Podcast Summary
Difficulty for First Time Buyers in Securing Mortgages: First time buyers face challenges in obtaining mortgages due to limited availability of low deposit options, potentially leading to a mortgage credit crunch.
First time buyers are facing a tougher time getting onto the property market due to the removal of low deposit mortgages by some lenders like Nationwide and TSB. This is making it more difficult for first time buyers to secure a mortgage, as they are seen as riskier borrowers. The limited availability of these mortgages is causing a competitive market, with some lenders like HSBC offering them in a raffle-style system. This could potentially trigger a mortgage credit crunch, as it limits the availability of credit for first time buyers who have historically helped drive up house prices. It's important for first time buyers to explore alternative options like family member deals or help to buy schemes. Overall, the property market is seeing a shift, and it's essential for buyers to stay informed and adapt to the changing landscape.
Mortgage market sees restrictions for smaller deposits: Banks have become more cautious due to the pandemic, leading to fewer mortgage options for those with smaller deposits, potentially impacting home movers and remortgagers, and raising concerns for a widening gap in mortgage rates
The mortgage market has seen significant restrictions in recent months, with a large percentage of deals being axed for those with smaller deposits. This is a change from the credit boom of recent years where banks were eager to lend, leading to longer mortgage terms and more lenient affordability tests. However, following the economic downturn caused by the coronavirus pandemic, banks have become more cautious, leading to fewer mortgage options for those with smaller deposits. This could impact those looking to move home, as well as those looking to remortgage. The long-term implications are uncertain, but it is clear that the systems and checks put in place by the banks and Financial Conduct Authority in response to the last financial crisis are being tested in new and unprecedented ways. This situation is different from the last credit crunch, but the potential for a widening gap between mortgage rates for large and small deposits remains a concern.
Affordability checks during economic downturn: Economic downturn may weaken affordability checks, longer mortgage terms increase risk, understand mortgage options and long-term goals
While affordability checks imposed on banks and building societies through stress tests are intended to protect homebuyers from mortgage payments they cannot afford if interest rates rise, the current economic situation with widespread income loss due to furloughs and job losses may render these checks less effective. Additionally, the trend of longer mortgage terms, such as 35 or 40-year mortgages, may put borrowers at risk of financial strain in the future. Unlike during the financial crisis, the government has not mandated mortgage holidays, but instead encouraged forbearance from lenders. It's important for borrowers to understand their mortgage options, including the difference between repayment and interest-only mortgages, and to consider their long-term financial goals and ability to make payments as they plan for homeownership.
Pandemic's Impact on Housing Market: Challenges for First-Time Buyers and Demand for Rural Homes: The pandemic has led to challenges for first-time buyers in securing mortgages, causing a potential bottleneck effect. Simultaneously, there's a surge in demand for larger homes in the countryside, resulting in optimistic sellers and increasing asking prices.
The current housing market is experiencing some significant shifts due to the pandemic. First-time buyers are facing challenges in securing mortgages, leading to a potential bottleneck effect on the rest of the market. Simultaneously, there's a surge in demand for larger homes in the countryside as city dwellers seek more space. These trends have resulted in sellers being optimistic, with asking prices increasing and a high number of offers being accepted above the average. However, the long-term implications of these developments remain uncertain, and it's crucial to monitor how the situation evolves as the economy adjusts to the new normal.
Increased demand for larger homes with gardens during lockdown: The lockdown and good weather have boosted demand for larger homes with gardens, causing price increases. However, property values are determined by buyers' willingness to pay, and local data and sold prices are crucial for informed decisions.
The lockdown and the good weather have led to an increased demand for larger homes, particularly those with gardens, as more people consider working from home long-term. This trend is driving up prices for such properties, but it's important to note that property values are ultimately determined by what buyers are willing to pay. The current uncertainty makes it challenging to gauge the property market on a larger scale, and it's essential to look at local data and previous sold prices to make informed decisions. Estate agents, who are naturally optimistic, should be taken with a grain of salt when it comes to their reports on the property market.
Best-ever week for property sales but uncertainty remains: The UK property market has shown signs of resilience with record sales, but uncertainty remains due to challenges in securing mortgages and completing sales during the pandemic.
The UK property market, despite a challenging start to the year due to the pandemic, has shown signs of resilience. Knight Frank reported its best-ever week for agreed sales, but this is not representative of the market as a whole. Rightmove reported an increase in asking prices, which is expected due to seasonal effects. However, the number of sales agreed since the market reopened is 36% lower than the same period last year. This discrepancy between the number of agreed sales and the usual completion rate raises concerns about the stability of the market. Sellers are still aiming for high prices, but buyers are facing challenges securing mortgages and completing sales due to the pandemic. The property market's unique dynamics, such as sellers setting prices and the seasonal effect, make it challenging to predict. While things are looking better than expected now, uncertainty remains about how the market will look in the coming months.
Economic Recovery and Property Market Debate: Signs of consumer spending and saving during lockdowns contrast with struggling savings market and low long-term interest rates, indicating a complex and uncertain economic recovery with both positive and negative signs
The economic impact of the pandemic is still uncertain, with some signs pointing towards a "V-shaped recovery" and others suggesting a more prolonged downturn. The property market, in particular, has been a topic of debate, with some seeing it as a sign of an impending economic rebound and others as a potential warning sign. Despite widespread furloughs, redundancies, and economic decline, there are signs that consumers are continuing to spend and even save money during the lockdowns. Some experts believe that this could lead to a burst of spending and even hedonism once the restrictions are lifted. However, the savings market has been hit hard in recent months, with inflation at record lows and savings accounts offering little return. Long-term interest rates remain low, making it difficult for savers to keep up with inflation. Despite some green shoots in the savings market, it is unlikely that many accounts will offer returns that beat inflation in the next year. Overall, the economic picture is complex and uncertain, with both positive and negative signs emerging. It remains to be seen which way the economy will ultimately go, and how the various sectors will fare in the months and years to come.
Savings market faces challenges with declining interest rates: Despite low rates, having a savings account is crucial for financial security. Prioritize setting aside funds, even if returns are minimal.
The savings market is experiencing a significant decline in interest rates, making it increasingly challenging for savers to find accounts that keep pace with inflation. Easy access accounts, including those from once-popular providers like Marcus Bank, are disappearing at an alarming rate as more money floods in. Top providers like National Savings and Investment are currently leading the charts, but even they may not be immune to this trend. The best rate for a cash ISA is currently just 0.65%, and even longer-term fixed rates are offering smaller returns than in the past. With inflation currently at 1.7%, many savings accounts are no longer able to protect savers' purchasing power. Despite these challenges, it's more important than ever to have a rainy day fund to cover unexpected expenses, such as job loss or unexpected repairs. Even with low rates, having a savings account can provide peace of mind and financial security. For those who can save, it's essential to prioritize setting aside funds, no matter the rate of return.
Unexpected savings from coronavirus lead to surge in hot tub sales: Amidst economic uncertainty, consider saving unexpected funds for emergencies or future downturns, and be cautious of scams during hot tub purchases.
The coronavirus outbreak has led many people to save money they would have otherwise spent on travel, holidays, and socializing. This unexpected windfall has resulted in a surge in sales of expensive items like hot tubs, which have seen a 1000% increase on eBay. However, not everyone is in a position to make such purchases. Some people have lost their jobs and are struggling financially. It's essential to be aware of increased scams related to hot tub sales and to only deal with reputable companies. The future remains uncertain, and it's wise to consider saving any extra cash for emergencies or potential economic downturns. The conversation also touched on the idea that people might be opting for home improvements and other treats instead of traditional vacations. Overall, the discussion emphasized the importance of being financially prepared and making the most of unexpected circumstances.
Hot tub sales surge during pandemic: People have been investing in hot tubs to enhance their home experience and create a staycation-like atmosphere during lockdowns.
Due to the pandemic and lockdown restrictions, many people in Britain have been unable to go on holidays or spend their travel budgets. Instead, they have turned to home improvements, specifically hot tub purchases, as a way to enhance their home experience. Hot tub sales have significantly increased, with people investing in these luxurious items to create a staycation-like atmosphere in their gardens. The popularity of hot tubs has even led to shortages of other expensive garden appliances like pizza ovens. Despite some criticism and nuisance concerns, hot tubs have become a popular trend during the pandemic, offering a form of relaxation and enjoyment for those stuck at home.
Hot tub scams on the rise during lockdown: Be cautious when purchasing hot tubs or other items online due to a surge in scams, and consider waiting for long delivery times.
With the increase in people looking to make home improvements and purchases during the lockdown, such as hot tubs, there has also been a surge in scams. Scams involving hot tubs have seen a 400% rise according to NatWest. People are being tricked into transferring money for hot tubs that never arrive. Similar scams are happening with other items like Nintendo Switches and Pedigree pets. It's important to be cautious and not rush into making a purchase or transferring money to someone outside of a reputable website. Treat it as you would any other big purchase. Companies are reporting long wait times for hot tubs, so it may not be the best time to buy one depending on the setup of your home. Stay informed with the latest money news by visiting thisismoney.co.uk or downloading the app. If you have any comments or questions related to hot tubs or any other topic, you can email editor@thisismoney.co.uk or tweet @thisismoney. And if you enjoy our podcast, please rate us on Itunes to help others find us.
