Help To Buy Closure Will Not Affect Those With Small Deposits

The Bank of England has told the government that its flagship scheme which has helped more than 79,000 buyers on to the housing market can be closed without any impact on the supply of home loans. Help to Buy was announced in March 2013 by the then chancellor George Osborne with the aim of encouraging lenders to provide mortgages requiring deposits worth 5% of the value of a property at a time when they were demanding bigger deposits. The scheme is scheduled to close at the end of this year, and the Bank’s governor, Mark Carney, has told Osborne’s successor, Philip Hammond, that its closure would not affect customers with small deposits. Read more on the Guardian website.

First-Time Buyers Punished As Lenders 'Sneakily' Raise Mortgage Rates

Britain's biggest lenders are punishing first-time buyers by increasing the cost of their mortgages in a move which defies the Bank of England's Governor, Mark Carney, who said they have "no excuse" not to pass on recent interest rate cuts. When the Bank cut interest rates in August to make lending cheaper, Mr Carney insisted the effect of lower rates should be felt “immediately” in the economy. But major lenders including Halifax, Tesco and Nationwide have raised the price of a number of popular tracker mortgages, making them more expensive for buyers. Experts said banks were "sneakily" upping rates to boost their own profit margins, at the expense of consumers. It means already struggling first-time buyers are now being attacked from all angles, as banks have also slashed rates offered on savings and high-interest current accounts, making it more difficult for them to save for a deposit. Read more on the Telegraph website.

Mortgage Rates Hit Nine-Year Low

Interest rates on mortgages have hit record lows, but borrowers are being slapped with higher fees as banks look to protect their profit margins, data from Moneyfacts.co.uk suggests. The average interest rate on a two-year fixed mortgage fell to 2.52pc in February, down from 3.14pc a year earlier and the lowest level since Moneyfacts.co.uk, which compiled the data, began monitoring the sector in 2007. It comes after Bank of England Governor Mark Carney indicated that interest rates are going to stay lower for longer than expected, with a rate rise now forecast for 2017 at the earliest. Read more on the Daily Telegraph website.

Buy-To-Let: A Happy New Year For Landlords?

New survey data from YouGov points to considerable financial resilience on the part of buy-to-let landlords as they face the prospect of future rises in interest rates. The findings may bring some new year solace to the sector, which faced a challenging end to 2015.  In the final weeks of the year, the IMF added its voice to those favouring controls over buy-to-let lending, the Bank of England governor Mark Carney reiterated his concerns about activity in the sector, and HM Treasury published a consultation on powers of direction for the Financial Policy Committee (FPC) in the buy-to-let market. The writing has been on the wall for some time and may partly explain a recent Residential Landlords Association survey showing that 10% of landlords plan to leave the market over the next five years. Read more on the CML website.

Carney Promises Action On Buy-To-Let Property Market

The Bank of England has again expressed concern about the UK's buy-to-let property market. The Bank's governor, Mark Carney, said he was concerned about high levels of lending to landlords and that the Bank would take action. "There are a number of things happening ... we are watching it closely and we will take action," he said. Mr Carney said the problem was that investors might sell their properties at the same time if house prices fell. In September, the Bank's Financial Policy Committee (FPC) made a similar warning about the buy-to-let market. The committee, which is led by Mr Carney, said the growing market posed a threat to the UK's financial stability. Read more on the BBC website.

Help To Buy Will Just Hinder Efforts To Solve The Housing Crisis

We shouldn’t be surprised that both the Treasury and the Bank of England are increasingly concerned about the burgeoning growth in buy to let. In the summer budget, the chancellor limited some of the tax deductions landlords can claim, with the aim of levelling the playing field with owner-occupiers; and in the autumn statement, he clobbered buy to letters – and second home owners – with a 3% stamp duty surcharge. Meanwhile, the Bank’s financial policy committee, which has the job of preventing a future crash, worries that buy-to-let landlords could bail out quickly in case of trouble, and are more at risk if interest rates rise. So the FPC announced that it may turn its new “macroprudential” tools on the sector. Governor Mark Carney has made it clear that he sees these new powers, which are meant to allow it to rein in lending in specific pockets of the economy without clobbering growth, as the first line of defence against a housing bubble. Read more on the Observer website.

Landlords Bruised by U.K. Tax Rise Could Face New Loan Limits

The U.K.’s amateur landlords, already bruised by higher taxes when they buy rentals and lower rates of tax relief, could be facing a new blow. George Osborne told lawmakers in October that Bank of England will get powers to regulate the so-called buy-to-let market as soon as possible. The central bank may move as soon as Tuesday’s meeting of the Financial Policy Committee to curb lending for rentals. Governor Mark Carney moved to limit the riskiest loans to homeowners last year by setting loan-to-income limits for some mortgages. Lending to landlords soared afterward, leading Jon Cunliffe, the Bank of England’s deputy governor for financial stability, to warn that investors could amplify an adverse shock to the housing market because they might seek to sell their rentals. Read more on the Bloomberg Business website.

Conservatives Risk Fresh Financial Volatility amid Housing Crisis

The Conservatives are sowing the seeds of a new financial crisis through their failure to tackle the housing problem, Nick Clegg has said as he calls for the "muscle of the state" to be used to help build up to 300,000 homes a year.  In an attack on the Treasury and the CLG, the deputy prime minister accused the Tories of having an ideological objection to intervening in the housing market to build more homes. Clegg made the comments as he came under pressure to change strategy and swing to the left after poor European and local election results. He said Mark Carney, the Bank of England governor, and Christine Lagarde, the director of the International Monetary Fund, were right to warn about the need for more housing in the UK. The Conservatives' failure to invest in housing was "unfair and economically unsustainable" and would create the seeds of the next financial crisis, he said. Watch a video (2 mins 40 secs) of the speech on the LibDem website. 

Housing Market Boom 'Biggest Risk' To Recovery

Britain’s booming housing market represents the “biggest risk” to the economic recovery, Bank of England governor Mark Carney has warned. Carney said he was concerned about the dangers of a “big debt overhang” building up as approvals for large mortgages increase. He said the Bank was monitoring the situation but there was little it could do about the “deep, deep structure problems” in the housing market, with demand outstripping supply. Carney noted that in his native Canada there were half as many people as in the UK, yet twice as many houses are built every year. Read more on the Building website.

Carney Could Scrap Help To Buy Next Year

George Osborne’s flagship Help to Buy mortgage scheme could be shot down by Mark Carney in the coming 18 months, top bank analysts say, as the booming housing market gathers pace. The chancellor wants the scheme, which supports house buyers with small deposits, to last for three years. But if the housing market overheats the Bank of England can recommend it is tweaked or is closed down early – something analysts believe is increasingly likely. Carney’s Financial Policy Committee (FPC) can use a range of other macroprudential tools in an effort to calm other parts of the market it also fears are overheating. Swiss bank UBS expects Carney to call on Osborne to scrap the scheme within the next 18 months, as well as using other tools. Read more on the City AM website.