. Half the extra £1.5bn will come from the Department of Communities and Local Government, and the other half will be redirected from other parts of Whitehall. The Home Office and Department for Transport were identified by the business secretary, Lord Mandelson, as the most likely targets for further savings.</p><p>Brown said the 110,000 homes being built over the next two years would allow councils to give greater priority to local residents whose names had been on the waiting list "for far too long".</p><p>Critics branded this policy "British homes for British workers", but it was unclear how many extra council and housing association homes would actually be reserved for local residents. Housing minister John Healey made clear that priority would continue to be given to those with "serious housing needs", and only then would extra priority go to those who have spent a long time on the waiting list, have local or family connections, or are moving to the area to take up a specific job. "We need to make sure people think they have a fair chance of getting new homes as they are built," said Healey.</p><p>The strategy document published by Downing Street reads: "There is a perception that allocation policies for social housing are unfair, inflexible and act as a barrier to people being able to move when they need to ? We will pursue reforms to tackle these problems."</p><p>The document says the rules will be changed to give more priority to local people who have spent a long time on the waiting list. The small proportion of homes known as "choice-based lettings", which are reserved for those who are moving into key jobs from elsewhere in the country, is to be expanded.</p><p>The housing minister is also to announce the details of a consultation to allow councils to keep all the proceeds of council house sales and the revenue they receive in rents. The ban on local authorities spending council house receipts has been a longstanding complaint since sales were introduced by the Tories in the early 1980s.</p><p>The breakdown of how the extra £1.5bn will be spent shows 15,500 new affordable homes are to be built, of which 11,000 will be for social rental. A further 4,000 affordable homes will come from extending the Kick Start programme, which gets stalled housebuilding sites back on track.</p><p>The move to change the housing allocation rules was criticised by immigration welfare groups, who accused ministers of pandering to the far right.</p><p>Two recent research studies have "exploded the myth" that newly arrived foreign workers have been able to jump the local housing queue, they said. A joint study for the Equality and Human Rights Commission and the Local Government Association recently found that 60% of new migrants who had come to Britain over the last five years were living in the bottom end of the private rented sector. A further 18% were living as owner-occupiers, with only 11% in social housing. Those who had come from Poland and other eastern European countries made up less than 1% of public sector lettings.</p><p>Most newly arrived migrants are banned from joining the waiting list for council or housing association accommodation.</p><p><strong></strong></p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/society/housing">Housing</a></li><li><a href="http://www.guardian.co.uk/politics/gordon-brown">Gordon Brown</a></li><li><a href="http://www.guardian.co.uk/politics/labour">Labour</a></li><li><a href="http://www.guardian.co.uk/society/policy">Public services policy</a></li><li><a href="http://www.guardian.co.uk/society/communities">Communities</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/money/houseprices">House prices</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Society&spacedesc=rss&system=rss&transactionID=12466848729417160318333372840146"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Society&spacedesc=rss&system=rss&transactionID=12466848729417160318333372840146" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Empty properties? How a disused car park was recycled into this des-res
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/50544?ns=guardian&pageName=How+a+disused+car+park+was+recycled+into+this+des-res%3AArticle%3A1238729&ch=Money&c4=Property%2CMoney%2CHousing+%28Society%29%2CSociety%2CLondon+%28News%29%2CFirst-time+buyers&c6=Huma+Qureshi&c8=1238729&c9=Article&c10=News&c11=Money&c13=&c25=&c30=content&h2=GU%2FMoney%2FProperty" width="1" height="1" /></div><p>Boarded-up properties, abandoned shops and disused car parks may not sound like pleasant places to live, but one housing association thinks these derelict spaces could help first-time buyers take an affordable leap on to the property ladder. </p><p>Notting Hill Housing (NHH), one of the largest housing associations in the country, has just spent nine months converting a disused, dark and dingy car park in Putney, south-west London, into 10 spacious and bright apartments which no longer betray any sign of their former dilapidated existence.</p><p>The development in Cambalt Road is part of Wandsworth council's Hidden Homes scheme - a project which scouts out disused properties such as sheds, garages and old boiler rooms on local authority land and transforms them into apartments. </p><p>Mark Vaughan, director of home ownership at NHH, says: "This idea of recycling existing buildings could be rolled out as a model across the country."</p><p>The Empty Homes Agency, an independent charity which highlights the waste and inefficiency of derelict properties in England, is also encouraging local communities to work together and make more efficient use of wasted space in neighbourhoods. </p><p>Henry Oliver, policy adviser at Empty Homes, says: "A lot of new developments end up wasting space, and it is far more efficient to maximise what is already available. There is a huge amount of space going begging everywhere - places such as empty offices and upper floors above shops which could have a residential use."</p><p>To date, Hidden Homes conversions have only been available as social housing stock from local authorities; Southwark council has also earmarked empty launderettes and unused offices as spaces to be converted and remodelled into residential properties. But the 10 properties in Cambalt Road are the first to be available to first-time buyers via the New Build HomeBuy scheme.</p><p>Full market prices start from &pound;213,000, but under the shared-ownership scheme first-time buyers can purchase a minimum 25% share worth &pound;53,250 on which they must take a mortgage, and pay a rent on the remainder. </p><p>Providers offering mortgages on New Build HomeBuy schemes include HSBC, Abbey and Leeds building society.</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/society/housing">Housing</a></li><li><a href="http://www.guardian.co.uk/uk/london">London</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848729455010453097074503687"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848729455010453097074503687" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Thousands face first-home despair after HomeBuy funding shortfall
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/77192?ns=guardian&pageName=%3Cb%3EThousands+face+first-home+despair%3C%2Fb%3E%3AArticle%3A1238728&ch=Money&c4=First-time+buyers%2CProperty%2CMoney%2CHousing+%28Society%29%2CSociety&c6=Jessie+Hewitson&c8=1238728&c9=Article&c10=News&c11=Money&c13=&c25=&c30=content&h2=GU%2FMoney%2FFirst-time+buyers" width="1" height="1" /></div><p>No sooner had buyers' hopes been raised by the lure of government funding than they were dashed, writes Jessie Hewitson</p><p>As many as two-thirds of first-time buyers who thought they were purchasing through a government-backed scheme have had their dreams crushed because it ran out of funding.</p><p>Cash broke the story about MyChoice HomeBuy following April's budget, but the number of people who have been affected is only just coming to light - and it looks like running into thousands. </p><p>Many are first-time buyers but others are those further up the chain who have seen their buyer disappear, and so have missed out on a new home.</p><p>MyChoice HomeBuy allows buyers to choose any home on the market - old or new - and have the government fund as much as 50% of the purchase price with a low-interest loan. </p><p>Paul Robson was one such buyer who thought he was on the road to completing on his first home. </p><p>After receiving the nod from his local housing association's financial adviser that he was eligible for the scheme, the 31-year-old company director found a new flat he loved in Stevenage, Herts, and paid a &pound;1,000 deposit to secure it. </p><p>Shortly after, he found out that the funding for MyChoice HomeBuy had run out in the local area, so he wouldn't be able to buy after all. "It was massively disappointing," he says. </p><p>"It has wasted a great deal of my time, and now I'm back to square one. I have a verbal agreement from the developer to refund my &pound;1,000 deposit, but I won't fully relax until I get it. In my mind it feels like the government came up with a great idea and got the hopes of thousands of first-time buyers up, only to rip it out from underneath us."</p><p>Robson's is not an isolated case. Richard Stone, of SPF Sherwins, one of the biggest affordable housing mortgage brokers, has carried out more than 1,400 assessments for first-timers eligible for MyChoice HomeBuy. Of these, only 100 were able to buy. </p><p>"It's another nail in the coffin of the affordable system," he says. "It's a fantastic scheme, but this is bad PR. I'd say at least two-thirds of the people I have seen have walked away disgruntled." </p><p>Different regions of the country ran out of money for the scheme at different times, but for some it was just three weeks after the April 2009-April 2010 funding came into effect. </p><p>By the middle of last month, most housing associations had nothing more to give. The reason the money was spent so quickly was that there wasn't enough to meet demand in the first place - perhaps because the government was trying to shepherd buyers away from MyChoice HomeBuy and towards another initiative, HomeBuy Direct. </p><p>This latter scheme has proved less popular with first-timers because it only allows for the purchase of new-build properties. Nevertheless, it received an extra &pound;80m in funding in the last budget, money many hoped would go towards MyChoice HomeBuy.</p><p>This enthusiasm for HomeBuy Direct can be accounted for by the fact that developers share the financial burden with the government, so public money goes further. It also kills two birds with one stone, points out Sue Cocking, head of affordable housing for Knight Frank. </p><p>"Because there is a problem with new properties not selling, it makes better use of resources for the government to encourage first-time buyers to purchase these empty new homes," she says. "There's a wider economic benefit." </p><p>A spokeswoman for Communities and Local Government said that &pound;350m has been spent on Open Market HomeBuy - MyChoice HomeBuy is one of two schemes that come under this umbrella term - since April 2006, allowing 11,100 completions on house purchases.</p><p>"We have had a very positive response to our HomeBuy products, especially those available through Open Market HomeBuy, but it is just one way we are ensuring that first-time buyers have a range of options to help them on to the housing ladder. This includes HomeBuy Direct," she added.</p><p>The biggest problem with all these affordable schemes, according to Cocking, is their complicated nature. </p><p>"At the last count there were nine initiatives being offered - there's shared-equity, shared-ownership, HomeBuy Direct, Rent to HomeBuy, Immediate Rent, to give a few examples. </p><p>"People have to get their heads round all these before making an informed choice, and it isn't easy."</p><p>For an indication of just how complicated, the discussion board of the Metropolitan Home Ownership website is littered with posts from a slew of confused and frustrated first-time buyers. </p><p>Many people express the hope that they will receive funding for their new homes; others seem to be totally baffled by the system. </p><p>Paul Robson's only remaining hope is to buy the flat that he has set his heart on through yet another affordable initiative, the OwnHome Scheme (<a href="http://www.ownhome.co.uk">ownhome.co.uk</a>). This is run jointly by Co-operative Bank and the property management and development company Places for People. </p><p>"I may still be able to purchase this way, but I have been told that there is every likelihood that will run out money, too," he says. </p><p>"I should hear in the next few weeks. If that does happen, I'm facing the prospect of being let down by government schemes twice."</p><p>? Have you successfully bought through a government-funded ownership scheme? Has it worked out well or do you regret your decision? Contact us at <a href="mailto:cash@observer.co.uk">cash@observer.co.uk</a> or write to Cash, The Observer, Kings Place, 90 York Way, London, N1 9GU.</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/society/housing">Housing</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=1246684872948365592143522770966"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=1246684872948365592143522770966" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Fears grow that Northern Rock could saturate the mortgage market
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/30339?ns=guardian&pageName=Fears+grow+that+Northern+Rock+could+saturate+the+mortgage+market%3AArticle%3A1236531&ch=Business&c4=Northern+Rock+%28Business%29%2CBanking+%28Business%29%2CEurope+%28Business%29%2CBusiness%2CMortgages+%28Money%29%2CUK+news%2CProperty%2CMoney%2CFirst-time+buyers&c6=Jill+Treanor&c8=1236531&c9=Article&c10=News&c11=Business&c13=&c25=&c30=content&h2=GU%2FBusiness%2FNorthern+Rock" width="1" height="1" /></div><p>Government plans to split bank await EU investigation into effect of state aid on rivals</p><p><strong></strong>Concerns that Northern Rock will be able to abuse its government-owned status to beat rivals are mounting ahead of the publication next week of an EU investigation into state aid for the Newcastle-based lender.</p><p>The much-anticipated document on the government's plans to split Northern Rock into a "good" bank, bolstered with £14bn of taxpayer funds to fuel mortgage lending, and a "bad'" bank, containing most of the troublesome legacy loans, will be followed by a month when interested parties can lobby the European commission.</p><p>The Building Societies Association is concerned that Northern Rock might be able to abuse its position to squeeze out its members, many of which are already struggling in the downturn in demand for home loans.</p><p>Adrian Coles, director general of the association, is also on the alert for evidence that Northern Rock will be able to attract savers more easily than rivals. Savers are currently a crucial form of finance for building societies, which use the deposits to lend in the mortgage market.</p><p>As a result, Coles said the BSA is hoping Northern Rock will focus its lending on parts of the mortgage market where it is currently difficult to obtain loans.</p><p>"We would expect Northern Rock to concentrate on those parts of the market where the private sector is reluctant to lend at the moment, for example high loan-to-value and first-time buyers," said Coles.</p><p>"We would be very concerned if it were to saturate the market where there is already sufficient supply and competition. If Northern Rock lends in competition with private-sector lenders it should not abuse its privileged, state-funded, position by squeezing margins to a level at which the private sector cannot compete," he said.</p><p>Coles said he would be "looking for assurances" that Northern Rock will not compete unfairly for savings.</p><p>The EU has been forced to extend its investigation into Northern Rock by the government's decision to use it to rejuvenate mortgage lending rather than pull it out of the home loans market to enable it to repay taxpayer loans.</p><p>Brussels is examining whether the changes will enable Northern Rock to return to long-term viability while avoiding "undue distortions of competition".</p><p>Before the new plan for Northern Rock was proposed, the lender had already agreed to a number of measures designed to help it avoid abusing its government- supported status. It promised to keep off the top of the "best buy" tables for its financial products, for instance.</p><p>A European commission spokesman on competition said: "The publication of details of the revised UK scheme and the invitation for third parties to comment has not yet been published. It should be published some time next week. Interested parties will have one month to comment and then the UK government will have an opportunity to comment on the comments from third parties."</p><p>The Treasury said: "We are working with the commission. Things are proceeding the way we expected to and we are committed to the new lending by Northern Rock."</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/business/northern-rock">Northern Rock</a></li><li><a href="http://www.guardian.co.uk/business/banking">Banking</a></li><li><a href="http://www.guardian.co.uk/business/europe">Europe</a></li><li><a href="http://www.guardian.co.uk/money/mortgages">Mortgages</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=12466848729525485470158882094292"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=12466848729525485470158882094292" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Mortgage lending falls again in May
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/1824?ns=guardian&pageName=Mortgage+lending+falls+again+in+May%3AArticle%3A1233946&ch=Money&c4=Mortgages+%28Money%29%2CFirst-time+buyers%2CProperty%2CMoney%2CMortgage+lending+figures+%28Business%29%2CBusiness%2CUK+news&c6=Hilary+Osborne&c8=1233946&c9=Article&c10=News&c11=Money&c13=&c25=&c30=content&h2=GU%2FMoney%2FMortgages" width="1" height="1" /></div><p>Mortgage lending fell for the second consecutive month, dropping 2% in May, the Council of Mortgage Lenders says</p><p>Mortgage lending fell for a second consecutive month in May, dropping by 2% to £10.3bn, according to figures published today by the Council of Mortgage Lenders (CML).</p><p>The figure is almost 60% down on May last year when gross lending totalled £24.7bn, and 70% lower than in the summer of 2007 when the housing market was at its peak.</p><p>The drop seems to quash the idea that the mortgage market might be starting to recover, after an increase in March took lending to £11.5bn. However, the CML said the headline figure could disguise a moderate improvement in lending for house purchases, which had been offset by a sharp fall in remortgages.</p><p>Separate figures released today by the Bank of England appear to back this up. The Bank's latest <a href="http://www.bankofengland.co.uk/publications/other/monetary/trendsinlending.htm" title="Bank of England Trends in lending report">Trends in lending report</a> shows the fall in gross lending since early last year has been concentrated in remortgaging activity.</p><p>Its research, which is based on figures from major lenders representing 80% of the mortgage market, showed that for the second month running the value of mortgages for house purchases outstripped that for remortgages in May.</p><p>Firm numbers are not available, but it looks like they could be in line with those for April when the number of <a href="http://www.guardian.co.uk/money/2009/jun/02/mortgage-approvals-bank-of-england" title="Mortgage approvals continue to rise">remortgage approvals dropped to 31,800</a> against a six-month average of 41,054. "As gross mortgage lending includes both lending for house purchase and remortgage, then even if house purchase activity is showing a slight lift it will not be fully reflected in overall gross lending when remortgaging is declining ? as indicated in recent approvals data from the Bank of England," the CML said.</p><p>Remortgaging has dropped sharply since last autumn as swingeing cuts to the Bank of England base rate have brought down many lenders' standard variable rates (SVRs) ? the rates most fixed and tracker deals revert to.</p><p>With credit conditions still tight borrowers have increasingly found it is cheaper to pay the SVR than to switch to a new special offer rate, or that tougher lending criteria mean they are unable to switch lender.</p><p>In recent weeks brokers and lenders have started to encourage borrowers to move off SVRs and on to fixed-rate deals before interest rates start to rise again, with Nationwide reintroducing 90% mortgages for existing customers.</p><p>However, rates on fixed deals have <a href="http://www.guardian.co.uk/money/2009/jun/11/mortgages-rates-inflation-nationwide" title="Buyers face hike in mortgage rates as inflation fears mount">also started to rise</a>, making them much less attractive in the short term.</p><p>First-time buyers are also struggling to get loans, with research published at the weekend showing the number of deals available at 90% loan-to-value had <a href="http://www.guardian.co.uk/business/2009/jun/13/mortgage-first-time-buyerd" title="Mortgages for first-time buyers slow to a trickle">slumped over the past two-and-a-half years</a>.</p><p>The CML said it did not anticipate an upturn in mortgage lending any time soon. The group's economist, Paul Samter, said: "While recent signs from the housing market have been more encouraging, we do not anticipate a significant recovery in activity in the coming months.</p><p>"Lending volumes appear to have stabilised at extremely low levels, but the weak labour market and lenders' limited access to funding will constrain activity for some time yet."</p><p>The Bank's lending report showed borrowers have not been taking advantage of low interest rates to clear their mortgage debts more quickly. Lenders reported no significant change in the value of lump sum or regular repayments since the base rate fell to its historic low of 0.5% earlier this year.</p><p>It said: "Lenders have reported that, while some households may have used part of the gain from lower interest payments to increase the rate at which they are paying off their mortgages, others may be making lower repayments because they are experiencing financial difficulties or are more uncertain about their future financial position."</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/mortgages">Mortgages</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/business/mortgage-lending-figures">Mortgage lending figures</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848729563600638796511050300"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848729563600638796511050300" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Economic recovery: 10 signs to look for
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/48452?ns=guardian&pageName=Economic+recovery%3A+10+signs+to+look+for%3AArticle%3A1233266&ch=Money&c4=Consumer+affairs+%28Money%29%2CHouse+prices+%28Money%29%2CBorrowing+and+debt%2CRedundancy+%28Money%29%2CNegative+equity+%28Money%29%2CFamily+finances%2CMoney%2CRecession+%28UK%29%2CCredit+crunch+%28Business%29%2CBusiness%2CProperty%2CFirst-time+buyers%2CEconomic+recovery+%28Green+shoots%29&c6=Laura+Howard&c8=1233266&c9=Article&c10=&c11=Money&c13=&c25=&c30=content&h2=GU%2FMoney%2FConsumer+affairs" width="1" height="1" /></div><p>Are we really seeing the green shoots of recovery, or is the optimism misplaced? Laura Howard examines the facts behind the headlines<br /><br /><a href="http://www.guardian.co.uk/money/blog/2009/jun/18/alternative-green-shoots">10 alternative signs the recession is over</a></p><p>The news last week from the National Institute of Economic and Social Research that <a href="http://www.guardian.co.uk/business/2009/jun/10/uk-industrial-production-recession" title="Recession is at an end, says leading economics thinktank">"the recession is over"</a> raised more eyebrows than champagne glasses. While GDP (gross domestic product) may have grown slightly in April and May, most commentators agree the UK is still in a downturn. So how will we recognise the green shoots of recovery when we see them? Here are 10 signs that the economy may be on the up. <h2>1. GDP is in consistent growth</h2><p> A well-used definition of a recession is two consecutive quarters of negative growth, but that doesn't mean that two consecutive quarters of positive growth shows the economy is out of the woods, says Martin Gahbauer, chief economist at Nationwide building society. "The quarter after that may be negative again. Ideally we need GDP to be growing at around 2.5% annually." GDP <a href="http://www.guardian.co.uk/business/2009/apr/24/uk-economy-recession-gdp-falls" title="British economy shrinks at fastest rate for 30 years">fell by 1.9% in the first quarter of 2009</a> and was 4.1% down on the first quarter of 2008.</p><h2>2. First-time buyers return</h2><p> Mortgage lenders have talked a good game when it comes to helping first-time buyers get on the property ladder, with a greater number advertising loans at 90% of a home's value. But credit scoring on these deals is incredibly high, Melanie Bien at broker Savills Private Finance says. "Even if the buyer can get the deposit together there is every chance their application will still be rejected."</p><p>According to Peter Bolton-King, chief executive of the National Association of Estate Agents, a healthy property market requires between 25% and 33% first-time buyers. "Currently there is nothing like that level and, as second-time buyers need first-time buyers to sell to, the market can't recover until lending improves."</p><h2>3. House prices rise sustainably over a longer period</h2><p> While both <a href="http://www.guardian.co.uk/money/2009/jun/04/house-prices-halifax" title="House prices rise by 2.6% in May">Nationwide and Halifax reported house price rises in May</a>, of 1.2% and 2.6% respectively, homeowners shouldn't get too excited. "Average house prices fell by 11% during 1991 and 1992, but there were five monthly price rises in this period," Nitesh Patel, an economist at Halifax, says. "It is important not to put too much weight on any one month's figures."</p><p>Ray Boulger at broker John Charcol says: "It took six to seven years for average property values to fall around 15% in the last recession and recovery was also slow. The 20% fall we have seen in the space of 21 months could mean a more rapid recovery."</p><h2>4. Inflation climbs back up to normal levels</h2><p> Inflation should be pegged at around 2% a year to see the economy "chugging along", according to Martin Ellis, chief economist at Halifax. But <a href="http://www.guardian.co.uk/business/2009/jun/16/inflation-remains-above-target" title="Latest inflation figures">the RPI (retail prices index) measure of inflation is negative</a> at -1.1%. "So-called deflation can be beneficial in the short term as it makes things cheaper for people who are struggling," Ellis says. "But if it becomes persistent it causes a delay in consumption and investment; people adopt an 'it will be cheaper tomorrow' approach."</p><h2>5. Mortgage approvals hit 100,000 a month</h2><p> The headlines are alone in painting a rosier picture for mortgage approvals. In April, lenders granted 43,200 mortgages, according to the Bank of England. This compares with 40,000 in March and surpasses expectations of a rise to 41,000. However, the earliest records ? dating from April 1993 when the UK was recovering from the last recession ? show mortgage approvals at 87,291, the Bank says.</p><p>Healthy activity is around 100,000 approvals month, according to Boulger, but he adds: "We may not see this for some time." It took until October 1996 for approvals to hit 100,000 after the last recession ? almost four years after it had officially ended.</p><h2>6. Interest rates come up from the floor</h2><p> Rock-bottom interest rates are a blessing for homeowners paying variable rate mortgage deals. "In the early 1990s recession, the base rate soared from 7.5% to 15% in a matter of months, which no homeowner budgets for and so was a major cause of repossessions," Boulger says. "With base rate at 0.5% today's homeowners have a much better chance of meeting the mortgage even if their circumstances do change."</p><p>But rates of 0.5% do not spell a healthy economy in the longer term. "In any history that is recent enough to be relevant rates average around 5%, which they will climb to again," Boulger says.</p><h2>7. Negative equity is just a memory (for most)</h2><p> There are an estimated 900,000 homeowners with a <a href="http://www.guardian.co.uk/money/2009/apr/17/mortgages-negative-equity-recession" title="900,000 homeowners pushed into negative equity, says mortgage body">mortgage debt larger than the value of their home</a>, the Council of Mortgage Lenders says, which is still a far cry from the 1.5 million in 1993.</p><p>According to Boulger, homeowners who are on a typically priced repayment mortgage and borrowed 90% of the property value when house prices started to fall should be out of negative equity in the next 18 months if house prices recover just 5% from today's levels.</p><h2>8. Confidence returns to the stock market</h2><p> At Christmas 2007 the FTSE 100 stood at 6,500 points. It fell to a six-year low of <a href="http://www.guardian.co.uk/business/marketforceslive/2009/mar/09/marketforces-ftse" title="Oil stocks help FTSE 100 regain early losses">3,500 in early March</a> this year but has now climbed to around 4,500 points. Jason Witcombe, an adviser at Evolve Financial Planning, says: "The stock markets accurately reflect what the world thinks. Having risen 25% since March the outlook for the next year or two is much better than it was." He adds that investor confidence needs to grow further but the FTSE does not need to return to 6,500 to see a recovery.</p><h2>9. The pound gathers strength</h2><p> Last Friday, sterling reached 1.18 against the euro ? the highest level since 3 December 2008. Robin McEwen, managing director of foreign exchange specialist Foremost Currency, says: "Positive news from the housing market and reports of GDP growth in both April and May, have contributed to the stronger pound. Providing returned confidence in the British economy continues we can expect to see healthier rates of 1.3 against the euro and 1.7 against the dollar (currently 1.64) towards the beginning of 2010." But McEwen adds that a return to the pre-recession 1.45 against the euro and 2.0 against the dollar is doubtful.</p><h2>10. Unemployment falls and jobs are secure</h2><p> Job losses ? especially within the financial and manufacturing sectors ? continues and there are now <a href="http://www.guardian.co.uk/business/2009/jun/17/uk-unemployment-rises" title="Unemployment rises by another 230,000">2.26 million people out of work</a>.</p><p>Ellis says job security is the key to any recovery. "Unemployment lags behind the rest of the economy. It might be that technically we are coming out of recession, but people won't feel like that if they haven't got a job."</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/consumer-affairs">Consumer affairs</a></li><li><a href="http://www.guardian.co.uk/money/houseprices">House prices</a></li><li><a href="http://www.guardian.co.uk/money/debt">Borrowing & debt</a></li><li><a href="http://www.guardian.co.uk/money/redundancy">Redundancy</a></li><li><a href="http://www.guardian.co.uk/money/negative-equity">Negative equity</a></li><li><a href="http://www.guardian.co.uk/money/family-finances">Family finances</a></li><li><a href="http://www.guardian.co.uk/business/recession">Recession</a></li><li><a href="http://www.guardian.co.uk/business/credit-crunch">Credit crunch</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/business/economic-recovery">Green shoots</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848729658235601538637561384"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848729658235601538637561384" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
10% deposit boost for first-time buyers
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/17782?ns=guardian&pageName=10%25+deposit+boost+for+first-time+buyers%3AArticle%3A1231328&ch=Money&c4=First-time+buyers%2CProperty%2CMortgages+%28Money%29%2CBanks+and+building+societies%2CMoney&c6=Lisa+Bachelor&c8=1231328&c9=Article&c10=&c11=Money&c13=&c25=&c30=content&h2=GU%2FMoney%2FFirst-time+buyers" width="1" height="1" /></div><p>Lisa Bachelor says that you can snap up a good deal ... but you will have to be quick</p><p>First-time buyers have been given a glimmer of hope as a couple of lenders introduced deals that will need only a 10% deposit.</p><p>Britannia Building Society, which is soon to merge with the Co-operative Bank, launched its product last Tuesday. The interest rate of 5.09% is fixed for two years once a &pound;599 fee is paid, though there is a fee-free option if borrowers go for a higher rate of 5.49%.</p><p>A repayment mortgage of &pound;150,000, would cost &pound;884.77 a month on the &pound;599 fee option.</p><p>The society has also launched a three-year fixed rate loan at 5.59% with the same fee, or 5.99% without, and a five-year fix at 5.69% with the fee, or 6.09% without, also both on loans of up to 90% loan-to value (LTV). </p><p>"These deals are really good but, with other lenders putting up rates, how long will they last?" said Richard Morea of brokers London & Country. </p><p>The smaller Saffron Building Society also reached out a hand to first-timers, with 90% LTV and a rate of 5.65%. It is only available in Saffron's catchment area. This is mainly East Anglia but also includes any London postcode starting with E (not EC), so includes Hackney and Walthamstow. </p><p>It comes with a relatively low fee of &pound;495, reduced by a further &pound;200 if a relative of the borrower has &pound;1,000 or more in savings with the building society. </p><p>Britannia and Saffron are amongst what is still only a handful of higher loan-to-value mortgages on offer.</p><p>A few weeks ago Lloyds TSB launched its Lend A Hand, which allows first-time buyers 95% LTV. But to take advantage of the deal you will not only need the minimum 5% deposit, you will have to find another 20% from parents, grandparents or friends. This money must sit in a Lloyds TSB account held under legal charge for 42 months earning 3% interest.</p><p>Most lenders still require deposits of at least 20% or more, though there have been some encouraging signs for those with less. "There are certainly more lenders offering higher LTVs than there were, and some, like Abbey, have started offering their best rates on higher LTVs," said Morea. </p><p>"However, swap rates - the market rates which fixed rate prices are based on - have been going up, so borrowers can expect fixed-rate deals to become more expensive."</p><p>There was already evidence of this last week. Nationwide announced deals on Wednesday, only to pull them and replace them with higher rates on Friday. </p><p>Yorkshire Building Society, West Bromwich, HSBC and Scottish Widows also all put up the price of their fixed-rate mortgages. Two of the best for those wanting 75% LTV - from the Melton Mowbray and Market Harborough building societies - were pulled. </p><p>The Mansfield Building Society bucked the trend, however, and has reduced the interest on its three-year fixed rate - on up to 75% LTV - from 4.09% to 3.95%, with a &pound;999 fee.</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/mortgages">Mortgages</a></li><li><a href="http://www.guardian.co.uk/money/banks">Banks and building societies</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848729686715107117076523071"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848729686715107117076523071" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Scales tipping as demand outstrips supply again
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/16100?ns=guardian&pageName=Scales+tipping+as+demand+outstrips+supply+again%3AArticle%3A1231305&ch=Business&c4=Housing+market+%28Business%29%2CEconomic+recovery+%28Green+shoots%29%2CFirst-time+buyers%2CHome+information+packs%2CBuying+to+let%2CRecession+%28UK%29%2CProperty%2CBusiness%2CUK+news%2CMortgages+%28Money%29&c6=Kathryn+Hopkins&c8=1231305&c9=Article&c10=News&c11=Business&c13=&c25=&c30=content&h2=GU%2FBusiness%2FHousing+market" width="1" height="1" /></div><p>Estate agents are finding buyers at last. Now they need something to sell, says Kathryn Hopkins</p><p>'All I want is a happy balance," says David McKillop of independent estate agents McKillop & Gregory in Salisbury, Wiltshire.</p><p>Last year, his problem was that too many people wanted to sell their homes but there were no buyers walking through the door, as banks tightened lending conditions. This time, however, the tables have turned. "There are no shortage of buyers. My worry is there's a shortage of instructions," he says. "People are sitting on the fence. I wish I knew why."</p><p>First-time buyers are "back in force" as their parents are helping them with deposits, claims McKillop. He also says buy-to-let investors are coming back, which has led to an increase in sales at the bottom end of the market. "In the last three months sales have exceeded last year, but instructions are bad. More people were selling last year but prices were inflated."</p><p>McKillop says the lack of instructions has slowed business down: "We have some very good buyers at present, but they cannot find anything." </p><p>He believes Home Information Packs (Hips) have deterred some people from testing the market because of the cost and extra hassle. "Nobody wants to look at them or read them."</p><p>In general though, he believes things are looking up for the housing market. "I'm much happier now," he says. "The financial situation has settled down. Last year, we kept being hit by more bad news and that hit people's confidence. People are more confident now."</p><p>Keith Spencer at Newland Rennie Wilkins in Abergavenny in Wales is having the same problem as McKillop. He says there is a "reasonable level of buyer inquiry, but lack of new instructions, especially given that this should be the busy time of year. Prevailing sentiment is that it is not a good time to be selling, and lack of confidence of vendors in their employment position means that they are not looking to trade up." </p><p>As for house prices, Spencer believes it is rather early to say that they have reached a bottom. "At the moment there are transactions taking place. I think it's too soon to say that prices are rising, but we are now at a point where we have two or more people competing for the same property. </p><p>"People are increasing their bids, but they are still not paying as much as the asking price. Few properties are making more than the asking price."</p><p>He is now worried about the lack of new stock coming onto the market. For Newland Rennie Wilkins, June is traditionally a month where a "flood" of properties are put up for sale, but so far they have only had a "steady trickle".</p><p>Chris Baker, director of Cambridge-based estate agents Pocock and Shaw, said he also has very little stock coming on to the market, which has created a "vacuum". "People who sold over the last few months, and rented instead of buying, are now keen to get back into the market." </p><p>Baker believes a lot of people now reckon the market has bottomed out and "don't want to miss the boat", but that stock levels have been depleted and there is not enough choice. Nonetheless, he believes the housing market is now in a much better state than it was a year ago. "If a house is priced correctly, we are back to the market of two or three years ago. We are making more sales but we just need more houses to sell."</p><p>Michael Fisher, of estate agents Fisher and Wrathall in Lancaster, says that there has certainly been quite an increase in buyer interest, but he too believes that it is too soon to call a recovery in the housing market. </p><p>"I'm fairly cautious because of a few issues on the horizon, such as the imminent likelihood of an increase in mortgage rates.</p><p>"I also have a lot of concern that because agents have seen their stock of property go down over the last few months, there's a temptation for agents to talk the market up again.</p><p>"Sales have lifted up again, marginally, but we have to see this in the context that we're still in the national average of sales down by 66%. So the fact that we sold two more houses this week is fine - but we're still more than 50% down."</p><p>Fisher says his agency is seeing more houses going out than coming in and believes this is an early indicator that there will be a shortage over the next few months. He also says that Hips are putting off less-committed would-be sellers from entering the market. "If you are going to pay &pound;350 or whatever it is for a Hip, then you've got to be serious."</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/business/housingmarket">Housing market</a></li><li><a href="http://www.guardian.co.uk/business/economic-recovery">Green shoots</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/money/homeinformationpacks">Home information packs</a></li><li><a href="http://www.guardian.co.uk/money/buying-to-let">Buying to let</a></li><li><a href="http://www.guardian.co.uk/business/recession">Recession</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/mortgages">Mortgages</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=12466848729737756874129093156684"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=12466848729737756874129093156684" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
UK's housing needs new foundations
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/5131?ns=guardian&pageName=%3Cb%3EUK%27s+housing+needs+new+foundations%3C%2Fb%3E%3AArticle%3A1231304&ch=Business&c4=Housing+market+%28Business%29%2CProperty%2CBusiness%2CMortgages+%28Money%29%2CMoney%2CHouse+prices+%28Money%29%2CFirst-time+buyers%2CHome+information+packs&c6=Kathryn+Hopkins%2CAshley+Seager&c8=1231304&c9=Article&c10=Feature&c11=Business&c13=&c25=&c30=content&h2=GU%2FBusiness%2FHousing+market" width="1" height="1" /></div><p>However house prices may be moving, a new generation is signalling an end to Britain's passion for property</p><p>Talk that the housing market may be bottoming out after 18 months of falling prices may cheer the chattering classes of existing homeowners, but for young people it is no cause for celebration.</p><p>Jonny Scott, aged 24, from Winchester, says that one day he would like to buy a house or a flat but, despite a 20% drop in prices across the country, that still "seems millions of years away. I don't even see it as a possibility at the moment".</p><p>He adds that he cannot see himself getting on to the property ladder for at least another 10 to 15 years: "I kind of hope by 35 there will be a child or two in the equation, but that might have to come before I'm able to buy a house."</p><p>Jack Mitchell, 24, doing temporary work in Surrey after graduating from Birmingham University, is not even considering buying at the moment because it is just not "viable", adding : "I don't know anyone my age who owns a house."</p><p>Bianca Gill, 22, from London has moved back in with her father because she believes having fewer outgoings will allow her to find a job with fewer hours, so she has more time to look for jobs in her chosen field. "It's difficult because I've lived by myself for a few years, but the prospect of buying a house is so far away."</p><p>These are by no means isolated cases and may reveal that Britain's love affair with property is gradually fading. Research from the Chartered Institute of Housing out tomorrow will show that only a third of young people (18-to-24s) now aspire to own their own home. There has also been a big change in attitudes among the 25-to-34 age group; only 69% think home ownership is a good thing, down from 83% before the credit crunch struck.</p><p>CIH chief executive Sarah Webb says: "We've driven too many people into unsustainable owner-occupation and need to do a far better job of putting renting and owning on a level playing field. We need to get serious about the number of houses we are prepared to build and have to look at renting as a more attractive alternative to owning."</p><p>Evidence from the front line is that the stabilisation in the housing market is not driven by young people: the fall in prices so far has done little to help them gain a foothold on the housing ladder.</p><p>Julia Lodge, sales manager at estate agents Barnard Marcus in Hammersmith, west London, says first-time buyers are still struggling to get mortgages: "Most of our buyers are either cash or European buyers. There are first-time buyers looking, but the vast majority of them are getting help from their parents. There are hardly any that can do it on their own any more."</p><p>For buyers wielding sacks of euros, the UK market must now seem really cheap given the 20% fall in prices from the peak and the fact that the pound is down so far against the euro over the past year. The British raids on the French and Spanish property market of recent years, fuelled by the strong pound, seem to have gone into reverse. </p><p>Lodge says the London market, which often leads the rest of the country, has really turned around and she is run off her feet. "Last year was terrible, but now it's very exciting. I wouldn't say prices are heading up yet, but activity has really improved."</p><p>Her experience is mirrored across Britain, although often less strongly than in London, according the recent monthly survey from the Royal Institution of Chartered Surveyors. It showed buyer inquiries at their highest for 10 years. </p><p>Property website Rightmove enjoyed its busiest day ever recently and said that asking prices in May showed the largest rise since records began in 2003, and, after many months of sharp declines, both the Nationwide and Halifax monthly surveys suggested prices rose strongly last month.</p><p>Given that the Bank of England cut interest rates to an all-time low of just 0.5% over the winter, perhaps a levelling out of the housing market should not be a surprise. So does that mean the end of the slump is upon us? Can the "good" times of rising prices be about to return? The picture is somewhat confusing, but experts advise caution on assuming the slump is over.</p><p>"We are certainly not talking the market up," says Simon Rubinsohn, RICS chief economist, who thinks prices may still have further to fall. "There are still plenty of headwinds against it, such as the fact that first-time buyers still find it difficult to get a mortgage and job losses are still rising rapidly."</p><p>The problem most agents report is that there is too little property on offer. The RICS survey shows that the number of houses and flats has shrunk by a third over the past year, probably as sellers unable to find buyers in the depths of last year's market meltdown have let their property instead. Lettings surveys show there has been a big increase in supply of rentals, with a resultant downward pressure on rents.</p><p>Rightmove's survey also recorded the lowest number of new properties coming on to the market during May. Professor Steve Nickell, a former member of the Bank of England's monetary policy committee and now chairman of the National Housing Planning and Advice Unit, is puzzled that house prices seem to be bottoming out given that first-time buyer access to mortgages on reasonable terms is restricted by a still dysfunctional banking system.</p><p>"The market does look to be bottoming out, and if the mortgage market loosens up then prices will go up again. If it doesn't loosen up, then prices will just be flat for a long time," he says.</p><p>It is true that new mortgage approvals - a good indicator of where prices will be in a few months - have been picking up in the recent months. But figures from the Council of Mortgage Lenders last week showed approvals in April rose 16% from March to 35,600. That sounds impressive, but the figure was 28% below last April's already depressed level and 60% below the 88,000 April average over the previous seven years.</p><p>"Despite the recent pick-up, mortgage activity is still down at a level that is normally associated with falling house prices," says Howard Archer, an economist at IHS Global Insight. </p><p>And last week several lenders started to raise their fixed-rate mortgage offers, for the first time in a year, in line with movements in money market interest rates. </p><p>Ray Boulger, of mortgage brokers John Charcol, says: "If interest rates continue to rise, then the current recovery in the housing market, which is based primarily on much-improved affordability as a result of a combination of lower house prices and lower interest rates, may well wobble."</p><p>Professor David Blanchflower, who recently left the Bank of England's monetary policy committee, wrote last week that we should not get carried away. "House prices still have a long way to fall. It should be remembered that during the period of declining house prices of the early 1990s, approximately one month in three house prices actually increased."</p><p>The underlying long-term picture is that there is a shortage of supply: and that means the pattern of high house prices and market booms and slumps will be hard to break.</p><p>Nickell says that the long-running shortage of housing that the British property market suffers has not gone away just because prices have slumped. "There is a shortage in the sense that not enough houses have been built to keep pace with the number of new households being formed," he adds. "And that has been the case since about 1998."</p><p>Britain's birth rate has been relatively strong, people are living longer and there is a steady flow of immigration, all of which puts upward pressure on demand. Britain is estimated to need nearly a quarter of a million new homes a year just to keep up. This year, though, experts expect fewer than 100,000 to be built - the smallest number since the second world war - as a result of the market slump.</p><p>Nickell is worried that social housing waiting lists have risen to 700,000 households since the turn of the century: "And it is continuing to rise very strongly. This is putting pressure on the private rented sector."</p><p>Britain, along with Spain, has the highest levels of owner occupancy in Europe, at something over 70%. In Germany, by contrast, only about 40% of people own their homes, although prices there have not risen in real terms for decades because of a declining population. This lack of house price inflation reduces the attraction of buying and explains why the majority of Germans rent.</p><p>But many other European countries, such as Ireland, Spain and France, as well as the United States, have seen very similar property booms this decade, driven by cheap and plentiful credit. Those markets have also bust spectacularly. But in the spring the International Monetary Fund warned that house prices were still overvalued in many countries and that the correction probably had "a considerable distance left to run".</p><p>Lack of housebuilding means Britain looks destined to live with relatively high house prices lurching from boom to bust as they have done for decades.</p><p>There are campaigners who argue that Britain should deal once and for all with its damaging boom-bust cycle in house prices by reaching for a radical policy known as annual land value tax (LVT), which would be levied on the value of land up to its maximum permitted development value. </p><p>The tax would be levied on property owners at, say, 1%, of the land's value every year, with the proceeds used to replace council tax and reduce income tax, thus rewarding work rather than property speculation. LVT would also encourage, for example, an elderly person living in a large family house to move to a flat and free the house for a family in a country where space is limited. It would also discourage developers from sitting on empty sites and buildings.</p><p>"This tax-shifting vision would release billions into the pockets of millions of working people and their families to spend and make the economy work for them and not landowners, speculators and bankers," says Louanne Tranchell, chair of the Labour Land Campaign.</p><p>LVTs are used elsewhere in the world and the idea goes back at least two centuries. "With the financial crisis, the time is ripe to introduce a system to collect the unearned income from the value of the land, which arises from community activity and services, and through investment in transport and infrastructure funded by the public purse," Tranchell adds.</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/business/housingmarket">Housing market</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/mortgages">Mortgages</a></li><li><a href="http://www.guardian.co.uk/money/houseprices">House prices</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/money/homeinformationpacks">Home information packs</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=1246684872977281998337716071131"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=1246684872977281998337716071131" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Young people 'giving up on the property dream'
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/85911?ns=guardian&pageName=Young+people+%27giving+up+on+the+property+dream%27%3AArticle%3A1231293&ch=Business&c4=Housing+market+%28Business%29%2CProperty%2CMortgages+%28Money%29%2CBusiness%2CFirst-time+buyers&c6=Ashley+Seager&c8=1231293&c9=Article&c10=News&c11=Business&c13=&c25=&c30=content&h2=GU%2FBusiness%2FHousing+market" width="1" height="1" /></div><p>Young people are increasingly falling out of love with the idea of owning their own home, new research shows, as prices remain too high for most to afford.</p><p>A study of 2,000 people by the Chartered Institute for Housing, to be released tomorrow, shows that only a third of 18-to-24-year-olds now think owning a home is right for them.</p><p>Over the past 12 months an estimated 2.4 million people, most of them young, have changed their opinion about home ownership, when asked their ideal living situation before the credit crunch compared with their ideal living situation now.</p><p>The biggest change in attitudes has come in the 25-to-34 age range, with a fall from 83% to 69% of respondents wanting to own their home.</p><p>CIH chief executive Sarah Webb said: "A generation has grown up believing it has to own at any cost - in part because we haven't provided them with decent information about the alternatives. We can't repeat this mistake with future young people." </p><p>Webb believes Britain not only needs to build many more flats and houses, but to come up with more viable and affordable forms of tenure such as shared equity. She also wants the government to consider using the tax system to prevent house prices from booming again.</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/business/housingmarket">Housing market</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/mortgages">Mortgages</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=1246684872983618922619732072982"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Business&spacedesc=rss&system=rss&transactionID=1246684872983618922619732072982" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Mortgages for first-time buyers slow to a trickle
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/24895?ns=guardian&pageName=Mortgages+for+first-time+buyers+slow+to+a+trickle%3AArticle%3A1231124&ch=Money&c4=First-time+buyers%2CBanking+%28Business%29%2CMortgages+%28Money%29%2CProperty%2CBorrowing+and+debt%2CCredit+crunch+%28Business%29%2CUK+news&c6=Hilary+Osborne&c8=1231124&c9=Article&c10=News&c11=Money&c13=&c25=&c30=content&h2=GU%2FMoney%2FFirst-time+buyers" width="1" height="1" /></div><p>There are only 3% of the products available to property ladder newcomers that there were two and a half years ago</p><p><strong></strong><strong></p><p></strong>First-time buyers who want to get on the housing ladder have seen the number of mortgages available to those without a large deposit slump by 97% over the last two and a half years, according to new research released today.</p><p>Figures from the price comparison service Moneysupermarket show there are 102 mortgages on offer to borrowers with a 10% deposit, compared with a choice of 3,148 in January 2007.</p><p>Rates have also started rising after a year of falls. Yesterday, a number of big lenders put up the cost of their fixed-rate mortgages and experts suggest other lenders will follow suit.</p><p>First-time buyers are already paying a high price for their borrowing ? in January 2007, the base rate stood at 5% and the average interest rate on a 90% home loan was 6.2%. Today, the average rate on a first-time buyer loan stands at 6.23%, 5.73% above bank base rate.</p><p>Ray Boulger, of mortgage broker John Charcol, said the increase in price had been driven by a lack of competition and by new rules under which lenders have to set aside more capital to cover high loan-to-value mortgages. "The cost to the lender of making one 90% LTV loan available can be four or five times the cost of offering a mortgage at 60% LTV," he said. "We're in a situation where the more lending a lender does at 90% the less lending they are able to do overall."</p><p>This week, Britannia Building Society re-entered the first-time buyer market with a market-leading two-year fixed rate of 5.09%. However, borrowers have reported problems obtaining the loan. One first-time buyer said he had been turned down by Britannia because a large chunk of his deposit had come from his parents.</p><p>"A secondary problem to the lack of mortgages available at 90% is that these deals are extremely hard to qualify for," said David Hollingworth, of mortgage broker London & Country. "Lenders are looking for people who can pass their credit score with flying colours."</p><p>Boulger said tightened lending criteria meant first-time buyers applying for a large loan had a two-in-three chance of being rejected, with lenders only interested in "squeaky clean" borrowers with perfect credit records.</p><p>Although figures this week from the Council of Mortgage Lenders showed a rise in new borrowers in April, numbers remain low by historic standards and experts say the market cannot recover until first-time buyers can find loans.</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/business/banking">Banking</a></li><li><a href="http://www.guardian.co.uk/money/mortgages">Mortgages</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/debt">Borrowing & debt</a></li><li><a href="http://www.guardian.co.uk/business/credit-crunch">Credit crunch</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848729861478583169845089814"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848729861478583169845089814" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Mortgage completions rise by 16%
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/71847?ns=guardian&pageName=Mortgage+approvals+rise+by+16%25%3AArticle%3A1229839&ch=Money&c4=Mortgages+%28Money%29%2CProperty%2CMoney%2CFirst-time+buyers%2CMortgage+lending+figures+%28Business%29%2CBusiness%2CUK+news&c6=Hilary+Osborne&c8=1229839&c9=Article&c10=News&c11=Money&c13=&c25=&c30=content&h2=GU%2FMoney%2FMortgages" width="1" height="1" /></div><p>The CML says 35,600 loans were completed for purchases in April, but the figure is down 28% on the same month last year</p><p></p><p>The number of mortgages taken out by homebuyers increased by 16% in April, but remains well below the historical average, the Council of Mortgage Lenders (CML) said today.</p><p></p><p>A total of 35,600 loans for house purchase were completed during the month compared with 31,000 in March. However, the figure was down 28% on April last year and less than half the average of 88,000 loans approved in the month of April over the past seven years.</p><p></p><p>The majority of mortgages were taken out by existing homeowners planning to move, who accounted for 22,100 of the total and £3.1bn of the total £4.5bn approved for purchases. However, first-time buyer numbers were also up over the month rising by 11% to 13,500.</p><p></p><p>The average first-time buyer put down a 25% deposit and borrowed 2.96 times their income, compared with 2.99 in March. In April last year the average deposit size was 11% and borrowers were typically taking on loans 3.33 times their earnings.</p><p></p><p>The change reflects both falling house prices, with recent indices showing prices are <a href="http://www.guardian.co.uk/money/2009/jun/09/rics-house-prices" title="House prices rise by 2.6%, says Halifax">still down by around 16% year-on-year</a>, and the insistence of lenders on large deposits.</p><p></p><p>The mortgage market for new buyers has improved slightly in recent weeks, with lenders introducing a number of higher loan-to-value deals, but lenders are likely to remain cautious as long as house prices continue to fall.</p><p></p><p>Recent monthly increases, reported by Halifax and <a href="http://www.guardian.co.uk/money/2009/may/29/house-prices-nationwide" title="House prices rise for second time in three months">Nationwide</a>, have been ascribed to a lack of available properties, and there are concerns that if sellers start to flood the market again prices will take another nosedive.</p><p></p><p>The CML's head of research, Bob Pannell, said: "There are tentative signs of house purchase lending stabilising, but we need to see considerably higher transaction levels to underpin house prices."</p><p></p><p><h2>Remortgage misery</h2></p><p>The CML's figures showed the slump in remortgages continued in April with completions for those switching deals falling by 22% to 31,000. This is the first time since December that remortgage numbers have fallen below house purchase numbers.</p><p></p><p>The change has been driven by cuts to the Bank of England base rate at the start of the year, which made many lenders' standard variable rates (SVRs) looks more attractive than the short-term deals available to borrowers approaching the end of a special offer rate, and tightened lending criteria which have made it more difficult for borrowers to switch loans.</p><p></p><p>The months of falling interest rates have driven the base rate to an historic low, and persuaded borrowers to lock into deals before rates start to rise again. The CML said 69% of borrowers taking loans in April had opted for a fixed-rate deal ? the highest share since last year.</p><p></p><p>Pannell said: "With the interest rate cycle now at its floor, an increasing proportion of borrowers are taking out fixed rates, including for longer-term periods of five to 10 years. With expectations for rates to remain low in the near future, shorter term fixed-rate deals are less appealing than attractively priced variable rate deals.</p><p></p><p>Andrew Montlake, director of independent mortgage broker Coreco, said it was a relief that the majority of borrowers were choosing to fix their rates. "Lenders are now hiking their fixed rates, partly because swap rates have increased dramatically over the past few days, partly because lenders have too many applicants and too little to lend, and partly because they can.</p><p></p><p>"What concerns me is that many people coming to the end of their existing mortgage products are still reverting to, or being forced to revert to, the SVR which could come back to bite them should rates rise sharply."</p><p></p><p>The UK's largest building society, Nationwide, will increase the cost of its fixed-rate mortgages tomorrow. The lender is to increase rates on two-year deals by up to 0.61%, while five-year rates will go up by up to 0.86%.</p><p></p><p>Ray Boulger of mortgage broker John Charcol said: "Such large and varied increases indicate that either Nationwide wants to rebalance its mix of business or it has reassessed the relative risks of different types of business, or perhaps both. It may also indicate that it wants to reduce the overall amount it lends."</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/mortgages">Mortgages</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/business/mortgage-lending-figures">Mortgage lending figures</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848729891739011130803425516"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848729891739011130803425516" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
House prices buoyed by property shortage
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/73777?ns=guardian&pageName=House+prices+stabilised+by+property+shortage%3AArticle%3A1228598&ch=Money&c4=House+prices+%28Money%29%2CProperty%2CFirst-time+buyers%2CMoney%2CHousing+market+%28Business%29%2CBusiness%2CUK+news&c6=Jill+Insley&c8=1228598&c9=Article&c10=News&c11=Money&c13=&c25=&c30=content&h2=GU%2FMoney%2FHouse+prices" width="1" height="1" /></div><p>A combination of rising buyer inquiries and a shortage of homes for sale is supporting house prices, Rics says</p><p>Increasing interest from new buyers plus a shortage of properties for sale is helping to stabilise house prices, according to the latest housing market survey from the Royal Institution of Chartered Surveyors (Rics).</p><p>Rics's members said buyer inquiries increased for the seventh month in a row in May, and at the fastest rate since 1999. Estate agents also saw a rise in sales, albeit from very depressed levels. The average number of properties sold over the past three months rose to 11.8, up from 10.6. Fewer surveyors also reported a fall in house prices.</p><p>At the same time new instructions have continued to fall: the average number of properties on estate agents' books has dropped in the past month to 58.4 from 69.4, and by more than a third over the past year.</p><p>Rics said the lack of new supply coupled with the increase in activity is providing some support for house prices, but warned there could be further price falls to come. Spokesman Ian Perry said: "The housing market does appear to be close to bottoming out with activity picking up in a material way and prices at last stabilising.</p><p>"However, it is important to remember that the lack of supply has been as important in underpinning prices as the rise in demand. Moreover, with the economic backdrop still quite uncertain, unemployment set to continue increasing sharply and finance for first-time buyers still in short supply, there are a number of significant obstacles for the market to overcome over the coming months."</p><p>The findings from Rics were supported by house price figures published today by the government's communities department , which showed prices rose by 1.1% month-on-month in April, after dropping 1.3% in March. This means the year-on-year fall in house prices narrowed to 13% in April from 13.6% in March.</p><p>In London, the improving market is being driven by first-time buyers who have built up equity over the past two years, or who have been lent deposits by their parents, taking advantage of lower prices, according to estate agent <a href="http://www.ludlowthompson.com/" title="Ludlow Thompson website">Ludlow Thompson</a>.</p><p>Director, Stephen Ludlow, said: "Sentiment has changed considerably ? at the end of last year nobody could see a floor for prices. Whilst prices may not have reached the very bottom buyers are no longer worried that the market is still in meltdown mode.</p><p>"The pickup in demand in May was so sudden that it has been the lack of supply of properties actually on the market that caused the bounce in prices. We've had to move lettings staff on to sales to deal with the surge in activity."</p><p>However, Howard Archer, chief UK and European economist for IHS Global Insight, said he remained sceptical that house prices had bottomed out.</p><p>"It is not uncommon for there to be months of rising prices when house prices are still trending down. Most recently, the Halifax reported that house prices rose by 2% month-on-month in January but then fell sharply during February-April before rising again in May.</p><p>"Housing market activity is still very low by past norms and at a level consistent with falling house prices, and despite markedly rising buyer interest we believe that the pickup in actual house purchases is likely to be gradual and fitful for some time to come."</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/houseprices">House prices</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/business/housingmarket">Housing market</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848729954236591475059397290"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848729954236591475059397290" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />
Property expert: Are we eligible for another first-time buyer scheme?
<div class="track"><img alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/90731?ns=guardian&pageName=Property+expert%3A+Are+we+eligible+for+another+first-time+buyer+scheme%3F%3AArticle%3A1221749&ch=Money&c4=First-time+buyers%2CProperty%2CMoney&c6=Virginia+Wallis&c8=1221749&c9=Article&c10=&c11=Money&c13=Ask+the+experts%3A+homebuying&c25=&c30=content&h2=GU%2FMoney%2FFirst-time+buyers" width="1" height="1" /></div><p><strong>Q</strong> My husband and I purchased a shared-ownership property in May last year. However, the flat and the area have not lived up to our expectations and we really don't want to live there any more. We were thinking of selling our share and looking for another place. We have seen many great flats for first-time buyers in other areas. The rent and buy schemes are also very appealing. The issue is: if we sell our share of the flat, can we still obtain first-time buyer status? We do not have any other properties. <strong>ZA</strong></p><p><strong>A</strong> I'm sorry to say it is highly unlikely you will still be treated as first-time buyers. So it is also unlikely you will be eligible for any of the government-sponsored HomeBuy schemes. On a more positive note, in terms of getting a good deal on a mortgage, being a first-time buyer no longer gives any particular advantage. Having as big a deposit as possible to put towards buying a home is currently what gets the best mortgage deals.</p><div class="related" style="float: left; margin-right: 10px; margin-bottom: 10px;"><ul><li><a href="http://www.guardian.co.uk/money/firsttimebuyers">First-time buyers</a></li><li><a href="http://www.guardian.co.uk/money/property">Property</a></li></ul></div><div class="guRssAdvert"><a href="http://ads.guardian.co.uk/click.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848729991905190495102672829"><img src="http://ads.guardian.co.uk/image.ng/richmedia=yes&site=Money&spacedesc=rss&system=rss&transactionID=12466848729991905190495102672829" border="0" /></a></div><div class="terms"><a href="http://www.guardian.co.uk">guardian.co.uk</a> &copy; Guardian News & Media Limited 2009 | Use of this content is subject to our <a href="http://users.guardian.co.uk/help/article/0,,933909,00.html">Terms & Conditions</a> | <a href="http://www.guardian.co.uk/help/feeds">More Feeds</a></div><p style="clear:both" />