Catch up on Mortgage Strategy’s most popular stories this week. King’s Speech: Key details left blank in leaseholder and rent reform Bills and HSBC announces cut to mortgage rates. Read more below:
King’s Speech: Key details left blank in leaseholder and rent reform Bills
Two out of the 21 Bills in the King’s Speech focus directly on housing—the leasehold system and the rental market. The government asserts that its overarching goal in both cases is to enhance “fairness in the housing market.” However, property professionals highlight that crucial details in both Bills still need to be clarified within a little over a year before the upcoming election, a period that will ultimately determine the effectiveness and impact of the proposed reforms.
HSBC announces cut to mortgage rates
HSBC has declared a reduction in mortgage rates across all its ranges for both new and existing customers, effective from Wednesday, November 8. Emphasising their commitment to customer support, an HSBC UK spokesperson stated, “We remain dedicated to providing the best possible rates to all our customers. Hence, we are pleased to announce rate cuts across our UK residential and international mortgage ranges, as well as our Buy to Let range, for both new and existing customers.”
Speculation rising about stamp duty changes in Autumn Statement
Speculation is mounting that Chancellor Jeremy Hunt will introduce alterations to stamp duty in his Autumn Statement on November 22. Housing is a focal point for the government, as evidenced by the inclusion of the Leasehold and Freehold Bill in the recent King’s Speech. While the Chancellor’s fiscal leeway for tax concessions is constrained, targeted reforms to stamp duty could invigorate activity in a subdued property market and bolster house prices. This move could be strategically appealing to voters, particularly in anticipation of a general election within the next 14 months.
Co-op Bank profits fall as it manages mortgage volumes, explores options
In the nine months ending September, The Co-operative Bank reported a pre-tax profit decrease of 21% to £81.1 million. The decline is attributed to pressure on mortgage margins and ongoing takeover speculation surrounding the bank. Despite this, the bank experienced a 10% increase in net interest income to £363.4 million, thanks to the positive impact of rising interest rates.
Mortgage lending to slump to lowest growth in a decade: EY ITEM Club
UK mortgage lending is predicted to show the lowest growth in a decade, extending into 2024, per EY ITEM Club. With the highest mortgage rates since 2008, home loans are projected to increase by just 1.5% in 2023 and 2% in 2024. This sluggish growth, the slowest in ten years, is attributed to subdued economic growth and declining housing market sentiment, reducing demand, according to the economic forecasting unit of the professional services firm.
Landlords continue to exit UK market with another 151,000 home sales
Landlords are increasingly exiting the UK property market, selling 151,000 buy-to-let and holiday homes in the year leading up to April 5, 2023, reports UHY Hacker Young. The profitability of buy-to-let properties has significantly decreased for many landlords due to rising mortgage rates. The average 5-year fixed-term buy-to-let mortgage rate, which stood at 1.72% at the end of 2021, has climbed to 5.55% by the end of September 2023.
Nationwide cuts resi rates by up to 38bps, prices start from 4.64%
Starting from November 9, Nationwide Building Society is implementing rate reductions on its two-, three-, and five-year fixed-rate products, with decreases of up to 38 basis points. The lowest rate will now begin at 4.64%. Additionally, the lender is reducing rates on its switcher range by up to 25 basis points, featuring rates from 4.64% on five-year fixed products, 4.94% for three-year fixed products, and 4.99% for two-year fixed products. Rates on additional borrowing and for existing customers moving homes will also be cut by up to 25 basis points.
House market past ‘peak pain’: Savills
Savills anticipates a positive shift in the UK housing market, stating it is beyond the “peak pain” phase. With average house prices expected to decrease by 3% next year, the property agent attributes this trend to easing affordability pressures. The forecast includes a prediction that the Bank of England base rate will reach 4.75% by the end of the following year, contributing to a stabilization of the housing market by mid-2024, as outlined in its five-year house price forecast. This year, Savills projects a 4% decline in house prices.
Halifax figures point to growth in buyer confidence
In October, average house prices saw a 1.1% increase, contrasting with a 0.3% decline in September, as per the latest Halifax House Price index. This uptick breaks a streak of six consecutive monthly falls, but prices remain 3.2% lower than the same period last year and 1.9% down from the previous quarter. The typical UK home now stands at £281,974, reflecting a rise of approximately £3,000 compared to the previous month.
Buy-to-let mortgage arrears up 29% in Q3: UK Finance
The latest Mortgage Arrears and Possessions report from UK Finance reveals a 29% increase in the number of buy-to-let mortgages in arrears from Q2 to Q3 this year. The figures indicate that 11,540 BTL mortgages were in arrears during the quarter, constituting 0.57% of all outstanding BTL mortgages. UK Finance attributes this rise to the compounding effect of cost-of-living pressures and higher interest rates, particularly when landlords struggle to increase rents to offset their growing expenses.
