A summary of property industry comments on mortgages, rates, regulation and trends for 2011.

Mortgages

Remortgaging approvals have seen a sharp rise in late 2010, and this is expected to continue during 2011.

Nationwide reports mortgage approvals for first-time buyers is at a 12 year high. However, London FTB's expected to put down at least £50,000 deposit.

Also CML states lenders will have to start repaying around £130bn of emergency loans in 2011. This means that loan to value (LTV) are unlikely to increase and borrowers with small deposits will be unable to proceed with property purchases. This will particularly affect the first time buyer market, which in turn will boost the rental markets' demand from tenants.

- Sources: Daily Telegraph, Nationwide, Halifax, CML.

Increased Buy-to-Let lending

Paragon Mortgage lenders believe that the confidence in the continued buoyancy of the lettings market will see buy-to-let lending increase by 10-15% in 2011.

There is speculation that more lenders will come into the market for buy-to-let as strong demand for the rented sector will increase the confidence of buy-to-let lenders and availability of buy-to-let loans.

Banking

Virgin are rumoured to be opening their own high street bank in 2011 with experts welcoming more competition. - Sources: LSL Property Services, BBC.co.uk

Repossession

Prediction of 40,000 new repossessions in 2011, up from 36,000 in 2010. The governments moves to cut help for borrowers in trouble is a major factor.

- Source: The CML.

Interest Rates CML forecast - Bank of England Base (BoE) rate: Base rates are likely to remain at their current level of 0.5%.

It is anticipated that inflation will be modest and may fall towards the end of next year, which means the BoE could continue its current monetary policy.

Thisismoney forecast: There is no suggestion by markets that the rates will return to 'normal' during the year. The majority of economists have predicted that interest rates will remain as they are until the third quarter. Thisismoney suspects that the first interest rise will be seen in October. However forecasts seem to be changing month by month so this is by no means guaranteed.

Some quarters are not convinced that the base rate will remain at 0.5%: there was a recent statement by The Bank of England Executive Director for Markets, Paul Fisher: "rates need to return to a normalised rate of around 5%".

- Source: Council of Mortgage Lenders, Thisismoney.co.uk

Landlords and buy-to-let

2010 has been a fantastic year for buy-to-let investors, with an increase of buy-to-let mortgage brokers coming into the market.

Notably the return of Paragon has made a big difference to investors, with the company reporting a £71.8m pre-tax profit in September.

House prices have also remained low, meaning that buy-to-let investors could take advantage of London's red-hot rental market which emerged mid-year.

Nearly 50% of directly authorised intermediaries report an increase in buy-to-let enquiries in the last 3 months of 2010 54% of mortgage brokers are 'more confident' about buy-to-let lending in 2011 32% are 'slightly more confident' 14% remain 'unconvinced' that buy-to-let market conditions will improve 15% decline in voids during 2010, saving landlords an estimated 12% in potentially lost income 18% of landlords reported a vacancy period of only four weeks 41% of landlords are planning on increasing their rental prices in 2011, with 45% predicting a further increase in people looking to rent.

-Sources: LSL Property Services, Paragon Group, The Mortgage Alliance (TMA).

Tenancy Changes

House sharing looks set to increase. More households will take a lodger to help pay the bills. The number of renters seeking to share will increase for affordability of household bills.
Paragon Mortgages predicts the market will see more demand for specialist mortgages for Houses of Multiple Occupation (HMO).

Property Legislation

Buy-to-let mortgage regulation: Although there was speculation in early 2010 about FSA regulation, experts widely believe that the FSA will have neither the time nor resources to introduce this in 2011.

London Property prices
The capital has seen the strongest levels of increase: London property values rise £130bn in 2010, or £13.64 per day.

-Source: Zoopla.

Selling property

December 2010 saw a surprise rise in property rise in property prices. Predictions for 2011 are that house sellers will have to drop their asking price by up to 5% to secure a sale.

Simon Rubinsohn, RICS chief economist forecasts: "The lack of supply in the market is likely to prevent significant house price declines in 2011. The narrowing gap between supply and demand will see the gentle downward trend in prices currently taking place at least partly reversed as the year wears on".

At the end of 2010 first-time buyer (FTB) affordability hit a 12 year high with mortgage availability having significantly improved over the last three years. However, low loan to value mortgages are likely to make getting on the housing market unrealistic for many would be first-time buyers.

However mortgages looking to still be under strict rationing according to CML, especially since the banks will have to pay the government back in 2011 for 'rescue lending'.

-Sources: Rightmove, Halifax, Nationwide, Daily Telegraph, RICS, CML.

Fewer trader uppers in the sales market

The property equity gains of yesteryears gave many households the affordability to move up the property ladder. Whilst there will be some activity in this micro market it will be less than usual. London may suffer to a lesser extent than the rest of the UK because of it's stronger price increases.