Housebuilding Target Will be MissedA new report says the government will not reach target of building 240,000 homes a year by relying purely on the private sector. The report, compiled by the House of Lords' National Policy for the Built Environment Committee, says more power should be given to local authorities and housing associations to help pick up any slack in the planned 1m new-builds by 2020. The report also questions the affordability of new houses, stating that they won't be affordable in five years, therefore undermining their description as 'affordable'.
Source: City AM
Mortgages tumbling to 1%Mortgages are already as low as 1.5pc for a two-year fixed deal, but have space to go lower. This potential is in part a response to a poor-performing saving mechanism called a gilt. Gilts are extremely secure government issued bonds to savers, earning the name from 'gilt-edged' - they are guaranteed a return from the investment. However, gilts are currently giving low yields. These low yields help dictate the 'average' interest rate across different banks, which in turn affects how much it costs for mortgage lenders to get funding. Therefore, if the Gilt bonds give a low yield, it costs less to lend, so the public get cheaper loans, possibly as low as just 1pc for borrowers. Ray Boulger, of independent mortgage consultant John Charcol, said: 'Gilt yields are falling so fast that mortgage lenders are currently behind the curve with their fixed-rate pricing, leaving scope for some significant cuts on fixed rates.
Discounted Starter Homes won't helpThe guideline pricing to starter homes around the country will not be low enough to help those most in need of support to get on the property ladder. People who need affordable housing are defined as those who would spend 30pc of their household income on rent or purchasing. The Local Government Association says that the offered 20pc discounts would make it possible to borrow enough in just 45pc of council areas in England, mostly in the North East, North West and east Midlands.
Source: The Guardian
Under 35s will be 'Permanent Renters' within a decadeA government think-tank claims that those under 35 are going to be unable to purchase houses in their lifetime. The Resolution Foundation said that nine out of 10 low-and-middle income households will be the first generation that is permanently priced out of the housing market. It goes on to say that homeownership is increasingly for the well-off and the elderly. In 1998, over 50pc of 16-34 households were buying their own homes. Today, just 25pc are, with a forecasted 10pc by 2025, and just 5pc in London.
Source: The Guardian