Look back at the Housing Market in 2014
We’ve asked one of our panel mortgage advisors, Clark Marshall, to give us a round up of what we saw happen in 2014 for the housing market which includes the Mortgage Market Review (MMR) and recent changes to Stamp Duty Land Tax (SDLT):
At this time of year we tend to look back at the events of the past 12 months and comment on the fact that it was a year of “great change”. Personally, I believe that is a perfect way to summarise the events of 2014.
Some changes happen and are expected, planned for a long time, destined to impact on us at a set date. Others appear to happen almost overnight; can create quite a stir, normally with positive and negative feedback, and shock as a result of a lack of warning.
Changes in 2014 - the awaited and the unexpected
A major planned/expected change was the implementation of “The Mortgage Market Review” (MMR) in April 2014. Legislation that had begun to take shape as far back as 2009 finally became a reality. The main aim of the MMR was to “provide a sustainable market place that worked better for consumers”. The main impact on buyers and sellers was that lenders were now looking at mortgage applications in more depth, collecting and analysing more detail on each application. The impact of child care costs, travel expenditure, pension contributions and the like were considered in more detail on an individual basis for each application. Stories hit the press of applications being rejected by lenders due to where people shopped for their groceries, went on holiday or which gym they were a member of.
Eight months on, the market has settled down and generally speaking it appears that a sensible approach is being taken by lenders to each application. Some lenders will lend more to families than others, some more to single applicants. Some deduct pension contributions, share save and season ticket loans from income before assessing how much can be lent, others worry less about these on the basis an applicant can cancel the first two and that travel is already taken into account in their calculations.
Gone are the days when lenders would state they lend four or five times a client’s income regardless of the family unit. Although the changes resulted in some initial problems the fact is that under the old rules many lenders would have lent the same amount to a single applicant as they would to a family of five if they had the same income. A scenario that most agree was not in the interests of the consumer.
The Mortgage Market Review - has it worked?
It certainly seems to have taken us in the right direction in many ways to achieving its aim of providing a sustainable marketplace that works better for consumers. Although lenders are still fine-tuning their criteria, in general a sensible approach now appears to be evident. Mortgage Brokers have become even more important in helping an applicant to work their way through the maze of what each lender will lend. This, coupled with the varying approaches by lenders to some of the Affordable Housing schemes e.g. Shared Ownership, Shared Equity, have made the role of the panel of Mortgage Advisers working with Family Mosaic even more crucial.
A further change that took place last year, which to most appeared to happen overnight was the announcement in the “Autumn Statement” of the changes to Stamp Duty Land Tax (SDLT). Whilst still a complex area the Treasury has calculated that Stamp duty will be cut for 98% of people who pay it. If you’re buying a home for less than £937,500, you will pay less stamp duty, or the same.
Although this change appeared as a shock, there had been no, or very little, press commentary on such an event; it had obviously been planned for some time. Any scheme that benefits 98% of people paying a charge has to be seen as very positive and supports the current Government push to put Housing at the top of the agenda.
Further details on the impact of Stamp Duty (SDLT) and the changes, in particular regarding Affordable Housing schemes, are best directed to a solicitor. The panel of solicitors on the Family Mosaic sales website who specialise in this area are used to dealing with such enquiries.
The changes mentioned, along with the fact that property prices (according to the Nationwide House Price Index) increased by 7.2% over the course of 2014, on the back of an 8.4% increase in 2013 coupled with an improving economic backdrop predicted by most forecasters, gives much reason to be positive about the year ahead.
In 2015 we look forward to helping more clients than ever achieve their dream of home ownership.
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