NatWest provides help for first-time buyers

ermalink: NatWest provides help for first-time buyers

by Kay Murchie

A new savings account has been introduced by NatWest which is aimed at those saving a deposit to get onto the property ladder.

The First Home Saver Account offers a tax-free cashback of up to £5,000 upon completion of a NatWest mortgage.

The account can be opened with a minimum of £100 and under the terms, customers must make at least one regular monthly payment of at least £50 by standing order. However, additional deposits can be made whenever they want.

The final amount however depends on how much the customer has saved. This combination is equal to earning just under 20% AER on their savings, according to NatWest.

Customers must take their mortgage with NatWest and have the account open for at least 6 months.

A recent study by currency specialist, FC Exchange, has revealed that first-time buyers from the UK are increasingly considering investing abroad.

First-time buyers see the overseas property market as representing more opportunity for growth and better value for money, according to FC Exchange.

Cheltenham & Gloucester withdraws entire mortgage range

Permalink: Cheltenham & Gloucester withdraws entire mortgage range
by Kay Murchie

One of Britain’s biggest mortgage lenders, Cheltenham & Gloucester (C&G), has withdrawn its entire mortgage range.

C&G gave little notice and announced yesterday from close of business today, Monday May 19, we will be withdrawing and replacing our entire range of mortgage products.

C&G warned that when it does re-introduce its mortgage range, new deals will be more expensive.

Like many of its rivals, C&G has reduced its offerings and last week, withdrew a 5.89% buy-to-let mortgage and replaced it with a 6.29% 5-year fixed rate.

A recent report by Moneyfacts revealed that there are now 3,847 mortgage products available (including residential, sub-prime and buy to let), compared to 4,054 a month ago and 15,599 in July 2007.

Yesterday, however, internet bank first direct announced it will resume selling mortgages again to new customers and said it could now handle new applications.

On April 1, the bank withdrew all its mortgage products as it tried to clear a backlog of customer applications.

Commercial property could lose one third of value

Permalink: Commercial property could lose one third of value
by Lin Freestone

Several leading analysts in the commercial property industry agree that, by the end of 2008, commercial property will have lost 30% of its value. Prices have dropped by an estimated 20% at this stage in the year, and an additional 10% fall is a not unrealistic prediction.

Offices and shopping centres that have tenants on short-term leases are particularly susceptible to a decline in value, as they cannot provide a guaranteed income stream for the property’s owner for the next few years.

Companies are taking advantage of the current state of the market. Rom Capital, founded in 2001 to specialise in the acquisition and active asset management of property companies and portfolios, has established a £400m vulture fund to take advantage of low property prices.

Last week it bought Broadwalk Retail Park in Walsall, from the CB Richard Ellis pension fund, for £22.5m. This was a saving of £6.5m, or 22.4% on its initial sale price.

It is predicted that the continuing slide in values will not pick up until the fourth quarter of next year.

Land Securities, the UK’s biggest listed property group, announced last week that it was wiping £1.3bn off its real estate portfolio. This represented an 8.8% fall to £13.6bn. The group revealed a pre-tax loss of £888.8m, against a pre-tax profit of nearly £2bn last year.

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Demand for new homes slump

According to the Office for National Statistics (ONS), demand for private new-build residential property fell sharply during the first 3 months of the year.

When compared to the last quarter of 2007, demand for new homes was down 27%, and was down 36% when compared to the same period last year.

Furthermore, demand for new construction fell from 8.3 million in the last quarter of 2007 to 7.7 million during the first quarter of 2008.

The news follows announcements from several housebuilders who are suffering as a result of the fall in property prices.

Last week, housebuilder Persimmon announced it is to stop building on new sites until market conditions improve, which could result in tens of thousands of job losses.

Persimmon said sales in the first four months of 2008 had declined 24%.

Traditionally, April is the busiest time for housebuilders but Persimmon said that in the last 3 weeks it had experienced lower sales volumes and increased cancellation rates.

Furthermore, Taylor Wimpey, the UK’s largest housebuilder, warned that the fall in property prices is turning into a disaster for housebuilders.

Last week, Taylor Wimpey said it is being hit by a 26% collapse in business – a much sharper fall than estimated at its last market update six weeks ago.

Worldwide credit crunch will hit homeowners the hardest

Jim O’Neill, chief economist at Goldman Sachs, has warned that UK homeowners will suffer the most as Britain takes the biggest hit of the worldwide credit crisis.

Out of all the world’s economies, Britain is likely to be the worst affected. According to Mr O’Neill, the UK has a heavy reliance on financial services and was in the eye of the storm of a deleveraging world economy.

Mr O‘Neill, who is renowned for making far-sighted calls, warned that the ensuing slowdown will be passed on to homeowners.

The news comes as the Nationwide said that UK property prices are lower than they were a year ago.

Prices dropped by 1.1% in April, the sixth consecutive monthly fall, and were down 1% from the levels seen compared with April last year according to the Nationwide. The fall represented the first for over a decade.

Last year, Mr O’Neill predicted the collapse of the US property market which subsequently sparked the sub-prime mortgage crisis. Mr O’Neill said the UK mortgage market is effectively frozen.

He added that house prices are going to go through negative changes and it’s going to be a challenge for UK policymakers.

Goldman Sachs is forecasting that the UK economy will slow to an annual rate of growth of 1.8% this year and in 2009, down from 3% in 2007.