What a year 2017 has been…Britain left the EU, Formula 1 saw the biggest regulation shake up in decades, Trump was elected the US President to name just a few major changes. The Mortgage market, on the other end, was fairly stable this year and dominated by the continued low interest rate. With the new budget spelling some changes in the market and 2017 coming to an end I thought it was worth noting some major trends:
Interest rates: The biggest news in the mortgage market was the recent increase of the Bank of England base rate from 0.25% to 0.50%. The change is the first of its kind in over a decade and was put in place to combat rising inflation. This will affect all households and businesses in the UK who pay off their mortgages and loans. It will also increase returns on saving accounts. If you’re on a fixed-term mortgage you won’t see any immediate change – though if your deal ends soon, the one you move to may cost more. If you’re on a standard variable rate (SVR) or ‘discount’ mortgage, the rate is set by the lender, but your mortgage is likely to get more expensive. If you’re on a tracker mortgage, it definitely will – as the name suggests, these ‘track’ the base rate.
Research reveals major changes in British housing affordability: The gap between the least and most affordable parts of Britain has almost doubled since the start of the economic downturn, new Yorkshire Building Society research shows. However, homes in 54% of local authority areas – including Edinburgh, Birmingham, Peterborough, Leeds and Harrogate – are more affordable now than they were before the financial crash. There is an increasingly mixed picture across the UK housing market, according to the August 2017, UK Residential Market Survey. Although the headline level shows a return to growth, sentiment is less positive in prime central London and to a lesser extent the wider South East, alongside the North and East Anglia.
First-time buyers stamp duty tax relief: Another recent change has come from long-haul industry pressure based on property price increases. The Autumn Budget 2017 announced stamp duty land tax relief for first-time buyers. From 22 November 2017, stamp duty will be abolished purchases up to £300,000 and the existing rate of 5% will apply between £300,000 and £500,000. This change will definitely help first time buyers who are struggling to keep up with increasing property prices.
Landlord numbers fall as buy-to-let regulation Bites: While the number of landlords has fallen over the last two years there has been a rise in the supply of homes to rent, meaning landlords are expanding their portfolios. Since 2015 the supply of rented homes has increased from 4.9 million in 2015 to 5.1 million. Over the same time, landlord numbers have dropped by 154,000 to 3.56 million.
Government acts on housing strategy: The government has launched a consultation on proposals to streamline the planning process and ensure more new homes are built in areas where the need for them is greatest. Under the new proposals, assessing local housing need will be standardised, the government said. This will replace the current, “fragmented system”, which it blamed for delays and higher up costs for local authorities.
The Bank of Mum and Dad: the UK’s most lenient lender? One in five parents have taken money from their pension or stopped contributing to it, to help their children financially. Nearly six out of 10 parents who have loaned money to children or grandchildren have written off all or some of it. And three in four have not set any repayment conditions or plans for the money they have loaned.
I hope this has given you a flavour of what is happening out there. If you are looking to re-mortgage or indeed buy your first property make sure you do your market research. At Spot on Mortgages, we don’t charge a fee for our advice so get in touch with us to review your options further.
Your property may be repossessed if you do not keep up repayments on your mortgage.