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Market Watch: Housing taken seriously at last?


The Government seems to be taking housing seriously at last but the targets look tough given woeful past performance

Last week was all about the long-awaited housing white paper. Released in a blaze of publicity, it came up with several conclusions, including… we need to build more houses. There was an admission that the housing market was broken, and a raft of measures suggested to help mend it – albeit rather short on a lot of actual detail.

It is interesting to see the rhetoric shift away from just homeownership, with planning rules being amended so that councils can build more rental properties and encourage more long-term tenancies. All of this seems a little at odds with the recent attacks on landlords.

Communities secretary Sajid Javid said housebuilding needed to rise to 275,000 units a year, compared with 190,000 built in 2016. Every local council will be forced to publish projections for housebuilding, and developers will have to ‘use or lose’ planning permission once granted.

There is also to be an expanded and more flexible affordable homes programme for housing associations and local authorities, with £7.1bn of funding already announced and a further £3bn to help smaller builders challenge the large developers.

In addition, there was talk of incentives for older people to downsize, and plans for more sheltered housing schemes. The devil will be in the detail.

On the face of it, it is great that the Government seems to be taking this issue seriously at last. But the targets seem mighty tough given the past woeful performance.

To build the required amount of homes, we need to ensure we also have the skilled labour and materials, as well as support from builders and mortgage lenders.

The plans also need to have long-term, cross-party support and not fall foul of schoolboy politics from an ineffective opposition.

In other news, Connells reports a jump in first-time buyers in January, with the group responsible for a third of activity, up from a quarter a year ago. This seems at the expense of landlords, whose market share has declined rapidly (albeit based on higher-than-normal figures as they leapt to beat the tax change deadline last year).

In the markets, three-month Libor is still at 0.36 per cent while swap rates have shrunk once more.

2-year money is down 0.08% at 0.63%
3-year money is down 0.10% at 0.73%
5-year money is down 0.13% at 0.92%
10-year money is down 0.14% at 1.32%


In the mortgage world, there has been a mixture of rate rises and falls as lenders try to manage the conflicting forces of obtaining more business, keeping service levels high, making profit and meeting PRA requirements.

Santander has continued its dramatic start to 2017 with more product improvements. The big headline is its 18-month fixed rate at just 0.99 per cent with a £1,499 fee to 60 per cent LTV. It has also added a £250 cashback to its five-year fix at 1.89 per cent with a £999 fee, and cut its 90 per cent LTV two-year fix to 2.24 per cent.

Metro Bank continues to make a claim to greatness with reduced rates, including a five-year fix at 1.84 per cent, as well as a new five-year tracker with a reduced early repayment charge period.

Meanwhile, Clydesdale Bank has improved the way it calculates income for self-employed applicants and now assesses on two years’ data instead of three. It has also simplified its general documentation requirements.

Newcastle BS has launched its Help to Buy All in One Mortgage, with fee-free products up to 95 per cent LTV, including paying basic legal costs. Virgin Money has improved its 95 per cent LTV products, with two-year fixes reduced to 3.73 per cent and five-year fixes at 4.54 per cent.

In buy-to-let, BM Solutions has reduced rates by up to 0.15 per cent, while Virgin Money calculates its rental stress on a five-year fix at 145 per cent at 4.74 per cent.

TMW has some new products and has cut a handful of rates. It has two-year trackers from 1.59 per cent with a 2 per cent arrangement fee to 65 per cent LTV, a three-year fix at 2.09 per cent with a £1,995 arrangement fee and a five-year fix with no fees at 3.49 per cent to 75 per cent LTV.


Andrew Montlake is director at Coreco


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