Mortgage News – 30th September 2024
The mortgage market has seen a wave of rate cuts from major lenders, with reductions up to 0.53%, signalling increased competition and boosting borrower confidence. Alongside these cuts, Nationwide has raised its Loan to Income ratio up to 6x, making homeownership more accessible for first-time buyers, while landlords face growing financial pressure from upcoming EPC targets and potential rate hikes. As the property market remains resilient and demand for long-term fixed deals rises, borrowers are weighing whether to lock in rates now or wait, with upcoming stamp duty increases and the Autumn Budget adding urgency to decisions.
Mortgage Rate Changes
- NatWest cut rates up to 12bps on residential deals and up to 60bps on buy-to-let loans, following the Bank of England’s decision to hold rates steady.
- Nationwide has reduced selected fixed rates by up to 0.31%, affecting various products for new and existing customers.
- TSB reduced rates on selected 2 and 5 year fixed residential products for first-time buyers and home movers, with cuts of up to 0.10% and 0.20% for 85-95% LTV.
- Halifax cut mortgage rates by up to 0.3%, intensifying the competitive price war among lenders.
- Clydesdale and Virgin Money have cut mortgage rates by up to 0.4%, boosting competition and providing borrowers with more sub-4% options.
- Coventry has reduced mortgage rates by up to 0.53% across residential, interest-only, and offset products, adding to this week’s wave of competitive cuts from lenders.
- Barclays has reduced mortgage rates by up to 0.34% across its residential and remortgage products, with new rates starting at 3.71% for a 5-year fix.
Criteria Changes
- Nationwide raised the maximum Loan to Income ratio from 5.5x to 6x on its Helping Hand product, allowing first-time buyers to borrow up to 33% more, with up to 95% LTV available. This move has been praised for making homeownership more accessible and increasing competition in the mortgage market for first time buyers.
Buy to Let Rate Changes
- The Mortgage Works reduced their buy-to-let rates by up to 0.35%, with new rates starting from 3.49%.
UK Property Market Remains Resilient in August 2024
UK property transactions in August 2024 showed a 5% increase from August 2023 while non-residential transactions saw a decline of 3-4% over the same period. Residential Mortgage rates have been steadily declining, contributing to growing buyer confidence, with demand expected to increase further by year-end. Although residential transactions are performing well, the non-residential market faces ongoing difficulties, highlighting a split between the two sectors. UK monthly property transactions commentary
Demand for Long-Term Fixed Mortgage Deals Expected to Rise
With Nationwide increasing its Loan to Income (LTI) ratio from 5.5x to 6x, it is predict that other high street lenders may follow suit to attract first-time buyers. The market could see growing demand for longer-term fixed deals, as borrowers look to lock in lower rates before they rise again. While flexibility in mortgage products is increasing, brokers emphasize that affordability and competitive rates will remain the key factors in borrowers’ decisions.
Should Borrowers Lock in Mortgage Rates Now or Wait for Further Cuts?
With lenders like Coventry, TSB, NatWest, and Nationwide cutting rates despite the Bank of England holding its base rate steady, experts are divided on whether borrowers should lock in now or wait. Some advise locking in a rate now for stability, as market surprises like the upcoming Autumn Budget could push rates back up. Others believe further rate drops are possible, but warn that waiting carries risks, especially with the uncertainty of economic conditions.
Stamp Duty Increases Looming: Buyers Warned to Act Before April 2025
From 1st April 2025, Stamp Duty for first-time buyers will increase significantly. For properties up to £425k, which currently have no Stamp Duty liability, buyers will need to pay £6,250. For properties worth £450k, the tax will rise from £1,250 to £7,500, with thresholds for first-time buyers reducing from £425k to £300k. It is a warning that many buyers, especially first-time buyers, risk paying significantly more if they miss the 31st March deadline. The upcoming increase could add thousands to the tax bill, making it crucial for prospective buyers to act soon to avoid the higher rates. It may be worth waiting to see if the Autumn Budget brings changes, but it could also be wise to start the process early.
Landlords Face Financial Strain with Mandatory EPC Targets by 2030
Ed Miliband’s proposal to require landlords to achieve a minimum EPC rating of C by 2030 has raised concerns about the financial impact on both landlords and tenants. Upgrading properties could cost landlords an estimated £10,000 per home, with many likely passing these costs onto tenants through higher rents. Critics argue that the policy may drive smaller landlords out of the market, reducing rental supply and exacerbating the housing crisis, while the environmental benefits remain uncertain.
The Rent vs Buy Dilemma: Which is Cheaper?
Experts agree that while buying a home often proves more cost-effective in the long run due to building equity and potential property value appreciation, rising interest rates and hefty deposit requirements create significant barriers. Renting, on the other hand, offers flexibility and lower upfront costs but can become expensive over time, with no long-term security or financial benefit. Ultimately, the decision between renting and buying depends on individual circumstances, including financial stability, lifestyle goals, and market conditions.
Swap Rates
Sonia swap rates, which influence fixed mortgage rates, have edged slightly higher as a result of Inflation and Bank of England holding at 5%, raising concerns about potential mortgage rate increases. Industry experts suggest that mortgage rates may rise or, at best, stabilise in the short term, with the upcoming Budget and inflation remaining key challenges. While there may be marginal drops in rates, significant reductions are unlikely, and borrowers should carefully consider current offers rather than waiting for a major decline.
| Swap Rate | 26-Sep-24 | 27-Aug-24 | 27-Sep-23 |
|---|---|---|---|
| 2 Year | 3.843% | 4.063% | 5.081% |
| 5 Year | 3.585% | 3.695% | 4.497% |
Mortgage News – 23rd September 2024
Multiple lenders continue to reduce rates across their mortgage offerings, creating opportunities for buyers, remortgages, and landlords. While market activity has surged, inflation and interest rates remain key concerns, with inflation staying at 2.2% and the Bank of England holding the base rate at 5%. Swap rates have increased slightly since this time last week, suggesting cautious optimism about future rate cuts.
Mortgage Rate Changes
- Santander reduced rates across its mortgage range, now offering sub-4% rates on selected 2-, 3-, and 5-year fixed mortgages for purchases, remortgages, and buy-to-let, with reductions up to 0.29%.
- Skipton announced rate reductions on selected 90% and 95% LTV
- Halifax reduced their residential mortgage rates by up to 0.09% on home mover, first-time buyer, large loans, new build, affordable housing, and remortgage products.
- Virgin Money lowered rates across various mortgage products, including purchase, remortgage, buy-to-let, and product transfers, with reductions up to 0.20%.
- Principality reduced rates on its residential mortgages, with cuts of up to 0.25%
Criteria Changes
- Metro Bank enhanced its mortgage criteria, now accepting child maintenance payments for children under 13, foster income with a 24-month history, and applicants with less than six months of employment history following a career break or parental leave.
- West One Loans (specialist lender) has launched its first-ever 95% LTV products, aimed at first-time buyers.
Buy to Let Rate Changes
- Fleet Mortgages reintroduced its Energy Performance Certificate (EPC) A-C products with rates 0.10% lower than equivalent 5-year fixed products, and reduced rates on several 5-year fixed-rate products by 0.20%.
- Accord Mortgages reduced buy-to-let rates by up to 0.30%
Inflation stays at 2.2% in August
The Consumer Prices Index (CPI) rose by 2.2% in the 12 months to August 2024, unchanged from July, according to the Office for National Statistics Consumer price inflation, UK: August 2024 although core and services inflation rose slightly in August 2024.
Private rent and house prices – September 2024
The Office for National Statistics (ONS) reported that average UK house prices rose by 2.2% to £290,000 in the 12 months to July 2024, a decrease from the 2.7% growth rate seen in June. House prices increased across the UK, with England at £306,000 (1.6%), Wales at £218,000 (2.0%), and Scotland at £199,000 (6.0%). Meanwhile, average UK private rents grew by 8.4% in the 12 months to August 2024, slightly down from the 8.6% growth in July. Private rent and house prices, UK: September 2024
The Bank of England holds interest rates at 5%
The Bank of England confirmed interest rates were held at 5% with eight out of nine Monetary Policy Committee members voting in favour. The decision aims to manage inflation, which is on a downward trend but remains a concern, while minimising disruption to economic growth. The steady base rate will impact mortgages, loans, and savings, keeping borrowing costs and savings interest rates stable for the time being, as the Bank monitors global economic uncertainties.
Many believe the move reflects a cautious approach in contrast to more aggressive rate cuts by the U.S. Federal Reserve, with some experts expecting rate reductions later in the year. While the decision was largely expected, there is a consensus that it may help stabilize the mortgage and property markets, though some experts feel that a rate cut would have provided more immediate relief for borrowers.
Will Mortgage Rates Drop Further or Have They Hit Their Lowest Point?
There are concerns over the Bank of England’s decision to hold the base rate at 5%, with many pointing to rising Gilt and Swap rates as potential drivers of increased mortgage costs for borrowers. However, it seems further rate cuts may be delayed until after the October Budget. Despite the current pause, there is cautious optimism that rates will eventually resume their downward trend, though the path to lower rates may be very gradual.
Insolvency Data Highlights Urgent Need to Tackle Challenges Facing Struggling Individuals and Small Businesses
The Insolvency Service reported that 10,000 individuals entered insolvency in England and Wales in August 2024, a 5% decrease from July but 16% higher than August 2023. Company insolvencies for the same period totalled 1,953, which was 9% lower than the previous month and 15% lower than August 2023. Despite the recent declines, company insolvencies remain significantly higher than levels seen during the COVID-19 pandemic and the years 2014-2019.
Company Insolvency Statistics August 2024
Individual Insolvency Statistics August 2024
Rightmove: Early Autumn Surge in UK Property Market as Prices Rise by 0.8%
The UK property market saw an early autumn boost with a 0.8% rise in average asking prices, driven by increased market activity and a growing number of homes for sale. Sales agreed are up 27% compared to last year, as buyers and sellers take advantage of lower mortgage rates and improved affordability. However, the market remains cautious, with buyers being more selective, and uncertainty lingers ahead of the Autumn Statement and potential future rate cuts. Rightmove House Price Index – September
Three-Quarters of UK Home Sellers Trust Their Estate Agent
A survey by eXp UK revealed that 75% of home sellers trust their estate agent, with 95% stating that trust is crucial in the process. Face-to-face interaction and referrals from previous clients were the key factors in building trust, with accurate market pricing and clear communication also playing major roles. However, sellers felt least able to trust their agent when dealing with post-sale support and chain delays.
Swap Rates
The 2-year Swap rate has risen slightly to 3.831%, up by 0.049% from last week but still 1.217% lower than this time last year. Similarly, the 5-year Swap Rate has increased to 3.514%, a 0.097% rise from last week, yet remains 0.882% lower year-on-year.
| Swap Rate | 19-Sep-24 | 20-Aug-24 | 20-Sep-23 |
|---|---|---|---|
| 2 Year | 3.831% | 4.069% | 5.048% |
| 5 Year | 3.514% | 3.651% | 4.396% |
Mortgage News – 16th September 2024
A wave of rate reductions from numerous lenders last week was driven by the recent drop in swap rates, providing relief for borrowers seeking better mortgage deals. UK mortgage lending in Q2 2024 rose significantly, with gross advances up by 16.7%, despite an increase in arrears cases. Meanwhile, the UK economy has stalled, showing no growth in June and July, raising concerns about the upcoming Autumn Budget and its potential impact on businesses and borrowers.
Mortgage Rate Changes
- TSB cuts mortgage rates by up to 0.4% on their First time buyer and remortgage range.
- Barclays cuts rates by up to 0.66% on their residential and buy to let purchase range.
- Halifax reduced rates on its 2- and 5-year home mover and first-time buyer products up to 90% LTV.
- NatWest announced fixed rate cuts of up to 0.19% on selected 90% and 95% LTV products, benefiting first-time buyers and those with smaller deposits.
- HSBC cut rates across almost their whole range.
- Nationwide cut rates by up to 0.25% on their core new business and existing customer products.
- Virgin Money and Clydesdale cuts rates by up to 0.39%.
- Santander announced a sub-4% 2-year fixed rate for purchase up to 60% Loan to Value.
- Pepper Money reduced its fixed rates by 1%.
Buy to Let Rate Changes
- The Mortgage Works (Buy to Let Lender) lowered rates for existing borrowers.
- Paragon Bank has introduced £750 cashback and new 3% fee options on all 5-year fixed-rate buy-to-let mortgages.
- Fleet Mortgages reduced rates up to 0.30% on 2- and 5-year 75% LTV products for standard and limited company borrowers.
- The Mortgage Lender has reduced rates on its buy-to-let products, with 5-year fixed rates now starting at 4.71% for standard properties and 4.96% for HMOs and multi-unit blocks.
UK Mortgage Lending and Arrears Rise in Q2 2024 – Bank of England
In Q2 2024, gross mortgage advances increased by 16.7% from the previous quarter to £60.2 billion, with new mortgage commitments rising by 11.3%. Lending to borrowers with high loan-to-income ratios and buy-to-let mortgages also saw a slight uptick, while arrears cases increased by 2.9%, marking a 32% rise compared to the previous year. Despite the rise in arrears, new possessions decreased by 5.6% from the prior quarter, though the total number of possessions was significantly higher than in 2023. Mortgage Lenders and Administrators Statistics – 2024 Q2
UK Economy Stalls Amid Cashflow Concerns and Upcoming Budget Uncertainty
The UK economy showed no growth in both June and July 2024, as per ONS data GDP monthly estimate, UK: July 2024, sparking concerns about the upcoming Autumn Budget. Higher corporation taxes are putting pressure on business cashflow, despite steady trading during the summer. While the services sector grew slightly, declines in production and construction signal challenges ahead for economic momentum.
Declining Swap Rates: A Welcome Relief for UK Borrowers Amid Recession Fears
The 2-year Swap Rate has fallen to 3.78%, its lowest since March 2023, and the 5-year rate falling to 3.417%. Experts link this decline to fears of a US recession and weakening global economic indicators, which have led to a more optimistic outlook for UK mortgage rates. However, caution remains as upcoming economic events, such as the UK Autumn Budget and inflation data, could still impact the market, making it important for borrowers to act swiftly while rates are favourable.
| Swap Rate | 12-Sep-24 | 13-Aug-24 | 13-Sep-23 |
|---|---|---|---|
| 2 Year | 3.782% | 4.014% | 5.201% |
| 5 Year | 3.417% | 3.593% | 4.568% |
Mortgage News – 9th September 2024
Last week has seen some positive rate reductions from high street lenders including NatWest, Barclays and Santander Accord Mortgages improve their affordability assessments and Skipton introduce Shared Ownership track record mortgage. House prices rose by 0.3% in August and Swap rates continue the downward trend.
Accord Mortgages Lowers Income Requirements and Increases LTV Limits
Accord Mortgages has lowered the minimum income requirement from £60,000 to £50,000 for borrowers seeking more than 4.49-times their income. This change allows those earning £50,000 to borrow up to five times their income for mortgages up to 90% loan-to-value (LTV), with the exception of the Boost LTI product, which still requires a £60,000 income for borrowing 5.5 times income. They also increased the maximum LTV for new build home purchases using its Boost LTI product from 85% to 90%.
Skipton BS Introduces Shared Ownership Track Record Mortgage
Skipton Building Society launched a Shared Ownership Track Record mortgage aimed at helping renters trapped in the rental cycle to become homeowners. The Track Record Mortgage scheme, which offers a 100% mortgage for renters, now includes a Shared Ownership option to make homeownership more accessible. This can potentially help thousands of first-time buyers afford homes, especially in lower-cost shared ownership properties.
Rightmove Shares Surge Following REA Group’s Acquisition Interest
Rightmove’s shares have risen 20% after REA Group announced its intention to bid for the property listing site. Declining interest rates could boost the UK housing market, benefiting Rightmove’s core business. However, previous concerns over competitive threats, the company’s strong classifieds business and growth in mortgages, commercial real estate, and rentals make it an attractive acquisition target.
Could there be a CGT rise for landlords in the autumn budget?
The proposed rise in Capital Gains Tax (CGT) in the upcoming autumn budget is causing anxiety among landlords, with many already contemplating exiting the buy-to-let market. A significant portion of landlords, particularly smaller and equity-rich ones, could be driven out of the sector, leading to reduced rental supply and higher costs for tenants. Experts suggest that if the CGT rise is implemented, as many as one-third of landlords may leave the market, making room for corporate investors to dominate the buy-to-let sector.
House Prices – Halifax Property Index
Halifax confirmed that house prices increased by 0.3% in August, following a 0.9% rise in July, bringing annual growth to 4.3%, the highest since November 2022. The average property now costs £292,505, just below the record high set in June 2022. While affordability challenges persist for many buyers due to higher mortgage costs, the housing market has shown resilience, and modest price growth is expected to continue as interest rates ease.
2 and 5 Year Swap Rates
Swap rates continue to show downward trends, reflecting changes in market expectations. The significant year-on-year declines in both 2-year and 5-year rates indicate easing pressures on long-term borrowing costs, providing potential relief for borrowers. However, the volatility suggests that lenders and borrowers should remain cautious, as external factors such as inflation and the Bank of England commentary could still impact future rate movements.
| Swap Rate | 04-Sep-24 | 05-Aug-24 | 05-Sep-23 |
|---|---|---|---|
| 2 Year | 3.980% | 4.006% | 5.457% |
| 5 Year | 3.609% | 3.570% | 4.817% |
Mortgage News – 2nd September 2024
The UK mortgage market has seen a mix of trends in recent weeks and months, with notable shifts in lending activity and property transactions. Later life mortgage lending has declined in Q2 2024, while mortgage approvals for house purchases have risen, indicating a stronger demand for homeownership. Additionally, house prices have experienced slight monthly declines, though annual growth remains positive, and energy efficiency is becoming an increasingly important factor for buyers.
Mortgage Rate Changes
- Virgin Money reduced rates across their residential purchase range by up to 0.28%
- TSB cut rates by up to 0.50% on their fixed rates for new business and existing customers.
- Precise Mortgages reduced rates across their residential and buy to let ranges.
UK Finance Q2 2024 Later Life Mortgage Lending
UK Finance’s Q2 data shows a decline in later life mortgage lending, with 32,990 new loans to older borrowers, down 8.34% year-on-year, and a total lending value of £5 billion, down 17.5%. Lifetime mortgages also saw a decrease, with 5,610 new loans totalling £470 million, a 6% drop compared to last year. However, retirement interest-only mortgages increased, with 326 new loans up 23% year-on-year, and their total value rose by 15.4% to £30 million. UK Finance Q2 2024 Later Life Mortgage Lending
Mortgage Approvals – Bank of England
The Bank of England’s latest Money and Credit Report shows that net mortgage borrowing reached £2.8 billion in July, the highest since November 2022, and up from £2.6 billion in June. Mortgage approvals for house purchases also increased to 62,000, the highest since September 2022, while approvals for remortgaging declined to 25,100. This indicates a rising trend in home purchases, contrasting with a decrease in remortgaging activity. Money and Credit – July 2024
Residential Transaction Stable in July
In July 2024, UK residential property transactions reached 90,630 (seasonally adjusted), 7% higher than July 2023 but slightly lower than June 2024. Non-seasonally adjusted residential transactions were 96,800, a 13% increase from July 2023 and 7% higher than June 2024. Meanwhile, non-residential transactions also saw an increase, with seasonally adjusted figures up 4% from June 2024 and 2% higher than July 2023. UK monthly property transactions commentary
House Prices – Nationwide
In August, UK house prices fell by 0.2% month-on-month, but the annual growth rate increased to 2.4%, marking the fastest pace of growth since December 2022. Nationwide’s Chief Economist noted that while house price growth remains subdued, the market shows resilience despite higher interest rates, with energy efficiency increasingly influencing property values. More energy-efficient homes now attract a modest premium, while less efficient properties face larger discounts, reflecting growing importance on energy performance in the housing market. Annual house price growth edged higher in August
Home Ownership boost – Halifax
Halifax has launched a “Home Ownership Boost” for first-time buyers, offering up to £2 billion in loans with a new loan-to-income (LTI) limit of 5.5x, allowing borrowers to increase their maximum loan value by up to 22%. This initiative aims to help first-time buyers overcome the challenge of borrowing enough to purchase a home. For households earning £50,000 or more, this change could increase the maximum loan amount from £224,500 to approximately £275,000.
eXp UK surpasses 600 agent milestone
eXp UK has surpassed 600 member agents, adding 100 new agents in just six months, highlighting the growing momentum in the self-employed agency sector. This expansion comes after launching its brokerage model and buyer representation programme earlier this year. Adam Day, head of eXp UK, emphasized that the growing network not only offers significant earning potential but also provides increased opportunities and support for its agents, making it the largest self-employed agent network in the UK.
2 and 5 Year Swap Rates
Swap rates continue to fluctuate. The 2-year rate decreased by 0.019% since last week and dropped significantly by 1.414% compared to last year. However, the 5-year rate saw a slight increase of 0.020% since last week but has experienced a substantial decline of 1.069% over the past year.
| Swap Rate | 29-Aug-24 | 30-Jul-24 | 30-Aug-23 |
|---|---|---|---|
| 2 Year | 4.057% | 4.255% | 5.471% |
| 5 Year | 3.703% | 3.778% | 4.772% |
