Latest news with #BuildingSociety
Daily Mail
6 days ago
- Business
- Daily Mail
House prices are MORE affordable than 20 years ago - but they are still up to 9 times salary in some areas
House prices are more affordable on average than they were 20 years ago, according to the latest figures from Nationwide Building Society. This is based on the ratio comparing average incomes and average property prices. Between April and June this year, Nationwide says the average UK house price was 5.8 times the average annual salary of someone in full time work. This is marginally down on the same three month period in 2005 when the average house price was 5.9 times the average annual full time salary. Over the last 20 years, house prices have increased 73 per cent compared to earnings growth of 76 per cent over the same period. However, the current house price to earnings ratio is still above the long-run average of 4.8. These areas AREN'T more affordable Whether property has become more or less affordable will also greatly depend on where in the country someone lives. For example, in London, the house price to earnings ratio has risen from 7.1 to 9.2 over the past 20 years, which means property is less affordable in the capital. The surrounding outer metropolitan regions of London also saw a rise from 6.9 to 8. Meanwhile, the North has seen the most improvement, with a fall in average house price to earnings ratio from 5.4 in 2005 to 4 in 2025. This reflects the fact that house price growth has been the lowest there over this period. High house prices relative to earnings make it more challenging for prospective buyers to save for a deposit, particularly in London and the South East. Richard Donnell, executive director at Zoopla said: 'Future improvements to the house price to earnings ratio will vary depend on the region of UK and the headroom for house price growth. 'Home values have been unaffordable in Southern England for some time and remain so, which is why house prices are struggling to rise as a result of higher mortgage rates.' The other key factor in relation to affordability is interest rates and their impact on mortgage payments. Compared with 2005, mortgage payments have slightly decreased relative to take-home pay for a first-time buyer, according to Nationwide. Based on someone buying their first property with a 20 per cent deposit, average mortgage payments currently account for 34 per cent of take home pay, compared with 38 per cent in 2005. However, it's worth pointing out that affordability has deteriorated from a mortgage cost perspective over the past five years given the sharp rise in interest rates in 2022 and 2023. In July 2020 someone buying with a 20 per cent deposit could bag a five-year rate as low as 1.7 per cent. Now, most buyers are securing mortgage rates around 4 to 5 per cent. The lowest five-year fix for someone buying with a 20 per cent deposit is 4.15 per cent. Someone buying a property in 2020 with a £200,000 mortgage at 1.7 per cent with a 25 year repayment term would have been paying £818 a month. However, someone buying today with a £200,000 mortgage today and a 25 year term on a 4.015 per cent rate can now expect to pay £1,072 a month. Nationwide says the typical mortgage payments were 27 per cent of take home pay between April and June 2020, far less than the 34 per cent proportion today. Looking ahead, Nationwide says it expects a gradual easing in affordability constraints through a combination of falling interest rates and earnings outpacing house price growth. However, while the house price to earnings ratio suggests property isn't any less affordable on average than it was 20 years ago, it doesn't necessarily mean that getting on the ladder is as easy as it was 20 years ago. Jeremy Leaf, north London estate agent and a former Rics residential chairman argues that rising rental prices has made it harder for people to save a deposit towards buying their first home. 'What the house price-to-earnings ratio doesn't show is the impact of the rise in rents over that period - particularly in London and other cities,' said Leaf. 'That increase has made it more difficult for aspiring first-time buyers to save for deposits and resulted in the postponement of many moves. 'The sharp drop in transaction numbers following the ending of the stamp duty holiday last March showed the importance of financing those initial costs to first-time buyers in particular. 'In our offices, we have noticed how the demand for higher-priced properties in more favoured locations has struggled recently compared with less expensive areas.' He adds: 'Looking forward, that trend is likely to continue unless the government can improve for instance take-up in its 'Freedom to Buy' scheme by setting more generous terms than under the previous Mortgage Guarantee Scheme which would give a lift to the whole market.' How to find a new mortgage Borrowers who need a mortgage because their current fixed rate deal is ending, or they are buying a home, should explore their options as soon as possible. Buy-to-let landlords should also act as soon as they can. Quick mortgage finder links with This is Money's partner L&C > Mortgage rates calculator > Find the right mortgage for you What if I need to remortgage? Borrowers should compare rates, speak to a mortgage broker and be prepared to act. Homeowners can lock in to a new deal six to nine months in advance, often with no obligation to take it. Most mortgage deals allow fees to be added to the loan and only be charged when it is taken out. This means borrowers can secure a rate without paying expensive arrangement fees. Keep in mind that by doing this and not clearing the fee on completion, interest will be paid on the fee amount over the entire term of the loan, so this may not be the best option for everyone. What if I am buying a home? Those with home purchases agreed should also aim to secure rates as soon as possible, so they know exactly what their monthly payments will be. Buyers should avoid overstretching and be aware that house prices may fall, as higher mortgage rates limit people's borrowing ability and buying power. What about buy-to-let landlords Buy-to-let landlords with interest-only mortgages will see a greater jump in monthly costs than homeowners on residential mortgages. This makes remortgaging in plenty of time essential and our partner L&C can help with buy-to-let mortgages too. How to compare mortgage costs The best way to compare mortgage costs and find the right deal for you is to speak to a broker. This is Money has a long-standing partnership with fee-free broker L&C, to provide you with fee-free expert mortgage advice. Interested in seeing today's best mortgage rates? Use This is Money and L&Cs best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs. If you're ready to find your next mortgage, why not use L&C's online Mortgage Finder. It will search 1,000's of deals from more than 90 different lenders to discover the best deal for you. > Find your best mortgage deal with This is Money and L&C Be aware that rates can change quickly, however, and so if you need a mortgage or want to compare rates, speak to L&C as soon as possible, so they can help you find the right mortgage for you.
The Guardian
06-07-2025
- Business
- The Guardian
Anger as Nationwide refuses members a binding vote on boss's 43% pay hike
Nationwide is under fire for refusing to give members a binding vote on a controversial 43% pay rise for its chief executive, Debbie Crosbie, which could total up to £7m. Campaigners say it leaves the mutual's members with fewer rights than shareholders of listed UK banks and exposes a worrying 'loophole' in building society rules. Nationwide argues that after its £2.9bn takeover of Virgin Money Crobie's pay should compete with that offered by banks such as Lloyds and NatWest. However, the board is only offering members an 'advisory' vote at its annual general meeting (AGM) on 25 July, meaning there are no repercussions if they reject it. Large high street banks are required to hold a binding vote on their pay policies at least once every three years, under laws governing large businesses listed on the London Stock Exchange. If shareholders reject the policy, they have to revert to the old pay plan and put a revised pay deal to shareholders within 12 months. Nationwide could do the same, but said it is already going further than required under the Building Societies Act, which only requires binding votes for the election of board members. 'As part of our commitment to member engagement and transparency, Nationwide voluntarily puts the remuneration policy to the membership on an advisory basis at the AGM and we currently have no plans to change this approach,' a spokesperson said. While Nationwide has never held a binding vote on pay, it has also never proposed such a large renumeration package for its chief executive, which could result in a record payout worth up to £7m from current levels of £4.8m. That is close behind NatWest Group, which in April secured backing for a package worth up to £7.7m for chief executive Paul Thwaite. Luke Hildyard, the director of the High Pay Centre thinktank, described the situation as a 'loophole in the governance of building societies'. 'Mutuals are supposed to have a more collective approach to business than corporate banks, but while the banks are required to revise pay policies that are rejected by a majority of shareholders, and provide a response to the stock market if more than 20% vote against, building societies can in theory ignore their members.' 'The Nationwide case, where there may be significant discomfort with the huge pay out planned for the chief executive, highlights the need for the loophole to be closed,' he said. Crosbie's £7m pay deal has angered some members. 'I'm a Nationwide customer and didn't know about this? Please send me a voting form immediately,' one posted on X. 'Building societies are supposed to be the good guys. The apple has fallen far from the tree,' another claimed. Sara Hall, the co-executive director at campaign group Positive Money said Nationwide 'hiking its chief executive's pay because that's what the big banks are doing would be completely at odds with what building societies are supposed to stand for'. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion The move is 'counterintuitive for an institution whose main selling point is putting its customers before shareholders', Hall added. A Nationwide spokesperson pushed back against the criticism, saying its pay proposals – although advisory – 'always received overwhelming member support'. 'Any suggestion that we would ever ignore a vote against it is simply ridiculous. We always consider their views and at the last AGM over 94% of votes were in favour of the proposed remuneration policy,' they said. 'Nationwide delivered record member value last year, we are still first for customer satisfaction among high street banks, and more people switched their current accounts to Nationwide than to any other brand. 'We have managed this because we can attract, retain and motivate talented leaders. Even after the changes that are being proposed at the AGM, Nationwide's chief executive will still be paid substantially less than the other large banks.'
Reuters
29-05-2025
- Business
- Reuters
Britain's Nationwide reports annual profit up 30% as it integrates Virgin Money
LONDON, May 29 (Reuters) - Britain's Nationwide Building Society reported its annual profit rose 30%, as it incorporated its takeover of rival Virgin Money, which made it the country's second biggest mortgage lender. Nationwide said on Thursday its statutory 2004 profit before tax rose to 2.3 billion pounds ($3.09 billion), up from 1.8 billion the year before as it recorded its highest ever year for mortgage lending and retail customer balances. ($1 = 0.7444 pounds)
Daily Mail
08-05-2025
- Business
- Daily Mail
The mortgage you don't pay for three months: Is it helpful or just a gimmick?
First-time buyers are now being offered the chance to get a mortgage without having to make repayments for the first three months. The mortgage is with Skipton Building Society, and is available to those buying with smaller deposits. Known as the Delayed Start Mortgage, it is intended to give borrowers some financial breathing space and help them to budget for other costs such as furniture and decorating. It is even being endorsed by Location Location Location property expert, Phil Spencer. We run the rule over the mortgage deal, explaining how it works, who can get it, and whether it will cost them more in the long run. Helping hand? Skipton's Delayed Start Mortgage will give first time buyers time to settle in with no mortgage repayments due for the first three months Who can get the Delayed Start Mortgage? Skipton is offering the product to those buying with either a 5 per cent or 10 per cent deposit. While the deal is exclusively for first-time buyers, if buying as a couple, then only one person needs to be a first-time buyer to qualify. What are the interest rates? In terms of rates, those buying with a 10 per cent deposit could secure a two-year fix at 4.87 per cent or a five-year fix at 4.78 per cent. Those buying with a 5 per cent deposit could secure a rate of 5.2 per cent when fixing for two years or 5 per cent if fixing for five years. There are no arrangement fees attached to the mortgage. Someone buying their first home with a £200,000 mortgage on a 5 per cent rate could expect monthly repayments of £1,074. Skipton's Delayed Start Mortgage would therefore save them £3,222 over the first three months. However, the interest will still accrue from day one and will be added to the overall mortgage balance. This means they will pay slightly more in interest over the term. Based on the same scenario, the interest would accrue at £834 a month, meaning an additional £2,502 would be added to the total mortgage balance. This means their monthly payments going forward would be slightly higher than they would have been if they had paid the mortgage right from the off. In this scenario it would mean they would be paying £1,088 a month rather than £1,074 a month. How do the rates compare? The rates on the Delayed Start Mortgage aren't the cheapest on the market, so it is worth weighing up how much the delayed repayments would benefit you, and whether you would prefer to save on your monthly payments in the long run. For example, Virgin Money has a two-year fixed rate at 4.53 per cent for those with a 10 per cent deposit, which comes with a £995 fee. On a five-year fix, HSBC has a rate of 4.39 per cent with a £649 fee. For those wanting to buy with a 5 per cent deposit, Monmouthshire Building Society and Nationwide both currently offer two-year fixed rates of 4.85 per cent, with fees of £1,439 and £999 respectively. On a five-year fix, the cheapest rate is with Monmouthshire at 4.75 per cent, also with a £1,439 fee. > Find the best rate for you using This is Money's mortgage search tool Why has Skipton launched it? The aim is to give first-time buyers some breathing room in the immediate aftermath of purchasing a property. First-time buyers are spending upwards of £30,000 in the first three months of moving into their new home, according to Skipton's research. The mutual surveyed 1,000 first-time buyers and found that almost two thirds felt financially strained during this time. Seven in 10 first-time buyers said the moving process cost a lot more than they expected. Skipton's research also revealed first-time buyers spend nearly £3,500 on average on furniture to kit out their homes, as well as £2,600 on kitchen appliances. They also face a bill of £1,700 on removal companies, Skipton claims. More than two thirds of first-time buyers also had to juggle costs for two properties, as rental agreements often overlap with moving in. More than four in 10 found it difficult to line up their move with the end of their lease, with 26 per cent blaming delays in the buying process, according to Skipton's research. AVERAGE COSTS FIRST TIME BUYERS FACE THREE MONTHS AFTER MOVING IN Issues faced by first-time buyers in first three months Average cost 1. Furniture (Sofa, chairs, tables etc.) £3,487 2. Kitchen appliances (Air fryer, kettle, toaster, coffee machines etc.) £2,662 3. Home décor (plants, lamps, accessories) £2,911 4. Locksmith £1,623 5. Utility set-up £2,138 6. Removal company £1,747 7. Electrical work £1,914 8. Plumbing £1,684 9. Roof repairs £1,759 10. White goods £2,482 11. Carpets, flooring, tiling £2,291 12. Painting and decorating £2,118 13. Stamp duty £2,264 14. Surveys £1,604 Source: Skipton Building Society Is it a good option for buyers? Skipton delayed mortgage product certainly has its merits and many across the industry have welcomed what they deem as much needed support for first-time buyers. Property expert Phil Spencer, founder of the property website Move iQ, is one of those in favour. 'Buying your first home is a huge milestone, but for many, making the leap from paying rent to managing a mortgage can feel overwhelming,' he says. 'That's why I'm genuinely excited about Skipton Building Society's new Delayed Start Mortgage. It offers first-time buyers some much-needed breathing space at exactly the right moment.' Not all are convinced, however. Harry Goodliffe, director at mortgage broker HTG Mortgages, says: 'Let's be real - if you need a break before you've even started paying the mortgage, it's worth asking whether the timing is right. 'Interest still racks up from day one, so this isn't free money. It's a lifeline, not a longer-term fix.' Ben Perks, managing director at Orchard Financial Advisers, adds: 'This could be great for those borrowers that need to renovate or modernise a property on entry,' said Perks. 'But if it's used to help cash-strapped borrowers, things could get messy. 'If you need to start your mortgage life with a payment holiday, should you be starting?' Best mortgage rates and how to find them Mortgage rates have risen substantially over recent years, meaning that those remortgaging or buying a home face higher costs. That makes it even more important to search out the best possible rate for you and get good mortgage advice. Quick mortgage finder links with This is Money's partner L&C > Mortgage rates calculator > Find the right mortgage for you To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C. This is Money and L&C's mortgage calculator can let you compare deals to see which ones suit your home's value and level of deposit. You can compare fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes. If you're ready to find your next mortgage, why not use This is Money and L&C's online Mortgage Finder. It will search 1,000's of deals from more than 90 different lenders to discover the best deal for you.
The Guardian
07-05-2025
- Business
- The Guardian
One-of-a-kind ‘Delayed Start' mortgage launched in UK
A one-of-a-kind mortgage offering a major financial perk – no repayments for the first three months – has been launched in the UK. The deal, unveiled by Skipton Building Society, is the latest innovation aimed at cash-strapped first-time buyers and is designed to provide them with a bit of breathing space as they settle into their new property. However, while the new Delayed Start mortgage should help ease the strain of the costs that come with buying a first home, those first three months are not free. Interest will start to accumulate from day one and will be added to the overall mortgage balance – so some may view this as something akin to 'buy now, pay later' for mortgages. Skipton said the new product was exclusively for first-time buyers and available to those borrowing up to 95% of a property's value. It said its survey of people who had bought their first house in the last five years found that first-time buyers were spending upwards of £30,000 during the first three months of moving in. This was causing almost two-thirds of them to feel 'financially strained' during that period, with many saying that the entire moving process 'cost a lot more than they expected'. A spokesperson for Skipton said the new product 'will enable first-time buyers to settle into their new home with no mortgage repayments due for the first three months, allowing them to manage the extra costs associated with buying and moving into their first property'. David Hollingworth at the broker firm L&C Mortgages said this deal would allow people to 'regain a bit of stability' before their mortgage payments kicked in. But the interest will be added on, so this could be seen as 'more like a payment holiday'. Those taking advantage of the deal will have a slightly bigger mortgage, and it 'will therefore cost you more'. This is the latest in a line of deals aimed at making it easier for first-timers to get on to the property ladder. In 2014, Leeds building society launched some mortgages with credit card-style '0%' introductory interest rates, although customers still had to pay off the capital during the first few months and the interest they did not pay at the beginning was added into the later payments. More recently – in 2023 – Skipton launched a deal allowing people who are renting to borrow 100% of the property's value.
