Oxford, Bath and Edinburgh least affordable for first-time buyers – Nationwide
A look at house prices to earnings ratio showed stark differences in affordability within the UK regions, Nationwide found.
In the East Midlands, Rutland was the least affordable local authority, while in the West Midlands it is Redditch, and in Yorkshire, Ryedale takes the top spot.
In Wales and Scotland, the respective capital cities Cardiff and Edinburgh have the highest house price to earnings ratios.
Andrew Harvey, senior economist at Nationwide, said: “Predictably, the least affordable local authority in London, and by extension Great Britain, is Kensington and Chelsea, where the typical house price is 16.8 times earnings.
“Perhaps unsurprisingly, it is also the most expensive local authority in the country and the only one where the average price exceeds £1m.”
On the other hand, the most affordable local authorities include Stoke-on-Trent in the West Midlands, County Durham in the North East, Great Yarmouth in the East and Dover in the South East.
Swindon is the most affordable region in the South West while Bromley takes the spot for London.
In Wales and Scotland, Merthyr Tydfil and East Ayrshire are most affordable.
Harvey added: “The most affordable local authority in Britain is East Ayrshire, in Scotland, where average first-time buyer house prices are just 2.3 times average earnings. East Ayrshire covers a large geographic area to the south of Glasgow, but its main towns are Kilmarnock and Cumnock.
“Copeland is the most affordable area in the North West of England. While the area includes parts of the western Lake District, its main settlements are along the Cumbrian coast from Millom to Whitehaven.”
The areas with the biggest improvement in affordability over the past five years include, Hammersmith & Fulham in London, Aberdeen in Scotland, Brentwood in the East and Harrogate in Yorkshire.
TSB refreshes mortgage range with high LTV reintroductions and rate changes
The lender has brought back its zero fee two and five-year first-time buyer and purchase fixes at up to 90 per cent loan to value (LTV).
Remortgage zero fee five-year fixes are also back on offer, as well as five-year shared equity products up to 85 per cent LTV.
At the same time, rates have been reduced on five-year first-time buyer and purchase fixes by up to 0.35 per cent.
The first-time buyer stepped down rates have been cut by 0.15 per cent and 10-year fixes up to 60 per cent LTV are down by 0.25 per cent.
Rates have also been cut on remortgages including five-year fixes by up to 0.30 per cent, and 10-year fixes by 0.25 per cent.
But costs have increased by up to 0.15 per cent on five-year first-time and purchase deals with £995 fee by up to 0.15 per cent.
Rates are also up on first-time buyer stepped down deals at 80 per cent by 0.60 per cent, as well as five-year remortgage fixes at 80 per cent LTV by 0.20 per cent.
Accord cuts select high LTV mortgage rates
Deals are being trimmed by up to 0.10 per cent from 26 February.
The revised range from the intermediary arm of Yorkshire Building Society will feature a two-year fix at 2.93 per cent, down from 3.03 per cent, at 85 per cent LTV, and a five-year equivalent fixed at 2.93 per cent down from 2.99 per cent. Both products come with a £495 fee, £500 cashback and free valuation.
The five-year fix at 90 per cent LTV will now cost 3.57 per cent, from 3.61, with £495 fee, £750 cashback and free valuation.
At the same time, Accord is improving rates on remortgages, meaning a two-year fix at 85 per cent LTV will have a new rate of 2.72 per cent, down from 2.82 per cent, with £995 fee.
And a two-year fix at 85 per cent LTV will cost 2.86 per cent, from 2.91 per cent, with £495 fee, £250 cashback, free valuation and remortgage legal service.
Jemma Anderson, mortgage manager at Accord (pictured), said: “We’ve reduced a number of rates across our higher LTV ranges to give brokers more competitive choice for clients with smaller deposits.
“Brokers will notice both shorter and longer initial deal terms benefit from the changes, and there’s options for both house purchase clients and those looking to remortgage. With a number of incentives remaining on mortgages across the range, we’re confident this revised range will be welcomed.”
Co-op anticipates return to profit in 2021 with mortgage lending to drive growth
The lender announced a statutory loss before tax of £103.7m, which was an improvement on the £152.1m lost in 2019, despite putting aside a Covid credit impairment charge of £21.6m.
Net residential lending is up 5.2 per cent, taking the book to £841.1m. The bank did not disclose its gross mortgage lending figures.
Co-op said it had helped more than 11,000 customers buy a new home and completed over 11,000 remortgages.
The bank revealed it had granted 20,523 mortgage and unsecured payment deferrals, with 92 per cent resuming repayments, with one per cent of the balances now in arrears.
In a statement, Co-op said: “It is clear that the Covid-19 pandemic has had a significant impact on the group and may continue to present further risks and challenges in both the short and medium term.”
However, the bank said it anticipates a return to profitability in 2021, with growth in retail mortgages helping to turnaround fortunes.
Nick Slape, chief executive, said: “Our priority has been to provide customers with the support and reassurance they have needed during this period and to navigate a challenging retail banking market and uncertain economic conditions.
“The performance in mortgages and the continued growth of our SME franchise has been particularly pleasing, with net residential lending up five per cent at improved margins and our SME business going from strength to strength.
“As we face into continued difficult times for many people and businesses, we remain committed to providing the support required as well as continuing to make a positive impact on the environment and the world around us.”
Mortgage arrears from pandemic set to peak in late 2021 – Fitch
The pandemic had a greater impact on the finances of so-called ‘non-prime borrowers’, rating agency Fitch said.
A peak in arrears is expected later this year or early 2022, with these borrowers expected to see a greater increase than prime-counterparts.
Payment holidays and the furlough and self-employed government schemes have combined to delay arrears and reduce the shock to household income in both non-prime and prime cases, Fitch said in a report on mortgage arrears of Residential Mortgage-Backed Securities (RMBS).
UK prime transactions on payment holiday peaked just below 20 per cent in May 2020, falling to below 10 per cent by August 2020.
Payment holidays were taken conservatively by those borrowers that saw their income as vulnerable, in particular the self-employed.
Payment holidays are available until the end of March 2021, and subject to a cumulative maximum six-month term, but Fitch said it does not see another peak in payment breaks.
Lenders are likely to offer further forbearance to these borrowers who have reach the end of payment holidays and are still in financial difficulties to limit the number falling into arrears, the report added.
The moratorium on repossessions will be in effect until 1 April 2021, but is set to remain at a low level, according to Fitch.
On average, the non-prime sector’s proportion of loans in six-month plus arrears is approximately eight times the level of prime transactions.
Fitch said this is indicative of where the earliest repossessions are likely to arise.
Higher relative levels of late-stage arrears are seen in legacy assets such as Northern Rock.
Among prime borrowers, Fitch said specialist lenders’ transactions such as Charter Court and Finsbury Square, have higher than average levels of late-stage arrears because these lenders are willing to consider borrowers that high street lenders may not.
Buy-to-let market opens up to first-time landlords – Moneyfacts
Around 65 per cent of buy-to-let mortgage deals – or 1,311 products – are accessible to novice investors, according to Moneyfacts.
A year ago, around 61 per cent of the market was catering to first-time landlords.
However, two-year fixed rates for first-time landlords have risen 0.30 per cent year on year to 3.10 per cent, while five-year deals are up by 0.35 per cent to 3.66 per cent.
The increases are steeper than the wider market, signalling that lenders are pricing risk into these deals.
Eleanor Williams, from Moneyfacts.co.uk, said: “Factors such as house price inflation, rock-bottom savings rates (making building deposits difficult), and uncertainty in job stability and income levels may play a part in a number of potential first-time residential buyers opting instead for the less onerous commitment of staying in privately rented properties.
“Furthermore, the BTL sector as a whole has shown itself to be relatively resilient and robust in the face of an unprecedented year, and therefore there may now be those who are considering capitalising on the opportunity to invest in the sector for the first time.
“Overall availability contracted sharply last year, which makes it even more positive to note that at 65 per cent, the proportion of the market that is available to FTLs has grown by 4 per cent year-on-year, meaning that would-be investors have plenty of choice, and is also an indication that providers are committed to servicing this demographic of borrowers.”
‘More important than ever’ vulnerable customers are treated fairly – FCA
The fair treatment of vulnerable customers should be embedded as part of culture and processes across financial firms, the Financial Conduct Authority (FCA) said as it issued updated guidance.
Using the guidance, the regulator will “hold firms to account for its treatment of vulnerable customers”.
The 57-page document outlined how businesses are expected to provide their customers with a level of care that is appropriate given the characteristics of the customers.
And that financial firms should understand what harms their customers are likely to be vulnerable to and ensure that customers in vulnerable circumstances can receive the same fair treatment and outcomes as other customers.
Firms’ senior leaders should “create and maintain a culture that enables and supports staff to take responsibility for reducing the potential for harm to vulnerable customers”.
Product design, communications and customer services are among the areas where the needs of these people should be considered at all levels and throughout the whole customer journey, the FCA said.
There are some 27.7million adults in the UK who now have characteristics of vulnerability such as poor health, experiencing negative life events, low financial resilience or low capability, according to the FCA.
Vulnerable customers may have limited ability to make reasonable decisions or could be at greater risk of mis-selling.
To achieve good outcomes for these customers, the FCA said firms should:
-Understand the needs of their target market/customer base
-Ensure their staff have the right skills and capability to recognise and respond to the needs of vulnerable customers
– Respond to customer needs throughout product design, flexible customer service provision and communications
– Monitor and assess whether they are meeting and responding to the needs of customers with characteristics of vulnerability, and make improvements where this is not happening
The FCA has also published a Memorandum of Understanding (MoU) with the Equality and Human Rights Commission (EHRC). This MoU sets out how the FCA will co-operate and work with the EHRC on equalities issues, to help protect people in financial services markets.
Nisha Arora, director of consumer and retail policy said: “Protecting vulnerable consumers remains a key focus for us and given the impact of the coronavirus pandemic, it is more important than ever that firms get this right.
“The guidance being announced today will help ensure vulnerable consumers are treated fairly and achieve outcomes as good as other consumers.
“While some firms have made significant progress, we want to see all firms across sectors taking steps to understand and respond to the needs of their customers, particularly those who are most vulnerable to harm.
“We also remind customers to tell your providers if you have specific needs – whether that’s due to ill health making it difficult to access a service, or a recent emotional or financial shock that is impacting your finances. Doing this will help firms support you.”
Tom Selby, senior analyst at AJ Bell, added: “Given the devastating impact Coronavirus and the national lockdown has had on people’s lives, it is no surprise the number of vulnerable or potentially vulnerable people in the UK has surged.
“In fact, over half the UK population – almost 28m people – now demonstrate characteristics of vulnerability. This is truly shocking and while we now have a roadmap out of lockdown, millions will face job and income insecurity in 2021 and beyond.
“Given this backdrop, it is positive to see the FCA re-emphasising the vital role financial services firms can play in identifying people who may be vulnerable today or at risk of being vulnerable in the future.
“Vulnerability, by its nature, can be transient and difficult to spot, so ensuring fair treatment of vulnerable and potentially vulnerable customers is at the heart of each firm’s culture is the right approach.”
Metro Bank offers SME insurance
SMEs can apply via the Metro Bank website or over the phone, and existing customers of the bank can also access products via their mobile and online banking.
There are seven distinct insurance products for businesses across 11 different industries, catering for:
-Residential and commercial property owners (real estate)
-Shop and retail
-Office and surgery
-Manufacturing and wholesale (including hotel and leisure)
-Businesses from home
Kat Robinson, director of customer experience at Metro Bank, said: “This is a crucial step for Metro Bank, as we continue to deliver new products and services that appeal to our growing base of business customers and deliver on our strategy to become the UK’s best community bank. We’re thrilled to launch into the SME insurance market with Churchill Expert after what’s been a very difficult year for businesses across the country. This is just the first stepping stone in our insurance journey, with pet and travel insurance offerings to follow later this year.”
Ian Exworth, director of affinity and aggregator at Direct Line Group, added: “We are happy and excited to launch our new Churchill Expert partnership with Metro Bank and look forward to bringing the very best in SME insurance to Metro Bank business customers. With new needs and requirements emanating from the pandemic-affected last 12 months, we look forward to working with Metro Bank to continue to develop our product suite to best fit the evolving needs of SMEs.”
Conveyancers rush to meet stamp duty cut off as volumes surge
Volumes were up by 27 per cent to 73,142 in December from 57,632 in November, according to a monthly tracker by property technology provider Search Acumen.
Conveyancers have rushed to help prospective buyers take advantage of stamp duty savings before 31 March when the temporary tax cut is set to end.
Transactions were last seen at this level in February 2020, while the number of active firms has risen but remains lower than any point before the pandemic.
The uptick in demand in the property market has resulted in firms benefiting from stronger trading conditions, Search Acumen said.
There were 3,808 active firms in Q4 from a low of 2,411 in Q2 2020.
But even with the year-end recovery in conveyancing activity, annual business volumes have remained acutely impacted by the disruption caused to the property market by the pandemic, the firm said.
There were 680,232 completed transactions registered in 2020, compared to 958,243 in 2019.
The top five conveyancing firms by volume of business retained a six per cent combined market share, despite their activity levels remaining 16 per cent lower in Q4 2020 compared to Q4 2019.
Andy Sommerville, director at Search Acumen, said: “This latest data reveals how much more resilient the property market has been to pandemic-induced shocks compared to the wider economy.
“The surge in activity in the property market can be largely attributed to buyers rushing to capture the savings on offer through the higher stamp duty threshold. Demand has also been stimulated by a change in consumer appetite for properties outside of cities with access to green spaces, as more people than ever before are working from home.
“The stamp duty deadline has put enormous pressure on the conveyancing industry and the traditional processes underpinning much of it, not to mention putting lawyers’ stress levels and patience to the test. This capacity crunch is set to escalate over the next few months and stretch the limits of existing working practices.”
NatWest lending dips to £31.5bn as pandemic wipes out profits
Approximately 258,000 mortgage repayment holidays were provided to help homeowners struggling with the Covid crisis.
The lender made a pre-tax operating loss of £351m last year, as the effects of pandemic took its toll on the business and it revealed plans to withdraw Ulster Bank from the Republic of Ireland.
However, in the final quarter, NatWest said it returned a profit before tax of £64m.
Increased mortgage margins and income helped support the business in the last three months of 2020, as the lender carried out £8.4bn worth of gross mortgage lending between October and December.
The lender said it is aiming to deliver lending growth above market rate in the years to 2023, while also reducing costs by around four per cent each year.
In the annual results, the lender revealed it would be pulling Ulster Bank from Ireland, with Northern Ireland unaffected by the move.
Alison Rose, chief executive, said it had “become clear Ulster Bank will not be able to generate sustainable long term returns for our shareholders”.
She added: “As a result, we are to begin a phased withdrawal from the Republic of Ireland over the coming years which will be undertaken with careful consideration of the impact on customers and our colleagues.”
As part of the results, the lender reported that it had 39 per cent women in its top three leadership layers and on aggregate 10 per cent Black, Asian and Minority Ethnic colleagues in its top four leadership layers in the UK.
Rose said: “Despite reporting a loss for the year, NatWest Group delivered a resilient underlying performance in a challenging operating environment.
“The bank continued to grow in key areas such as mortgages and commercial lending and our balance sheet remains strong, with one of the highest capital ratios amongst our UK and European peers.”
She added: “We cannot be certain of the long-term impact of the pandemic. But we can be certain that our bank will continue to support those who need it most as we build back better.
“By championing potential and helping people, families and businesses to rebuild and thrive, we will succeed together.”