One in six, or 2.2 million, first-time buyers are entering a long-standing loan agreement with their parents in order to get on the housing ladder, according to research. Parents are loaning an average of £24,347 to help their children get on the property ladder, compared to an average of £32,101 for those who gift the money.
There was a fascinating story in the national press last week. It concerned Bitcoin and whether mortgage lenders would accept it as the source of a deposit. The various iterations of the story revealed that Santander, Nationwide and Aldermore wouldn’t accept a deposit derived from the proceeds i.e. people who cashed in bitcoin for thousands of pounds, but Coventry BS, Skipton and Yorkshire BS would.
Now, Bitcoin for those who are unaware of it is a... Nope, can’t do it. It makes my head hurt to think about explaining the relative value of something that doesn’t actually exist but yet, you could buy a tropical island with.
Anyway, Bitcoin enjoyed a meteoric rise in value during 2017 and created tremendous returns for a number of people. The Daily Express reported that one public sector worker had built up £40,000 after investing in bitcoin for a deposit on a house.
So, can it be used for a mortgage deposit or not? Well, the Building Societies Association view seems to be a reluctant yes. They say both that electronic currencies are in the highest risk category in relation to money laundering but also that UK mortgage regulation does not forbid using sterling proceeds from cryptocurrency transactions as a deposit.
They also said menacingly that “it is well known that such currencies are popular with criminals, who use them to launder the proceeds of crime”. I don’t have any bitcoin but if I did would that make me a part of the seedy criminal underworld?
I’m not here to debate the ethics of cryptocurrencies and I’m absolutely certain that brokers have far better things to do with their time. What I found really interesting about this story as a former broker, is that none of the journalists knew, or seemingly couldn’t find out a definitive list of which lenders would, or far more importantly would not, accept a deposit derived from Bitcoin.
I’m not suggesting that it will be commonplace for clients to approach you with a crypto-based mortgage deposit but if they do that’s the problem that criteria searching is designed to address. Clients and cases simply don’t fit into neat little silos and although criteria changes may not be as regular as product changes they are still happening all the time. Let’s face it, the question of whether proceeds from cryptocurrencies could be used as a deposit for a mortgage would have been simply unheard of 12 months ago.
The problem: What this means in the real world for brokers, and it could be about Bitcoin deposits or any other criteria, is when you find out that the lender won’t accept your client and infuriatingly never would have.
That, above all else, used to frustrate me when I was a broker placing a case. You guide a client through the application process, collating information about their circumstances, finding a product that looks to fit their requirements and then have the rug pulled out from under you at the last minute.
The only thing worse? That sentence. You know the one. The one that includes a variation of the phrase; “we’ve never accepted borrowers with X”. This is probably the moment when you tap your head gently against the wall whilst mumbling choice profanities or you spot the ‘motivational’ poster of a cat on a branch telling you to ‘hang in there’ and want to do unspeakable things to whoever put it on the wall.
It is how we deal with this constant change that is important. Getting the correct information is critical and this contains two very important parts. Yes, it has to be the right information but it must also be at the right time. As a broker I would spend hours reading lending criteria on product sheets or calling a helpdesk and often still not get the answer I needed. Like every broker it didn’t feel like I was asking for much... just tell me upfront if you’ll accept my client’s circumstances!
The solution? Well, the phrase that simply sums it up is ‘knowledge is power’. Using an online criteria search solution means that you can find out upfront which lenders will consider your client. No more drip feeding of information from a lender to a spreadsheet that would have given you the information that you needed... if only you’d had it a week ago. Find a system that lets you input as many of your clients criteria quirks and oddities as you like to tell you which lenders will consider you. It’s nice when a complicated situation has a simple solution.
After December saw a property supply drought, January has seen a 40% increase in new sellers across the UK, according to research. 10% of towns saw new property listings more than double last month and almost half (48%) of UK towns and cities saw new listings up at least 50% in January.
Only six towns across the UK saw fewer new sellers marketing in January than listed their properties in December.
London, which has seen property prices falling over the past couple of months, saw a huge increase in new sellers in January, with every borough in the capital seeing more new property listings compared to December. New property supply was up 78.7% in January, and a fifth of London boroughs saw new seller numbers double last month, with property listings p 118.7% in Hillingdon and 117.3% in Bromley.
Across the regions, the south saw the biggest gains in new sellers in January, with five out of the top ten biggest risers in January. Solihull, in the West Midlands, registered the largest percentage of new property listings last month, up almost 150% on December.
After 2017 ended with a whimper, the property market has enjoyed a much-needed New Year bounce in new supply. This boost does need to be put into context though, as new listings are still at very low levels. The market desperately needs a few more healthy months to fill the supply reservoir. We expect 2018 to be another challenging year for the UK housing market as the country’s exit from the EU draws closer. House price growth is likely to be single digits this year at best. However, the property market has proven over the past 12 months that it is robust enough to handle the blustery economic headwinds coming its way.
For anyone thinking of selling their property over the next few months, they can be reassured there are committed buyers out there. But this is a price sensitive market. Buyers are negotiating harder and are happy to wait for the right property at the right price.
Net investment in buy-to-let property has fallen by 80% from £25 billion in 2015 to just £5 billion in 2017 due to "excessive regulatory intervention on the sector", according to research from the Intermediary Mortgage Lenders Association.