Times are getting tougher for first-time buyers looking to secure a high-value mortgage and get their first foot on the property ladder.
That’s because the total number of high-value mortgages has fallen for two consecutive months between July and September. It effectively means that mortgages which require a minimum deposit of 5% are currently fewer than they have been at any other point of 2016.
In fact, high-value loans with 5pc deposits now account for just 2.5pc of overall lending, which is quite a drop considering that figure stood at 4.2pc in the second quarter of 2014.
Mapping the mortgage landscape
But while the availability of high-value mortgages has shrunk, it is also worth noting that they are the only type of mortgage to do so. Elsewhere in the market, the number of mortgages that require a larger deposit amount (anything from 10pc) has actually steadily risen since January.
Experts within the housing market consider it to be another side effect of the Brexit vote, whereby lender appetite to take on the greater risk of a 5pc deposit has naturally declined in a time of economic uncertainty. It is this lack of appetite that seems to be preventing first-time buyers from staking their first claim in the housing market.
It is also thought that the drop in first-time buyers will have a further knock-on effect by preventing established homeowners from moving further up the property ladder.
Evolution Money is a non-LTV lender offering secured loans from £1,000 – £20,000 to clients with zero or restricted equity and mortgage arrears. Read more about our loan service and how we can help you today.
Last month, the Bank of England (BoE) lowered interest rates from 0.5% to 0.25%, a record low and the first cut since 2009. Mark Carney, Governor of the Bank of England, explained that the decision is a pre-emptive measure for the sluggish economic growth forecasted over the next few years.
This forecast is largely due to the inevitable “regime change” that’s expected following the UK’s exit from the EU earlier this year. Until policymakers successfully define a new relationship with EU countries – particularly on the movement of goods, services, people and capital – the future of the economy is open to debate.
Mark Carney (right) approved the decision to cut interest rates to 0.25% in August
Lower interest rates explained
Simply put, a cut in interest rates aims to get people spending. The overall cost of borrowing for both commercial banks and the general public is less, which encourages both people and businesses to save less and invest more.
For homeowners it could mean lower mortgage repayments – some predict as much as £22 a month cut in their average monthly bill – depending on their type of mortgage. This affords homeowners more disposable income which should give them more confidence to spend.
For savers, a cut in interest rates is generally considered bad news because they will see a worsened rate of return on their savings. The demographics that tend to be more keen to save, such as pensioners, are those most likely to be affected by the cut.
A short-term hiccup?
Given the BoE’s recent forecast for diminishing growth, many people are asking whether the short-term impact of Brexit will lead to another UK recession – defined as two consecutive negative quarters of economic growth.
Carney and other leading economic advisors say this is unlikely, and remain optimistic that the post-Brexit shock we’ve seen in the previous quarter will soon give way to a return in confidence.
The decision to cut interest rates to 0.25% is effectively a way to spur this process along a little faster. There’s even scope for the Bank Rate to drop even further, to 0%, by the turn of next year.
Evolution Money is a non-LTV lender offering secured loans from £1,000 – £20,000 to clients with zero or restricted equity and mortgage arrears. Read more about our loan service and how we can help you today.
House prices in the UK have continued to follow the trend of recent months, falling in August by 0.2% overall. This follows a sizable drop in July of 1.1%, which means that the average UK house price now sits at £213,930.
The figures, released by banking giant Halifax, clearly show that activity in the housing market has dropped off since the early months of the year. This news follows a survey by the Royal Institution of Chartered Surveyors (Rics) last month that revealed a record low number of homes listed on the market, and the lowest quarterly growth since December 2014.
The post-Brexit factor
Confidence in the housing market was widely expected to wane following the Brexit referendum, with many buyers and sellers deterred from entering the market altogether.
This, coupled with increasing prices in the early months of 2016, has caused the drop off in sales that we are now seeing. And as both demand and supply for houses drops, so does the average market price.
The below chart shows the decrease in annual house price growth between June and August:
The impact for house buyers and sellers
If you’re considering buying a house as the market reaches a ‘low point’ be mindful that, although you may be more likely to find a bargain, your options are bound to be far more limited than at other points in the year.
On the other hand, homeowners looking to sell are likely to prefer to wait until the market price picks up before listing their property on the market.
Always remember to take seasonality into account. As a rule of thumb, spring is usually the most active month for buyers and sellers in the housing market; whereas summer and winter are comparatively quiet.
A downturn during July and August isn’t all that surprising during the ‘holiday’ months, and we’d expect the appetite for buying homes to pick up for a month or two as we enter autumn. The revived demand in September and October tends to be caused by buyers who are in a rush to move into a new home prior to the festive season. However, there tends to be very little activity between October and January.
The longer term forecast
Despite the current downturn, housing experts say that confidence in the housing market will gradually return following the initial post-Brexit shock. Some also maintain that a long term increase in prices is on the horizon – a 3.3% increase over the next five years according to Rics.
Evolution Money is a non-LTV lender offering secured loans from £1,000 – £20,000 to clients with zero or restricted equity and mortgage arrears. Read more about our loan service and how we can help you today.
Evolution Money are celebrating today after successfully being named, for an impressive second year running, Best Second Charge Mortgage Lender in this year’s coveted Financial Reporter Awards 2016
Rhian Roberts, Head of Evolution Money Broker Division commented:
“Another outstanding accolade for the Evolution Money team, along with recently becoming fully authorised by the FCA, 2016 has started on a very positive footing and this award further establishes our position in the market. Thanks again to all our partners who voted”
The awards honors industry leaders, and professional movers and shakers from across the lending arena, while recognising the respect and esteem Evolution Money has within the sector. Votes are gathered from industry peers and professionals directly, and not a panel of judges.
After five years, Evolution Money continues to stand-out as a market leader. Receiving full authorisation from the FCA in March, having a talented, experienced Business Development team in place and launching a brand new corporate customer focused website, illustrates the company’s ongoing success and strength as a key player in the second charge sector. In addition, providing a great end-to-end customer journey is paramount to the company’s ethos and respected business approach.
The winners’ presentation ceremony will take place on 17th May 2016, at Manchester Museum of Science & Industry. Attended by this year’s victors, runner-ups and industry professionals, the event should prove to be a celebratory affair.
For a full list of all the winners please go to www.financialreporter.co.uk/awards/winners-2016/
If you would like more information about this topic, Evolution Money Limited, please contact Nicola Pilling on 0161 814 8918 or email at [email protected].
Manchester based lending specialist Darwin Loan Solutions, has today announced, all of the companies within the group have received their own full authorisation from the FCA.
Evolution Lending, Evolution Money and Progressive Money are delighted that full authorisation was received in such a short time, and expressed thanks to all their staff and colleagues who worked together in achieving this, along with demonstrating the organisational values that support great consumer outcomes.
The announcement follows the implementation of MCD this week, and recognises that providing a great end-to-end customer journey is paramount across the company’s ethos and respected business approach.
Mat Beaver, Managing Director commented;
“We understand authorisation is just the start of an ongoing expectation and we are committed to the development of all staff within the business in order to support a great culture and achieve regulatory conformance. Therefore a significant percentage of customer facing staff are already on their way to CeMap qualification, well-ahead of the required deadline”.
The group continues to be innovative industry leaders by providing niche secured and unsecured loan products to its customers, further cementing its commitment to continued growth, product delivery and customer satisfaction.
If you would like more information about this topic, Darwin Loan Solution Limited or Evolution Money Limited, please contact Nicola Pilling at 0161 814 8918 or email at [email protected].
First time buyers in some parts of the country will have to save for at least ten years if they are to afford the deposit for a home. Single people and those with young families find it particularly hard, says Shelter, the housing charity.
The high cost of living, static wages and rising house prices mean that childless couples must save for six and a half years in order to accumulate a 20 per cent deposit for their first home in England, and single people, 13 years. Even though wages are generally higher in the south east and in London, so too are rents, which means that it takes first time buyers longer to build sufficient funds for a deposit.
According to new research by Shelter, a couple living in London with a joint income of £53,384 will take 13 and a half years to save for a deposit on a home. Couples living in Windsor, Brighton, Maidenhead, Devon, Surrey and Oxfordshire will also have to save for more than ten years.
Couples with young children face an even longer struggle. Shelter says that when one parent works part-time, it takes 12 years to save enough for a deposit in England. For young families living in London, it would take 26 years. Single Londoners might find themselves saving for 29 years, to be able to afford a 20 per cent deposit.
The research for Shelter was undertaken by Liverpool Economics, which took into account house prices, wages and rents. Shelter’s CEO, Campbell Robb, said that home ownership is no longer affordable for many first time buyers and is now just a fantasy.
Buyers who succeed in raising a deposit of 20 per cent will find it easier to get mortgages at lower rates of interest. However, many mortgage companies do offer mortgages for buyers who can raise only a 5 per cent deposit.
Deciding which type of loan is the best depends entirely on your own circumstances as neither of these loan options is the best choice every time.
Secured loans are usually secured against a property; these loans are more attractive to those who are finding it difficult to borrow the amount they need through an unsecured loan. Secured loans could be a more viable option for those who have poor credit, need more money or who want to borrow over a longer period of time. Unsecured loans are becoming harder to get, and are only really suitable to those with good credit ratings to ensure a lower interest rate.
Use the below comparison table as a guide only for differences between the two loan types:
| Secured Loan | Unsecured Loan | |
| Can I get a get a loan with a poor credit history? | Yes | Yes |
| Can I borrow a large amount (i.e. £15,000)? | Yes | Yes |
| Can I make payments over a longer period of time (i.e. 10 yrs)? | Yes | No |
| Can I get a loan without owning an asset? | No | Yes |
| Is the loan cheaper than using payday loans and store cards? | Yes | Yes |
| Do you offer the lowest interest rate? * | Yes | No |
| If I can’t repay my loan is my home at risk? | Yes | No |
If you are not a homeowner then a secured loan through Evolution Money would not be an available option for you. In which case, if you desire a loan then you will need to have a good credit rating to ensure that you are offered a favourable interest rate with an unsecured loan lender.
If a secured loan sounds like an option for you or to find out more about getting a secured loan through Evolution Money. If you would like to see how affordable a secured loan is why not try our handy loan calculator?
* Interest rates are usually determined by the loan amount, loan term and ability to repay. Unsecured loans typically carry a higher interest rates than secured loans as the lender will be wary that the loan being lent is not secured against any assets should you default on the loan.
Home improvements can scale from a complete demolition of walls and extreme renovation, to the smaller less demanding task of redecorating the spare bedroom. Whatever level of improvements you want to make around your home rest assured that a home improvement loan through Evolution Money can help.
Here are just some of the ways our home improvement loans have helped our customers:
New Bathroom
Improving the bathroom is one of the easiest ways to improve your home. Bathrooms can quickly look outdated and a major bathroom re-fit can cost into the thousands of pounds. Nevertheless, if you want to update the current look and feel then a new stylish bathroom suite could be found for as little as £400.
New Kitchen
The kitchen is the heart of the home and often plays an integral part in the valuation the house. So, whether you are looking to make large changes and invest in some new cupboard units, appliances and work surfaces or you just want to spruce the kitchen up with some new fancy taps, cupboard handles and plug sockets. A home improvement loan through Evolution Money can give you the help you need to get the work started.
Going green
If you’re interested in ‘going green’ and making savings on your water and energy bills then a home improvement loan could be right for you. Our loans are used for various sustainable initiatives – whether you’re wanting to install solar panels to your roof, double glazed windows or just looking for ways to conserve the water you use, Evolution Money can help.
Adding a Conservatory
Conservatories are well sought after as they can well extend your summer living into the winter months. Obviously not all houses can accommodate a conservatory, but those that can offer themselves a great opportunity to get the most from their homes. However be sure to shop around for quotes and design options before making your decision.
Converting the loft
Choosing to expand the home upwards with a loft conversion offers homeowners an extra bedroom for growing families and can be a great return on your investment in the long run. Not all homes can accommodate a loft conversion, but if you’ve got the space it can be a great way to add extra value to your home.
Open plan
For many people the idea of an open plan home offers living arrangements a sense of space and light. Obviously you’ll need to seek professional advice before you undertake a project of this magnitude and start knocking walls down.
Have a look at our home improvement infographic on other ways to add value to your home, make savings and even how it could make you money. With loans available from £1,000 to £20,000 getting a Home Improvement loan whatever your plans has never been more appealing. Why not see how affordable our loans are with our handy loan calculator.
Loans being used for home improvements are becoming increasingly common, with many people choosing to improve the quality of life at home and add value to their property in the process. Have a look at our infographic on ways you can improve you home, add value and make savings in the process.
Getting a home improvement loan through Evolution Money couldn’t be easier
To find out if a home improvement loan through Evolution Money is right for you, why not use our handy loan calculator to see just how affordable our loans are. Or pick up the phone and call 0800 781 4095 to talk to one of our friendly specialist loan advisors who can walk you through every step of the loan process. We will complete a review of your circumstances to ensure that you can make the repayments on the loan before we agree to lend you money for your home improvements.
If you want to know if you could get a loan through Evolution Money then have a look at our criteria.
Expert help
Here at Evolution Money loans are always personal. Our experience means we understand what you may have gone through, and the difficulties that can be faced when trying to obtain a new loan with a less than perfect credit history. You may be worried you have no options, yet we’re confident we can find you the loan you want where other companies can’t, whatever your circumstances.
We pride ourselves on providing excellent customer service – we believe you’re entitled to a clear and up-front loan application process, so that’s exactly what we’ll deliver. All of this is supported by our membership of the Consumer Credit Trade Association – which means we follow their Code of Practice to provide the very highest standards of service to all of our customers.
You can call us directly and talk to one of our Loan Specialists and with home improvement loans ranging from £1,000 to £20,000 there really could be a loan available to help you make those changes around the home.
There are several common financial myths that carry on circulating, despite being misleading. It makes good sense to get up to speed on the most common of these so that you can get the most out of your financial planning.
Common Myth 1: Lending decisions are decided by credit reference agencies
The purpose of a credit reference agency is to put together and store your credit report safely. They do not make lending decisions; they are simply providers of your credit footprint. The lenders are the ones who will ultimately decide whether to proceed, and they do this based on several different criteria — not exclusively your credit rating score.
Common Myth 2: Past debts don’t follow you
Sadly, for many of us debts accrued in the past do count. If you have any IVAs (Individual Voluntary Arrangements), non-payment of debts or bankruptcies to your name from the past six years, these will show upon your credit history. Even something as seemingly innocuous as a missed repayment on a credit or store card can affect your rating, as there may be a red flag for unreliability, something that most lenders are very wary of. After six years, though, the slate will generally be wiped clean as far as your new lender is concerned, as a historic debt is not necessarily relevant to your current ability to repay a loan.
Common Myth 3: If you’ve borrowing for the first time, you’ll get a better deal
If you are borrowing for the first time, the lender will have no basis on which to predict your future reliability. This can in some cases be a basis for them to turn you down. Many lenders will be reassured, though, with some proof of good financial management in some form. Many people worry that if they are self-employed they will struggle to find a lender. In reality, there are several companies out there who will take your individual circumstances into account and will happily offer a self-employed loan.
Common Myth 4: Credit ‘blacklists’ exist
There is actually no such thing as a credit blacklist, and your gender, ethnic origin and religion are all entirely irrelevant to your credit rating. Many lenders will require an accurate picture of your current financial circumstances — how much you owe in total and your repayment history to date. A responsible lender will want to ensure that you are not taking on a financial burden that you will not be able to manage.
Common Myth 5: Others living under the same roof can affect your credit rating
Friends and family that you live with will not affect your credit unless you share a financial connection such as a jointly held mortgage, for example. Living with someone is not the same as having this connection.
Common Myth 6: If you repay your credit cards in full, your credit score will lower
This is just not true. In reality, you’re actually likely to get an improved credit score, as it is evidence both that you are able to manage your borrowing and can afford it. A lower score will come as a result of always making the minimum repayment, missing repayments or borrowing up to the very top of your credit limit.
Common Myth 7: It’s irrelevant how many credit accounts you have
Lenders need to be certain that you are able to afford additional credit, so they will look on an application more favourably if you don’t already owe significant sums across several accounts. They may also give preference to applications from customers who do not rely heavily on their current credit agreements. Ideally, you should aim to keep your borrowing on credit cards to under 25% of your limits.
Representative 22.93% APRC variable.
For a typical loan of £26,600 over 180 months with a variable interest rate of 19.56% per annum, your monthly repayments would be £484.00. This includes a Product Fee of £2,660.00 (10% of the loan amount) and a Lending Fee* of £763.00, bringing the total repayable amount to £87,030.00. Annual Interest Rates range between 11.7% to 46.5% (variable). Maximum 50.00% APRC. *Lending Fee varies by country: England & Wales £763, Scotland £1,051, Northern Ireland: £1,736.
Think carefully before securing debts against your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
