Mortgage approvals on the increase

Following a dip in July and August, mortgage approvals bounced back in September.  According to the Bank of England's Money and Credit statistics, mortgage approvals totalled 118,470 in September with a value of £19.1bn, compared to 113,524 and £17.6bn in August.

The number of approvals for house purchase reached 62,932 with the value at £11.1bn, up from August, but still lower than the six month average of 64,481. Remortgage approvals totalled 42,440, also down on the six month average of 41,882 but also higher than August.

AToM saw a busy October and we don't expect much to change with the run up to the end of 2016.  And of course, with Help to Buy 2 finishing at the end of the year, we do expect to see a slight rush as people with small deposits seek to gain approval on the product before it's withdrawal. 

Nationwide has increased the maximum loan to value (LTV) for customers remortgaging from other lenders on a like for like basis from 85% LTV to 90% LTV.  Rates for the two year remortgage product start from 2.39%.  As always, terms apply….! 

TSB has removed its mortgage application fee, which previously cost £265, from all of its residential and buy to let mortgages.  This lender has also launched new products including a three year fixed rate starting at 1.84% for a 60% LTV.  They also have products right up to 95% LTV.

No doubt we'll see similar from other lenders as they seek to increase volumes pre Christmas.

And finally....New figures from HMRC report that one in four properties bought in the UK in the third quarter of 2016 was a buy to let or a second home.  The introduction of the 3% Stamp Duty surcharge in April has seen figures published for the first time indicating how many properties are bought to rent out.  The data published by HMRC shows that it has collected some £670m in Stamp Duty since the additional 3% charge was introduced.   With First Time Buyers still struggling to get on the ladder, I can't see this changing anytime soon!

The valuation on your property is for the Lender

As part of the mortgage application process, lender's will require a valuation of the property on which the mortgage loan will be secured.  Normally, this is carried out by a surveyor who visits the property and they will value it for mortgage security purposes.  i.e, to make sure the value is suitable for the lender to recover their monies should the owner not pay the mortgage and they have to repossess and sell on.  The surveyor is the eyes of the lender and not usually employed by them.  The surveyor gives a valuation of the property and the lender relies on this in their mortgage calculations and offerings.  These may (or may not) compare with the valuation from the Estate Agent...

As this report is for the lender, they have no obligation to tell you what is in the report, or give you a copy! Therefore you should always consider the benefit of an independent survey on the property you are purchasing to ensure all defects are noted before signing contracts. There are a number of types of survey available, aside from the mortgage valuation, however the main two tend to be:

Homebuyer Report - a standard format set out by RICS (Royal Institution of Chartered Surveyors). This will not focus on every aspect of the property like a building survey will, but will advise on urgent and visible matters needing attention such as damp and subsidence. It may advise if items might have an adverse affect on the value of the property.

A Building Survey - an in-depth survey for all properties: listed buildings: buildings that have had extensive alterations, or of an unusual construction. The surveyor will examine all accessible parts of the property and advise on technical information: the condition relative to age: further special investigations required, and provide extensive information on major or minor defects.

In the height of 2007, many lenders used Automated Valuations Models (computer algorithms) to value the security property, rather than sending round a surveyor.  Fast forward to 2016 and we're seeing some lenders move back to this way of valuing. With AVMs, there is a huge reliance on data and an element of trust as a number of properties are not even viewed and unless the recent extension, or alterations to the property are documented in the data research, these may not be taken in to account, or increase the properties value!  These may also not pick up any issues as a more in-depth survey will, therefore consider paying the extra to get the satisfaction you are purchasing a decent property.