A rush by landlords and second home buyers to beat the deadline for a new three per cent stamp duty surcharge on additional properties saw mortgage lending in March soar 59 per cent higher than a year ago.
The Council of Mortgage Lenders said it had seen the biggest stamp duty distortion of the property market ever, as buy-to-let purchasers flooded the market. A total of £25.7 billion was taken out by borrowers last month – 43 per cent more than February when lending totalled £18 billion.
Richard Sexton, director of chartered surveyor e.surv, said: ‘This peak of house purchase lending could be the highest we’ll see in a single month for the rest of the year. Last-minute lending ahead of stamp duty changes has sparked an inevitable rush of activity. The view is, once the race to beat stamp duty changes finally fizzles out, the lending market will continue on a stable path – undaunted by a dip in buy-to-let activity.
‘With buy-to-let lending out of the spotlight, the focus moves to first-time buyers. March was a positive month for first-time buyers, indicative of a positive upcoming Summer. House purchase loans to first-timers totalled 11,487 – up a massive 19.3 per cent from 9,625 a year before. It’s a great time to be seeking a mortgage, with more choices available and more crucially, savings receiving a much needed last-minute boost from a rise in wages. But more needs to be done. With unemployment and house prices rising, property ownership is increasingly out of reach for some.’
Meanwhile, the latest Hometrack UK Cities House Price Index reveals that city level house price inflation over the first three months of 2016 reached 4.2 per cent, the highest rate of quarterly growth for 12 years as the normal seasonal increase in demand was boosted by demand for buy-to-let.
Tougher lending criteria for buy-to-let investors and changes to tax relief on mortgage interest payments have pushed investors to search for higher yielding property which means more investment in lower value cities, with lower buying costs, and further support for continued house price growth.
The highest increase in the last quarter was recorded in Liverpool as prices rose off a low base and closed the gap to other major cities such as Manchester and Leeds where house price growth is running at more than 7 per cent per annum – the highest year on year growth since 2007.
Pensions Minister Baroness Altmann has said ‘turning pensions into ISAs would be a disaster’ at a meeting of industry insiders this week – potentially setting her at loggerheads with the Treasury should it revive the radical idea in future. Altmann’s comments at an Association of British Insurers conference this week put her on ‘a collision course’ with Chancellor George Osborne over the future direction of pensions taxation, and could reduce the likelihood he will forge ahead with a Pension Isa, according to Thisismoney.co.uk. George Osborne is believed to have held off on a plan to axe pension tax relief and introduce a Pension ISA for everyone in his March Budget, for fear of a backlash from voters ahead of the Brexit referendum.
In other pensions news, from April 2017 people will have the option of selling or ‘assigning’ future annuity instalments to a third party firm, in return for a cash lump sum or an investment into a flexible drawdown policy. Following on from the success of the pension freedoms which give individuals complete freedom on how to use their defined contribution pensions from age 55, the Chancellor announced in his 2015 Budget that he would offer similar freedoms to those who had already purchased annuities. But pensions experts are concerned that more needs to be done to make the annuity market work more effectively. Steven Cameron, Aegon’s pensions director, said: ‘The launch of a secondary annuity market will offer new pension freedoms to those who bought their annuities in the past and would now prefer the flexibility of a cash lump sum or a new drawdown policy. However, as the Government has highlighted, it won’t be the right choice for most, with the Financial Conduct Authority identifying a long list of risks to consider. It’s vital that people have access to professional advice and guidance to make sure they get a fair deal and make an informed decision.’ Britons have lost millions of pounds through dormant bank accounts and unclaimed pension savings and Premium Bond prizes, according to research from Which?. Andrew Featherstone, new business manager for Dynamic Cash Management, said: ‘It’s not surprising that people could have been sat stagnant on accounts which were set up years ago. The numbers reported show the importance of actively managing your cash savings. Many people simply don’t have the time or the inclination to keep on top of accounts – even if that is simply monitoring changing rates or any return they’ve had on the accounts, never mind moving money around to keep on top of any better rates of interest. We would always encourage clients to register for any free services that do exist to trace any accounts in the first instance and they can always go to the Financial Ombudsman if they are convinced they do have existing lost accounts – before it is too late.’ Finally, new research reveals that motorists who need glasses or contact lenses but don’t wear them while driving increase their chance of an accident four-fold. One in six drivers have had an accident in the past two years but this increases to 67 per cent for those who need glasses or contacts but don’t always wear them. The study from Direct Line Car Insurance further reveals that 13.3 million motorists are risking their lives and the lives of other road users by driving with poor eyesight as a result of not wearing their glasses or contact lenses, with a fifth of respondents saying they always drive without them. More than a third of motorists claim they haven’t had a vision test in the past two years or more, despite good eyesight being a basic requirement of safe driving. So, if you’ve been putting off that trip to the optician, make an appointment today.
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