I hope you are well. This week, many house buyers across the UK will have been scouring the market for mortgage options, with property investors being top of the list of those keen to find good deals among the mortgage interest rate hikes.
Despite the media circus, it is not all doom and gloom. There are still attractive mortgage offers to be found and many other ways for an investor to still achieve a strong yield.
Reply to this post today to discuss your options with one of our advisors.
Now, let’s take a look at all the headlines that caught our attention this week. I always try to summarise the links to save you from having to click through.
Remember, you can also listen to this week’s newsletter on the podcast as well.
We would really appreciate it if you could subscribe and leave feedback for our Podcast on Apple.
Property News This Week
- Does London Need the Boost of Private Capital Funding? – Leading business campaign group BusinessLDN, in partnership with CBRE, has published a report detailing the urgent need for more affordable housing and calling on London to embrace private capital funding to make up the shortfall. The joint report claims that throughout 2019-2020, less than 9,000 affordable homes were built in London, representing just 20.5% of all new homes built in that time. Throughout the pandemic, delays and shortages were expected, but according to the report, this doesn’t account for the extent of the affordable homes shortage. BusinessLDN and CBRE have advised that rather than waiting for public funding and initiatives to fix the problem, private capital could be the way forward. Recommendations for securing this funding include encouraging the capitalisation of rental income and the prospect of a ring-fenced top-up grant being offered to affordable housing schemes with a high likelihood of completion.
- Mortgage Guarantee Scheme Extension Now Under Review – This Thursday, Kwasi Kwarteng met with the UK’s chief banking executives, including Nationwide, Virgin Money and Barclays, to discuss the various options available to help customers now experiencing difficulty securing a mortgage after the mini-budget put UK financial markets into a tailspin last week. With the pound at a record low and the economic climate on the rocks, UK banks were forced to withdraw almost 40% of their mortgage deals and re-launch them at higher rates. In response to concerns raised by the UK bank bosses regarding the mortgage market, the chancellor now admits that an extension of the mortgage guarantee scheme is on the cards. This guarantee scheme, currently set to end in December, offers bank and building societies the option of buying a guarantee from the government for 80% to 95% of a property’s total value. The percentage covered is then protected by the government should the borrower fall into arrears.
Phil Spencer Weighs In on Buying & Selling in the UK Right Now – As one of T.V’s most prolific estate agents, Phil Spencer has seen his fair share of market antics over the years. Now looking at the current shaky economic climate with never-ending interest rate hikes and a cost-of-living crisis in full swing, he is convinced that there are still solid reasons to invest in the UK right now. Figures published by the government indicate that up to 36% of UK homes are owned outright, with 45% of BTL landlords having no mortgage on their properties. These potential buyers will be able to bypass mortgage applications altogether. Also, it is worth noting that buyers remain incredibly keen to make their move, evidenced by a low number of fall-through deals. Another fact supporting house buying now is that mortgage approvals recorded in August showed their highest level since January, giving potential buyers confidence that their hopes will come to fruition and that despite the hardships, it is absolutely still possible to get on the ladder.
Overseas Investors Are Capitalising on the Weakened Pound – There is no doubt that UK buyers are currently navigating some difficult terrain right now, as the mini-budget reveal sent the value of the pound spiralling into a historic low, with mortgages subsequently pulled from the market as banks struggled to correctly price their products. However, what has been a problem for domestic buyers has proved to be an unexpected windfall to the droves of interested foreign investors. Alliance Fund has recently published research showing that the weakening pound has given overseas buyers savings of up to 16.5% in UK property deals. Data shows that investors from the US, the UAE and Hong Kong are among the top beneficiaries of savings due to the weakened pound. This signifies a particularly good opportunity for foreign investors to get into UK real estate at a lower price in order to maximise their yield and set themselves up for substantial growth as the economy recovers from the recent meltdown.
That is all we have for you this week. If you have any comments or questions on this week’s news summary, please feel free to email us at [email protected] – if not, see you next week.