This represents a significant turnaround compared with three years ago when the average cost of buying was 29% higher than the average rent paid. The monthly costs associated with buying accounted for 29% of average UK disposable income in 2011, compared to 47% in 2008.

Home buying costs have fallen by more than a quarter (£328) since 2008, driven by a decline in the average monthly mortgage payment of nearly one-third (£242) due to the marked fall in mortgage rates and house prices. The mortgage rate for a new borrower has been reduced to an average of 3.63% in 2011 from 5.75% in 2008, while the average house price has dropped by 11% over the same period.

Meanwhile, the average cost of renting has risen by 9% (£62) since 2009. Higher demand for rental property, driven partly by the difficulties for potential buyers entering the housing market, has pushed up rents.

Over the past year, buying costs have dropped by 5% while the typical cost of renting has risen by 5%, continuing the trends seen in 2010.

Buying a home was more cost-effective than renting in 11 out of the 12 UK regions in December 2011. In contrast, buying was more costly than renting in all regions in December 2008, demonstrating the considerable turnaround over the last three years.

Despite having higher absolute costs, buying is currently most affordable relative to renting in London with the average borrower in the capital paying 10.2% less per month than the typical private tenant. At the other end of the spectrum, Wales is the only region where renting remains cheaper than buying.

The number of buyers entering the market has continued to decline despite the improvement in the affordability of buying compared with renting since 2008.
Halifax estimates that there were around 510,000 home purchases with a mortgage in 2011: the lowest annual total since 1974 and 6% lower than in 2010.
Much of this decline can be attributed to the increase in the size of the deposit required, with the size of the average deposit put down more than doubling over the past decade. In addition, higher costs related to moving home such as stamp duty and estate agents fees have also added to the overall cost of home buying.

Martin Ellis, housing economist at Halifax, said: “The affordability gains for buyers relative to renters in the last three years have been significant. The average mortgage payment has fallen dramatically over recent years as a result of falling house prices and mortgage rates. At the same time, rents have risen due to strong demand for rented accommodation.

“Nonetheless, despite the improvement in the relative affordability of buying a home, the number of purchasers has continued to fall due to the ongoing challenges in raising a deposit and the considerable uncertainty over the prospects for the UK economy, which have severely constrained housing demand.”

“As soon as we see January’s inflation rate, we will consider reducing the refinance rate,” she said, adding that the NBB would do so in the first half of February.

“The base refinance rate will be lowered to a certain extent,” the official stressed.

“We are certainly seeing a lower level of foreclosure activity than a year or two ago,” said DataQuick President John Walsh. “The question is, how much of that decline is due to market conditions, and how much is due to policy changes that try to address economic distress?”

In the Bay Area, lenders filed 10,012 notices of default, the formal first step in the foreclosure process, in the final three months of the year, DataQuick said. That was down 16.6 percent from the same time in 2010. Statewide, 61,517 notices of default were filed, down 11.9 percent from the previous year.

The trend carried through to trust deeds, the final step in the foreclosure process. In the Bay Area, a total of 4,831 trust deeds were recorded in the fourth quarter, a 16.2 percent decline from 2010. In all of California, 31,260 trust deeds were filed, an 11.8 percent decline.

The numbers are still high by historic standards but are down compared with the surge in foreclosures four years ago.

As the housing market finds its footing and the economy adds jobs, the number of homeowners forced into foreclosure tends to drop.

“Once prices stabilize or start going up a little, fewer people get pushed into the distressed arena because there is a better chance that they will be able to refinance or sell the house and clear their loan,” said Andrew LePage, a DataQuick analyst. “Or they decide to fight to hang on. If prices were still going down, they might decide to throw in the towel.”

Lenders, which have come under ferocious criticism for not being more responsive to struggling homeowners, also have evolved how they handle late payments. Part of those changes stemmed from the 2010 robo-signing scandal that uncovered sloppy foreclosure paperwork.

“Five years ago almost all mortgage payment delinquencies would have triggered a default notice after a certain amount of time,” Walsh said. “Strategies now include short sales, refinances, interest rate changes, principal reduction as well as just plain waiting longer. It will be interesting to see how this plays out as the economy improves and the housing market finds its footing.”

Much of the housing distress remains concentrated in lower-cost inland areas where overbuilding was rampant during the housing boom. San Francisco, San Mateo and Marin remain the three California counties where mortgages are least likely to go into default, DataQuick said.

Across the Bay Area, there were 5.7 notices of default for every 1,000 homes in the fourth quarter. That concentration ranges from a low of 2.9 notices of default per 1,000 homes in San Francisco to a high of 10.7 such notices per 1,000 homes in Solano County. Statewide, the average was 7 notices of default per 1,000 homes.

For trust deeds, the Bay Area had 2.7 per 1,000 homes, ranging from 1.2 per 1,000 homes in San Francisco to 6 in Solano. Statewide, there were 3.7 trust deeds per 1,000 homes.

“We’ve worked through the worst of it,” LePage said.

FHA Commissioner Carol Galante said the upcoming rule changes will help the agency protect its Mutual Mortgage Insurance Fund, which, according to some, is in danger of needing a bailout. The fund slipped to a 0.24% capital ratio in the fiscal year 2011, down from 0.5% the year before.

The rule was initially proposed in October 2010 and finalized Friday.

The rule changes apply to lenders authorized to insure mortgages for the FHA without first submitting documents to the agency. Roughly 80% of all FHA-insured mortgages are done this way.

The FHA will make it tougher to get approval for the coveted status. According to the new rule, a lender must hold a serious delinquency rate at or below 150% of the program’s average for the two years prior to its application. This rate will apply to all states in which the lender does business.

Also, the final rule forces lenders to indemnify – or reimburse FHA for an insurance claim – if the lender “knew or should have known” of any fraud or misrepresentation involved. Lenders would be on the hook for indemnification if the loan defaults within five years of origination.

Some commentary from the industry asked it to be shorted to a two or three year window, because problems that occur after then are due to job loss or divorce rather than decisions made at origination. FHA wouldn’t budge and said adopting the shorter timeframe “would be inconsistent with proper risk management practices.”

Others wanted clarification on whether or not the FHA would judge nationwide lenders with others operating within a smaller geographic area when determining approval or renewal of the status. They recommended larger lenders be held to a claim rate up to 150% of the national average, rather than just the states in does business in.

FHA didn’t amend the rule based on these comments either.

In a separate proposal, the FHA is changing the maximum allowable amount of seller concessions, or how much the seller contributes to the down payment or closing costs. The FHA said it will be reduced because the current level creates incentives to inflate the appraised value of the home.

Galante said the FHA will “continue to strike a balance” between managing its risk and continuing to provide support to a still struggling housing market.

“Taken together, the changes announced today will protect FHA’s insurance fund from unnecessary and inappropriate risks while offering clear guidance to lenders regarding HUD’s underwriting expectations,” Galante said.

Helped by the refinancing arrangement reached by debt-ridden telecom major, the RCOM shares soared over 5 percent in early morning trade and was trading 3.12 percent higher at Rs 89.15 after paring some initial gains.

The loan proceeds would be used for refinancing the entire redemption amount of FCCB which are due for redemption on March 1, 2012, RCOM said, while adding that, “this is the largest refinancing in the history of FCCBs by any Indian Corporate.”

The company said it will benefit from the extended loan maturity of seven years and an attractive interest cost of about 5 percent.

As of quarter ended September 2011, the company has a debt amounting to nearly Rs 32,000 crore.

FCCBs are bonds that are issued in currencies different from the issuing company’s domestic currency.

Reliance Communications is the flagship company of Anil Ambani-led Reliance Group. The group currently has a net worth in excess of Rs 89,000 crore (USD 19.7 billion), cash flows of Rs 10,900 crore (USD 2.8 billion), net profit of Rs 3,600 crore (USD 0.8 billion).

Fewer than four years’ average earnings are now needed to buy the typical first-time buyer property in just under half of local authority districts, according to new figures released by the Halifax. This compares with just 5 per cent that were reckoned to be affordable on the same basis before the credit crisis began in 2007.

Halifax says the main reason for the decline is the need to put down a bigger deposit; the average first- time buyer deposit in 2011 was £27,000 compared to £17,500 four years ago. The deposit now stands at around 20 per cent of the purchase price.

Overall, there were only 187,000 first-time buyers in 2011: the lowest annual total since records began in 1974 and less than half the peak of 402,800 first-time buyers in 2006.

It is obvious that rising unemployment, lack of confidence in the economy and student debt are all factors in this decline, but the trend is nonetheless worrying.

And the future hardly looks rosy for those young people wishing to buy their home in 2012; the Stamp Duty threshold will be halved to £125,000 adding more to the cost of buying property and almost wiping out the benefit of the Government’s shared equity schemes.

It is also worrying that the few who did manage to get on the property ladder in 2011 were likely to have had support from well-off parents. In the third quarter of this year, 64 per cent of first-time buyers bought with the help of parents or relatives, compared to less than half that five years ago.

The Halifax survey details the national trend but here in the South West the housing crisis is sharply relevant to young people.

The combined effects of a low-wage economy, the proliferation of second homes and the shortage of affordable homes in the region create for many an insurmountable situation.

The Halifax forecast for 2012 is that house prices would stagnate, moving in a band of plus or minus 2 per cent over the year, so there is little relief here.

There is no doubt that the Westcountry’s three universities and the numerous colleges are now producing high-quality graduates who are key to growth and the advancement of enterprise in the local economy.

But if they cannot find homes they are likely to be drawn to other regions of the UK where their prospects are better, thus creating an unsustainable position of the region training and educating potential economic leaders only to lose them to UK competitors. This exodus would be harmful to the prospect of growth in the South West.

Current initiatives to resolve the housing crisis are worthy but piecemeal and mostly address only the symptoms and not the cause. Could 2012 be the year when all of the authorities unite to resolve this once and for all?

The limit means a lot in our area, where the median housing price is near the top in the nation. Since a greater percentage of our homes are sold in the $500,000-700,000 price range than in most of the rest of the country, the limits will be of particular benefit to our region. Sellers will have a greater support to maintain their home’s value since more buyers will be qualified to buy their home and therefore demand will be greater. And buyers will be able to qualify for more properties since the limit will increase.

Since FHA only requires a down payment of 3.5 percent and has rates that are often better than those of conventional loans, it has become an increasingly important part of the home buying and selling process. While there is a 1 percent funding fee and mandatory PMI requirements for five years for buyers who take advantage of the program, it has become a way for homebuyers to enter the market with less capital than is required by conventional programs.

Purchasing a home with less personal investment was a key factor in the mortgage and housing crisis that FHA loans are meant to help combat, but lending requirements and oversight have increased dramatically since the days preceding the 2008 meltdown. Gone are the so-called “no-doc”or “stated income” loan programs that simply relied on a credit score (and often a poor one) and while the minimal down payment requirements of FHA loans do not ensure buyers have much of their own skin in the game, buyers may only hold one FHA loan at a time, which helps prevent the extreme overleveraging of amateur investors that contributed to the nation’s foreclosure rolls.

The practical impact of an FHA loan limit increase is easily felt by today’s buyers and sellers. A listing of our own at $799,900 got limited interest while the loan program was reset to its pre-2009 levels, since it effectively ruled out FHA as an option (a buyer would need, $174,400 or 21.8 percent on top of the $625,500 loan to purchase the home at full price; this would make a conventional loan more attractive since it would not come with the 1 percent funding fee nor the more restrictive PMI — private mortgage insurance — requirement). When the limit was increased again, we instantly got two offers; one due specifically to that increase because the purchase could be made with $70,150, or 8.8 percent down at full price. Simple supply and demand dictates that with more buyers (who are not just willing, but also able), prices will stay steady or increase.

Our market continues to be strong and reliable, and investing in real estate in our area has become a favored way to build long-term financial security. The reversion to our recently high limits will only continue to benefit our local economy — specifically home buyers and sellers — as long as it is in place.

Like last year, the Thanksgiving and Christmas moratorium dropped metro Atlanta foreclosure notices in December to one of the lowest monthly totals for the year with 7,454. Only June 2011 was lower at 7,374. That is still more than twice the number of monthly foreclosure notices in the years leading up to the housing crisis.

The total for notices in 2011 dropped to the lowest level since 2008 — 109,548 in metro Atlanta. There were 127,140 notices last year and 117,107 in 2009.

A notice does not always end up in foreclosure, as the homeowner can work out a deal with the bank, sell the home or find a few other escapes.

Many factors are helping depress the total in 2011 — from federal regulators requiring more careful paperwork to a push by banks and nonprofits for refinancings, and the effects of the “robo-signing crisis,” where lenders stopped foreclosures because forged or illegal real-estate documents were found in many cases.

Still, no U.S. housing market has ever experienced the many pressures and changes like those of today, local experts say, That makes it difficult to interpret what the shifting numbers mean.

“We had this ridiculous amount of foreclosures for all of 2009 and 2010 and it carried into the first quarter of 2011,” said Barry Bramlett, the CEO of Equity Depot’s Foreclosure Report.

“We are definitely going to be down in the number of properties advertised for foreclosure this year. If the only criteria is that less foreclosures are good, then that is a good thing,” he said.

But the dropping number in 2011 means homeowners in shaky situations and ripe for eviction are just being put off to another day, it will slow the process by which the market is clearing itself of bad loans, Bramlett said.

“If your criteria is we are just going to continue stagnant because we won’t allow the situation to weed itself out, then it is bad,” Bramlett said.

“And all these influences which are influencing us downward are still there. It makes you think it is not going to change quickly.”

It’s a combination of stagnant home prices and cheap mortgage rates as at the same time apartment rents rise at nearly full complexes. Our math shows a typical house payments of $2,177 vs. rent at $1,440. So, we’ve got a theoretical leasing savings of 34 percent vs. monthly mortgage payments — lowest in our data collection that dates to 1989.

You could say that the buy-or-rent math now sides with the house shopper. No two house shoppers are alike, so the conclusion that’s a “buyers market” vs. renting is by no means crystal clear. But using my trusty spreadsheet — and data from my Big Orange Index (next version out this weekend!) — tells me that the home payments generated by recent homes purchases — when compared to a benchmark of local rents — look as favorable as they have in a decade. To do the math, we’ve charted …

• Estimated mortgage payments from DataQuick. These number crunchers go in and estimate — based on the terms of mortgages that are public — what each new buyer’s initial house payment may be.
• “Actual rents” at large apartments complexes, provided by several firms — most recently RealFacts. Actual rent? It’s average rents discounted by the amount of vacant apartments, reflecting what new tenant may be able to get, including discounts.

When you compare the two costs of shelter, as the accompanying chart shows, you see that buying was once running 60% above rents. That was during the silliness of 2006′s crazed real estate frenzy. Once the homebuying bubble burst, the cost of acquiring a home tumbled. Rents did stall, then drop briefly, as the Great Recession hit renters, too. Many folks chose to double up in some fashion, whether by adding roommates or moving in with relatives.

But that’s all changed. Look at it this way, by our math: A new owners’ estimated house payment is down 38 percent from 2007′s peak. A renters is paying the landlord only 4 percent less than leasing’s 2009 cost peak.

It’s not been a direct free fall. In 2010, renting’s financial edge grew slightly as tax incentives for homebuyers somewhat stabilized acquisition costs. Once those tax breaks ended, though, housing has again softened and mortgage rates have plummeted, making a home purchase — on paper — look seemingly cheap vs. rents. Local landlords have enjoyed a rebound in pricing recently, as doubled-up renters begin to seek their own rental housing.

Local rents, by this math, are up 3 percent in a year — second such consecutive gain. A buyer’s estimated mortgage payment is down 5 percent — 16th straight such drop.

Big caveat: This homebuying advantage may not pencil out for many wannabe owners. Skittish bankers are making it very difficult for all-but the overly qualified shoppers to get home loans. So the recent “affordability” — by many measures, in fact — is illusionary for many credit-quality-challenged house shoppers.