Property ladder-obsessed homeowners could become a thing of the past as a new study reveals almost three quarters of the nation are happy to remain in their current home as a result of the economic downturn.

The research by Aviva shows that 68% of homeowners see their home as an emotional investment, where they seek relaxation and calm, rather than a commodity to make money for the future.

This is a good thing – people are happy to stick where they are and save, rather than using their home to fund lifestyles beyond their means. This also helps people increase their stake in their home, giving them more financial options in the future.

The study reveals a surprising re-assessment of how the nation views its homes in recession-hit Britain 2009: it found that 80% of people considered themselves to be home ‘hoppers’ before the recession while only 26% say the same today.

Dr Paul Keedwell, expert in environmental psychology at Cardiff University says: “A surprisingly large number of people across the UK report having a new-found emotional attachment to their homes. This is probably because of, rather than in spite of, the economic downturn, which has made many of us change from being house hoppers to house stoppers.”

Simon Warsop, director of home at Aviva says: “In a country that has been driven by a property-ladder culture for so many years it is interesting to see that perhaps we are seeing the evolution of a new social trend – one where the home really is where the heart is rather than a commodity to do up and sell on.

“Clearly when the housing market picks up we may see our appetite for house hopping re emerge, but at the moment it seems we are clearly stopping in the place that makes us feel the most safe and secure.”

SOURCE: Aviva, 05/11/09

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People up and down the country are celebrating after Nationwide revealed that house prices have returned to 2008 levels – equity is rising and there is more hope for the home owning nation.

According to the building society’s latest House Price Index, house prices were up 0.9% in September, down from the August rise of 1.4%, but still enough to add another thousand pounds to people’s equity – the average price is up to £161,816, up from £160,224 in August.

But the most important statistics for homeowners is that the annual change, which is the difference between last year’s prices and this year’s, is at 0.0% – prices have returned to 2008 levels. This is great news, and unexpected news.

Martin Gahbauer, Nationwide’s chief economist, says: “The further increase in house prices is very much consistent with improvements in a broad range of economic and financial indicators over the last few months, all of which suggest that the most intense phase of the recession and financial crisis has probably passed.

“However, given that the housing market still faces considerable headwinds in the form of high unemployment, restrictive credit conditions and an impending withdrawal of the stamp duty holiday, it would be surprising to see house prices continuing to increase at the very strong rate seen in recent months.”

We are not out of the woods yet. Although equity has risen, it is still tough for many to use that equity, be it in the form of a secured loan or a new mortgage or remortgage. That means many people may have to sit tight for the next few months. So talk to your mortgage adviser by all means and see what you can do to make your financial life easier over the medium-term, but don’t expect miracles straight away.

Gahbauer says: “Lead indicators, such as mortgage approvals for house purchase, suggest that turnover should continue edging higher over the next few months, but at the current rate of increase it would take another 18 months for it to reach pre-downturn levels.”

SOURCE: Nationwide, 02/10/09

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The Government has set out plans so sale and rent back firms cannot use pressure tactics to try and ensnare people into losing their homes.

The Financial Services Authority, the Government’s watchdog, says exploitative advertising and high-pressure sales techniques by sale and rent back firms will be banned by 2010.

Sale and rent back is the scheme whereby people who simply cannot afford to keep their mortgage sell their property, pay their debts and then rent it back from the firm. The practice has been regulated by the FSA, but it is now making sure no vultures use pressure to get people to sell up.

The new proposals will include giving people a cooling-off period to give consumers more time to make decisions,
banning firms cold calling and prohibiting firms from dropping promotional leaflets through letter boxes.

The FSA will also be prohibiting the use of emotive terms like ‘fast sale’, ‘mortgage rescue’ and ‘cash quickly’ in promotional literature – it wants to make sure people have considered every other avenue before they make such a desperate decision.

Ed Harley, FSA head of mortgage policy, says: “Sale and rent back can be the right solution for some consumers, but many of the people typically targeted are financially vulnerable and have been badly hit by the experience. The FSA’s proposed new rules will help to protect consumers.

“We want to prevent high-pressure and inappropriate sales, and help consumers understand sale and rent back products, so they only enter into sale and rent back where it is an appropriate and sustainable solution for them.”

SOURCE: FSA, 28/09/09

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If you have the right amount of secured equity in your home then you will find it easy to find a great mortgage right now – proving the importance of doing all you can to increase the owning share of your home.

The number of residential mortgages available is slowly increasing, but still the market is dominated by deals for customers with more than a 25% deposit, according to Moneyfacts. It says that in April 2009 the number of mortgages available hit rock bottom at just 1,209, a 90% drop from the peak of 11,951 products available in July 2007. Today there are 1,392 products available – if you have the equity.

Lenders are very much adverse to risk right now – that means if you want a mortgage you have to prove to them that you are not a risk. Today that means having plenty of equity in your home – the smaller the mortgage they have to offer, the less they could lose and the better bet you become.

Moneyfacts says: “Lenders are slowly taking small steps back into the market, albeit with a very cautious approach. The market remains dominated by deals for those borrowers with at least a 25% deposit as lenders look to cherry pick the best customers. Borrowers with just a 10% deposit are finally seeing increased options, but they are still paying a very heavy price for their lack of equity.”

The website says the best deal on offer for a borrower with just a 10% deposit is 2% higher than that available to those with a 40% deposit, adding £170 per month to the cost of a £150,000 mortgage.

So if you want a mortgage, you need to start investing in your home. Talk to a mortgage adviser about overpaying on your mortgage – by paying to much you decrease the size of your loan and immediately make yourself a better bet for another loan.

SOURCE: Moneyfacts, 14/09/09

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