Mortgage News – 28th October 2024
In the lead-up to the Autumn Budget, the mortgage market has seen mixed rate adjustments from NatWest, HSBC and Halifax. Rising interest rates and financial pressures are impacting sectors like estate agencies and concerns over affordability have led 40% of first-time buyers to leave self-employment. Base rate predictions, swap rate fluctuations, and the possibility of Stamp Duty changes for first-time buyers are creating a cautious market, as small business owners and borrowers alike await economic clarity from the upcoming Budget.
Mortgage Rate Changes
- NatWest announces significant mortgage rate cuts of up to 41 bps across residential and buy-to-let products.
- HSBC adjusted rates, reducing for higher loan-to-value (LTV) mortgages (80%+), benefiting borrowers with smaller deposits, and increasing for lower LTV mortgages, impacting those with larger deposits or more equity.
- Halifax increased rates on selected 5-year fixed-rate products for home movers and first-time buyers by up to 0.08%.
- Gen H reduces higher LTV 2-, 3-, and 5-year fixed-rate mortgages by up to 25 bps amidst budget uncertainty.
- MPowered Mortgages cuts 3-year rates by up to 0.30%, with new purchase rates starting at 3.93% and remortgage rates at 4.08%.
Rightmove – Strong activity but muted Autumn price bounce as buyer choice builds
Rightmove reported (Rightmove October House Price Index) a modest 0.3% increase in new seller asking prices this month, far below the typical 1.3% rise for this time of year, with the average price reaching £371,958. The subdued increase hints that sellers and agents might be responding to buyer caution ahead of the Budget. If a rate cut is announced on 7 November, prices could see a sharper rise as buyers’ affordability improves.
Self-employed housing struggle
Aldermore’s latest First Time Buyer Index reveals that 40% of first-time buyers have given up self-employment to improve their chances of getting a mortgage. With higher mortgage rates and stricter lender criteria, this trend may be increasing as affordability challenges push people to secure their first property. However, concerns have been raised about whether switching back to self-employment after securing a mortgage could be seen as mortgage fraud. Four in ten give up being self-employed to get a mortgage
Goldman Sachs – Bank of England Base Rate projection
This week, base rate predictions varied widely, with Goldman Sachs forecasting a drop to 2.75% and Santander at 3.75% by next year. Goldman’s projection made headlines, suggesting rates could fall significantly in the coming year. However, experts are doubtful, dismissing the forecast as overly optimistic and “the stuff of fairy tales.”
Small Business Owners Urge Balanced Approach Ahead of Autumn Budget
With the Autumn Budget around the corner, small business owners across the UK are voicing concerns about potential tax changes and new regulations that could impact their operations. Key worries include possible increases in capital gains and dividend taxes, reductions in pension tax efficiency, and unfunded government spending. Owners argue these changes could harm growth, deter investment, and worsen the economic outlook for sectors already under strain, such as property and independent pubs.
Many feel that further tax hikes and complex regulations could stifle entrepreneurship and disproportionately affect smaller businesses, freelancers, and landlords. Overall, they urge the government to take a balanced approach that promotes economic stability and supports business growth without imposing additional financial burdens.
eXp – UK Estate Agency Sector Set to Shrink in 2024, Recovery Expected in 2025
eXp UK reports that rising interest rates and prolonged market uncertainty are likely to shrink the UK estate agency sector by 0.4% in 2024, bringing its value to £15.265bn. However, as mortgage approvals and house prices begin to rise, market sentiment has improved, and additional rate cuts may further boost confidence. The sector is expected to grow by 0.8% in 2025, reaching £15.389bn, as momentum builds from this year’s positive shifts.
Will the Government retain £425,000 Stamp Duty Exemption for First-Time Buyers
Ahead of the Autumn Budget, will the Government retain the current £425,000 Stamp Duty exemption threshold for first-time buyers (FTBs), fearing a reduction could price more buyers out of the market.
Swap Rates
The latest data on swap rates shows a slight increase from last week, although overall rates remain significantly lower compared to last year. As of 24 October 2024, the 2-year swap rate stands at 3.961%, up from 3.887% a week prior, yet still 1.027% lower than October 2023 levels. Similarly, the 5-year swap rate rose to 3.781% from last week’s 3.669%, marking a year-over-year decline of 0.779%. However, with the budget announcement scheduled this week, rates could see a substantial shift depending on economic policies unveiled, potentially impacting borrowing costs for the foreseeable future.
| Swap Rate | 24-Oct-24 | 25-Sep-24 | 25-Oct-23 |
|---|---|---|---|
| 2 Year | 3.961% | 3.841% | 4.988% |
| 5 Year | 3.781% | 3.581% | 4.560% |
Mortgage News – 21st October 2024
In the past week mortgage rates saw increases from lenders including NatWest, Barclays, Halifax, and Santander, reflecting recent market adjustments. Meanwhile, inflation hit a 4-year low, sparking predictions of potential base rate cuts by the Bank of England, while UK house prices rose by 2.8% in response to lower mortgage rates. Additionally, swap rates have softened, and the Government has introduced an Employment Rights Bill targeting exploitative work practices, offering a range of significant changes.
Mortgage Rate Changes
- NatWest increased rates by up to 0.3% across the bulk of its fixed rate products.
- Barclays announced a 0.2% increase in the majority of fixed-rate products in its residential and buy-to-let range.
- Halifax increased rates on 2- and 5-year fixed rate products between 0.11% and 0.24%.
- Santander confirmed a 0.2% across most of their fixed rate range.
New Employment Rights Bill Targets Exploitative Practices
The Government has introduced an Employment Rights Bill to tackle exploitative practices like zero-hours contracts and “fire and rehire” tactics. Additionally, the bill proposes modernizing health and safety guidance, particularly addressing extreme temperatures in the workplace. Unions are advocating for a maximum indoor temperature of 30°C, or 27°C for strenuous work, as London has averaged six days per year above 30°C over the past decade. Government unveils significant reforms to employment rights
Inflation Drops to 4-Year Low, Rate Cut Likely
Headline inflation fell to 1.7% in September 2024, down from 2.2% in August, marking a 4-year low and clearing expectations of 1.9%, according to the Office for National Statistics. Core inflation also cooled to 3.2%, with services inflation dropping to 4.9%, both lower than forecasted. Experts predict that the Bank of England will likely cut the base rate in November, with the possibility of another reduction before Christmas, offering relief for mortgage borrowers and the property market. Consumer price inflation, UK: September 2024
House Prices Rise by 2.8% Amid Lower Mortgage Rates
UK house prices rose by 2.8% to £293,000 in the 12 months to August 2024, up from a 1.8% increase in July, reflecting the impact of lower mortgage rates on demand. Increases were seen across the UK, with house prices rising to £310,000 in England, £223,000 in Wales, and £200,000 in Scotland. Meanwhile, average UK private rents grew by 8.4% over the 12 months to September 2024, unchanged from the previous month. Private rent and house prices, UK: October 2024
Swap Rates
Recent swap rates have shown a noticeable decline, offering positive news for borrowers. The 2-year swap rate fell to 3.887%, down from 4.032% just a week ago, marking a 0.145% drop. The 5-year swap rate also saw a decline, dropping to 3.669% from 3.796% in the same period, reflecting a 0.127% decrease. These reductions reflect a steady softening trend since last year, with the 2-year swap rate now 1.270% lower compared to October 2023, and the 5-year swap rate 1.018% lower.
| Swap Rate | 17-Oct-24 | 18-Sep-24 | 18-Oct-23 |
|---|---|---|---|
| 2 Year | 3.887% | 3.814% | 5.157% |
| 5 Year | 3.669% | 3.480% | 4.687% |
Mortgage News – 14th October 2024
The UK mortgage market has seen some changes as lenders adjust rates in response to climbing swap rates and economic pressures. Recent rate increases reflect the ongoing challenge of balancing rising costs, with the 2-year swap rate up by 0.291% and the 5-year rate up by 0.409% over the past month. Meanwhile, house prices continue to surge, reaching their highest levels since 2022, and new legislation aimed at strengthening renter protections is advancing in Parliament.
Mortgage Rate Changes
- Coventry raised selected residential rates for new and existing customers, potentially following the ongoing uptick in swap rates.
- Barclays adjusted their mortgage rates, with mostly small improvements but some increases, balancing rising swap rates and maintaining market share.
- Santander released a mix of mortgage rate changes, with residential fixed rates increasing by up to 0.22% and decreasing by up to 0.13% for remortgage customers.
- Halifax Introduced significant changes to its mortgage range, including the addition of ERC-free tracker products, withdrawal of ERC-inclusive tracker products, and rate reductions on selected product transfer and further advance options.
- Virgin Money changed their residential and buy-to-let mortgage rates, including new 60% and 75% LTV options, reductions on selected fixed rates for remortgage and purchase customers, and rate cuts for product transfers.
House Prices Surge to Highest Since Mini-Budget Crisis
House prices surged by 11% in September, according to the latest Royal Institution of Chartered Surveyors (RICS) survey September 2024, marking the strongest rise since the Mini-Budget crisis of 2022. The survey also revealed a positive outlook, with 54% of surveyors expecting house prices to rise over the next 12 months. While buyer enquiries were slightly down, new listings increased significantly, though sales volumes remained relatively steady.
Halifax: House prices rise by +0.3% in September
House prices rose by 0.3% in September, mirroring the increase recorded in August. On an annual basis, prices are up by 4.7%, marking the strongest growth rate since November 2022, according to Halifax House Price Index: September 2024
Impending End to Section 21 ‘No Fault’ Evictions
The Renters’ Rights Bill, which aims to provide greater security and protections for renters, is being debated in Parliament today. It includes a ban on Section 21 ‘no fault’ evictions, addressing a major cause of homelessness and offering immediate stability to 11 million private renters. The Bill also tackles unfair rent increases, extends the Decent Homes Standard to the private sector, and empowers tenants to address issues with poor-quality housing. Renter protections closer as Bill progresses through Parliament
Swap Rates
Swap rates rise, driven by concerns over rising oil prices, global conflicts, and inflation, lenders are increasing their mortgage rates. Over the past month, the 2-year swap rate has climbed by 0.291%, while the 5-year rate has risen by 0.409%, prompting potential advice for borrowers to lock in deals before further hikes occur.
| Swap Rate | 02-Oct-24 | 03-Sep-24 | 03-Oct-23 |
|---|---|---|---|
| 2 Year | 3.885% | 4.031% | 5.119% |
| 5 Year | 3.613% | 3.660% | 4.630% |
Mortgage News – 7th October 2024
This week brought more reductions from lenders, as UK house prices rose by 0.7% in September, the fastest annual growth in two years. Mortgage approvals also increased in August, and with Bank of England Governor Andrew Bailey suggesting potential rate cuts in November, further market shifts could be on the horizon. However, swap rates have seen a slight rise since last week, adding some uncertainty.
Mortgage Rate Changes
- TSB adjusted their range with rates on 5-year fixed residential mortgages up to 0.15%, while reducing rates on 3-year fixed mortgages by 0.10%.
- Saffron Building Society cuts rates across entire range with rates reduced by up to 0.60% across its owner-occupied, contractor, self-employed, and professional income boost products.
- MPowered Mortgages reduced rates on 3-Year Fixed products, with rates as low as 3.75% rate at 60% LTV and a £999 fee.
- Virgin Money lowers rates across various purchase and remortgage products with rate cuts up to 0.25% 2- and 5-year fixed rates.
- Halifax reduced rates for movers and first-time buyers with rates up to 0.11% lower for homemovers and first-time buyers, and up to 0.24% for remortgage products.
- HSBC cut rates by up to 0.16% across its residential and buy-to-let ranges.
- Barclays introduces new first-time buyer products and cut mortgage rates on selected products.
- The Mortgage Works reduced Buy-to-Let rates by up to 0.55% on selected buy-to-let products for new and existing customers.
Nationwide House Price Index – September
UK house prices increased by 0.7% in September, pushing the annual growth rate to 3.2%, the fastest since November 2022. Improved affordability due to wage growth and lower borrowing costs have contributed to the rise in activity and prices. However, uncertainty remains around the upcoming autumn Budget and potential stamp duty changes, which could affect future demand. September records fastest annual house price growth in two years
Bank of England Reports Rise in Mortgage Approvals for August
Mortgage approvals increased to 64,900 in August, the highest level since August 2022, according to the Bank of England. Remortgaging approvals also rose, reaching 27,200, up from 25,200 in July. This indicates a strong demand for mortgages, despite the usual summer slowdown. Money and Credit – August 2024
UK GDP Grows by 0.5% in Q2 2024: ONS
The UK economy grew by 0.5% in the second quarter of 2024, according to data from the Office for National Statistics. The services sector expanded by 0.6%, contributing to overall growth, while real household disposable income rose by 1.3%. This stronger-than-expected performance may influence monetary policy decisions, potentially making a November rate cut more likely. Quarterly economic commentary: April to June 2024
Bank of England Rate Cuts Could Come Sooner After Andrew Bailey’s Comments
Bank of England Governor Andrew Bailey has suggested that rate cuts may come earlier if inflation remains under control, potentially as soon as November. Experts predict a 25 to 50 basis point cut, which could further reduce mortgage rates and boost property demand. However, geopolitical tensions and rising fuel prices could influence the timing and magnitude of any cuts. Interest rates could fall more quickly, hints Bank
Zoopla: Lower Mortgage Rates Drive 25% Surge in Buyer Demand
Zoopla’s latest House Price Index reports a 25% increase in sales activity due to the lowest mortgage rates in 15 months. Buyer demand and sales agreed have risen significantly, especially in the East Midlands and North-East. Despite increased market activity, affordability constraints continue to limit house price growth, particularly in Southern England. House Price Index: October 2024
Swap Rates
Swap rates, which influence fixed mortgage rates, have edged up slightly in the past week, with the 2-year rate rising by 0.042% and the 5-year rate by 0.028%. However, Bank of England Governor Andrew Bailey has hinted that rate cuts could come sooner, potentially as early as November, if inflation remains under control. Experts anticipate a 25 to 50 basis point cut, which could lower mortgage rates further and increase property demand. Despite this it is uncertain how quickly rates will fall. Borrowers should consider current deals, as significant reductions may still take time.
| Swap Rate | 02-Oct-24 | 03-Sep-24 | 03-Oct-23 |
|---|---|---|---|
| 2 Year | 3.885% | 4.031% | 5.119% |
| 5 Year | 3.613% | 3.660% | 4.630% |
