News article published on: 24th June 2014
The big freeze may be continuing on the weather front; however it would seem that the property market is steadily thawing. Simon Nosworthy, head of the residential property department at Osbornes solicitors discusses how the number of new mortgage products now available the property market may be in line for a much needed boost.
It’s no secret that since 2008 the property market has been in severe depression with lending at an all-time low meaning many individuals either not being able get on to the property ladder and others sinking into negative equity.
However it was all change in August 2012 when the property market was given a much needed boost thanks to the Bank of England launching the Funding for Lending Scheme (FLS) initiative. The objective of the FLS is in part to encourage increased lending to home buyers. This is being done by offering up to £60 billion in cheap money to banks and building societies, the expectation being that lending to individuals and businesses will avert a further slowdown of the economy.
Antony Lopez, senior independent financial consultant at Sterling & Law Group PLC comments that the “the FLS scheme should make a positive difference to the mortgage market, especially for first time buyer in the South East of England”. Lopez explains that the biggest problems have been experienced by first time buyers requiring high deposits by lenders and there would be a ‘significant boost in first time buyers if 5% deposits became acceptable by lenders once again’.
Although products requiring only small deposits have not been flooding the market as they used to, Paul Bass, a director at Prolific Mortgage Financecomments that the market is ‘already seeing more competition from the lenders at higher loan to value products’. Bass cites the recent launch of the Woolwich “Family Springboard” mortgage as an example of a product which gives first time buyers and ‘second steppers’ the option to borrow up to 95% of the asking price with the assistance of family money.
Bass further comments that ‘competition at this end of the market should really see the property market start to move again, giving vendors the confidence to bring their properties to market again therefore increasing supply”.
As well as increased lending it is certainly clear that confidence is key to increasing momentum in the property department. The property department at Osbornes can certainly testify to an increase in confidence levels with a greater number of enquiries and instructions coming into the department over the last quarter and the outlook for 2013 is looking positive.
This movement correlates with comments by Emma Austin from Barclays notes that there has been a ‘raft of activity in the residential property market with rates being cut, new products appearing and some lenders setting their sights on increasing their presence in the first-time buyer arena to help build confidence. Austin states that Barclays lent £32.4 billion in the UK in the first 9 months of 2012 and in the third quarter lent £3.8 billion more to UK households and non-financial business than they repaid.
However, before we get carried away and start putting out the bunting there are still products on the market which are pretty much out of reach to first time buyers and even so called ‘second steppers. Mortgage broke Faz Qavolli warns that it is still tough to obtain an interest only mortgage and explains that Halifax have restricted the amount you can borrow on an interest only mortgage to 75% and that Santander will only lend 50% on an Interest only basis. However Faz agrees with others above that generally FLS should improve conditions in the mortgage market
Over 2012 the number of completed house sales was estimated to be about 930,000 and it will be interesting to monitor levels throughout 2013 to see if the FLS is having the desired effect on the market and on confidence levels.
Buying or selling?
If you are currently in the process of buying or selling a property you will need the services of expert residential property solicitors. The property department at Osbornes is accredited by the Law Society with their ‘Conveyacing Quality Scheme kitemark’.
The scheme is a quality standard for residential conveyancing practices and was introduced to enhance the reputation of conveyancing solicitors, providing clients with reassurance about their solicitor’s integrity. The department’s accreditation for the kitemark highlights the fact that all our property solicitors continue to provide the highest standard of client care.
We will be happy to provide you with a competitive quote for our services. For a quote contact us by:
Contributor contact details
Sterling & Law Group PLC
Senior Independent Financial Consultant
No. 1 Harley Street, London W1G 9QD
0845 838 2469
Prolific Mortgage Finance
Warnford Court, 29 Throgmorton Street, London, EC2N 2AT
77 Station Road, Barnet, Herts, EN5 1PU