Wharf Weekly Newsletter 13.06.24

Wharf Wins Highly Commended Commercial Broker of the Year at The Bridging & Commercial Awards 2024!

Brickflow partners with capital stack platform

Brickflow has announced a partnership with Deallocker, another specialist property finance marketplace, to offer borrowers and investors funding across the entire capital stack. The partnership will enable NACFB Member brokers to secure senior terms on the Brickflow platform, before seamlessly using Deallocker to secure any second charge or equity requirements for clients. Frazer Campbell, chief revenue officer, at the NACFB Partner, said: “This partnership has the potential to revolutionise the funding process for commercial property deals." The 'capital stack' is a term used to refer to the total capital invested in a property development project. Making up the largest section, typically, senior debt is at the bottom of the stack, followed by mezzanine debt, with equity at the top. Brickflow, Press Release

UK Economy

UK construction SMEs face challenges in growth

UK construction SMEs are ambitious to grow, but are held back by the impact of inflation, supply chain challenges, and reduced access to capital, according to a survey by Bibby Financial Services. The survey found that 58% of construction SMEs are optimistic that orders will increase in 2025. Construction SMEs are most inclined to spend despite the uncertain economic environment. Inflation and supply chain pressures have hit construction hard, with 56% of construction SMEs identifying inflation as a key challenge. Supply chain disruption has been particularly painful for construction SME owners, with 42% citing it as a top factor impacting their business. Access to external finance remains a hurdle, as 53% of construction SMEs said it’s more difficult to access external finance than it was six months prior. Business Money Magazine

CBI: UK economy is 'picking up steam'

The UK economy is “picking up steam” as households start to feel better off, according to a new forecast from the Confederation of British Industry (CBI). The CBI has upgraded its GDP growth forecast for this year from 0.8% to 1% and for next year from 1.6% to 1.9%, nearing pre-pandemic levels. Falling inflation is expected to lead to a Bank of England interest rate cut in August, but the CBI stressed the need to do more to achieve sustainable growth. CBI lead economist Alpesh Paleja said: “On the cost of living, yes inflation is getting back to target and that's very positive but the level of prices is still quite high.” Daily Mail

ECB cuts interest rates for first time in 5 years

The European Central Bank has cut interest rates by a quarter-point cut to 3.75% - the first cut in nearly five years. However, the central bank warned that inflation remained challenging and another rate cut at its next meeting in July seemed unlikely. The ECB now believes inflation will average 2.5% this year, up from 2.3% in its last forecast in March. Yael Selfin, chief economist at KPMG, said the ECB was right to take a cautious approach. Ms Selfin added: “ECB officials have stressed that the rate cut should not be interpreted as a declaration of victory on inflation.” Financial Times The Daily Telegraph The Times

Brokers optimistic about UK economy but wary of own prospects

Close Brothers Broker Solutions' research reveals commercial brokers are more confident about the UK economy than their own businesses. Despite this, staff recruitment is strong, and few saw a decline in income over the past year. The Censuswide survey of 500 brokers commissioned by the NACFB Patron showed 50% are confident in economic growth, compared to 46% of UK SMEs. However, only 23% of brokers expect business expansion, versus 40% of SMEs. Interestingly, 58% of brokers reported income increases, while 75% recruited new staff. Richard Cameron, managing director of Close Brothers Broker Solutions, noted: “Despite caution about the future, brokers have had a solid year in terms of income.” Close Brothers Broker Solutions, Press Release

Property News

First-timers take longer to get on the ladder

Analysis from Santander shows that almost one in five first-time buyers are 40 or over, with the rising cost of properties and mortgages meaning that those getting onto the property ladder have to save for longer. Graham Sellar from Santander said: "With the average age of first-time buyers increasing in the past decade, more are reaching other life milestones, such as having children first.” Mark Harris from the mortgage broker SPF Private Clients said: "Many first-time buyers have children because not every life decision can be put on hold.” Meanwhile, Data from banking trade body UK Finance shows that the number of first-time buyers fell 22.4% to 287,430 last year, the lowest since 2013. In 2004, the age at which the majority of people owned their own home was 32 but by 2022, the latest year for which official data is available, it had risen to 36. The average price of a property bought by a first-time buyer has risen 50% since 2015, according to the mortgage platform Twenty7tec. In June 2015 a typical first-time buyer borrowed ￡150,923 to buy an average first home worth ￡193,728. In May 2024, the average loan for a first-time buyer was ￡221,792 and the average first property cost ￡289,207. The Sunday Times

Stamp duty to be abolished for first-time buyers up to ￡425,000 – Tories

The Conservative manifesto will pledge to scrap stamp duty for first-time buyers on properties worth up to ￡425,000 as the Tories position themselves as the party of home ownership. The move will benefit around 200,000 households annually. The policy makes permanent a lift in the threshold introduced temporarily by Liz Truss and which is due to expire in March 2025. Based on previous Treasury estimates of similar moves the policy could cost ￡1bn a year. The move by the Tories comes after Labour unveiled its housing plan, including pledging priority for locals when developers sell homes and making the mortgage guarantee scheme permanent. The Daily Telegraph

UK house prices dip slightly in May

The average UK house price dipped slightly by 0.1% month-on-month, according to Halifax's House Price Index. The typical property value now stands at ￡288,688, marking a 1.5% increase compared to last year. Amanda Bryden, head of mortgages at Halifax, commented: "Market activity remained resilient throughout the spring months, supported by strong nominal wage growth and some evidence of an improvement in confidence about the economic outlook." Daily Mirror Evening Standard

Average mortgage ‘shelf-life’ has halved

With rates on home loans rising, analysis by Moneyfacts shows that the average “shelf-life” of a UK mortgage has nearly halved in a month. While at the start of May the average mortgage spent 28 days on the market, by the start of June the average had fallen to just 15 days. While deals are typically spending less time on the market, the number of products available has hit the highest level in more than 16 years. Moneyfacts data shows that there were 6,629 deals available at the start of June, the highest figure since the 6,760 recorded in February 2008. The report also shows that the overall average two and five-year fixed mortgage rates rose between the start of May and the start of June, to 5.93% and 5.50%, respectively. City AM

Mortgage arrears up in Q1

The number of mortgages in arrears, relative to all outstanding mortgage balances, increased to 1.28% in Q1, according to figures from the Bank of England. This is up from 1.23% in the final quarter of 2023, taking it to the highest proportion since the end of 2016. The value of outstanding mortgage balances with arrears increased by 4.2% quarter-on-quarter, hitting ￡21.3bn. This was 44.5% higher than a year ago. The report shows that cases of new arrears were two percentage points down on the previous quarter, with new arrears representing 11.4% of the total outstanding balance of late mortgages. The Times City AM

Foundation Home Loans launches new product

Foundation Home Loans has launched a new Limited Edition buy-to-let product with a five-year fixed-rate. The product is available for individual, portfolio, and first-time landlords, for both purchase and remortgage activity. It comes with a rental cover ratio of 125% at pay rate for limited companies and basic-rate taxpayers, and 145% at pay rate for higher-rate taxpayers. The launch of this new product follows the refresh of Foundation Home Loans' Core and Special buy-to-let products. Tom Jacob, Director of Product and Marketing at Foundation Home Loans, stated that the new product offers a highly competitive rate and low fee, appealing to advisers and their landlord clients. He also highlighted the demand for rental properties in the UK and the importance of competitive mortgage finance for landlords to secure quality properties and yield. BestAdvice

CHL Mortgages launches new range for landlords

Specialist lender CHL Mortgages has launched a new range for landlords, offering competitive rates and a choice of fee options. The range is open to individual and limited company landlords, with rates starting from 4.32% at 75% loan to value. For landlords looking to invest in houses in multiple occupation or multi-unit freehold blocks with up to six bedrooms or units, rates start at 4.33% at 75% LTV with a 5% fee. CHL Mortgages' commercial director, Ross Turrell, stated that the new range provides more ways for brokers to support their landlord customers, reinforcing the lender's commitment to the intermediary market. Mortgage Strategy

NatWest adjusts buy-to-let rates

From today, NatWest has revised its buy-to-let new business product range. Selected 2- and 5-year purchase deals will see reductions of up to 0.20% and 0.04%, respectively. However, some of the NACFB headline sponsor’s 2- and 5-year deals will increase by 0.08% to 0.20%. In the buy-to-let remortgage range, rates will decrease by up to 0.15% and 0.09% on selected 2- and 5-year deals, while 2-year 60% loan-to-value (LTV) deals will rise by 0.05%. Additionally, 2-year 65% LTV buy-to-let green purchase products will decrease by 0.05%, with some 2- and 5-year deals increasing by 0.08% and 0.20%. NatWest, Press Release