Mortgage News – 27th August 2024
Mortgage rates are currently experiencing significant reductions, with several major lenders, including TSB, HSBC, and Nationwide, reducing their rates across various products. As borrowers increasingly prioritize long-term payment stability, experts predict that rates will stabilize around 3%, although the era of ultra-low rates is likely over. Meanwhile, the property market is expected to gain momentum towards the end of 2024, driven by these ongoing rate cuts, though economic factors such as inflation and consumer confidence will remain critical in shaping the market’s trajectory.
Mortgage Rate Changes
- TSB cut fixed rates for first-time buyers and home movers by up to 0.25%.
- HSBC made reductions across their residential and buy to let ranges.
- Barclays cut rates on their existing customer range.
- Nationwide reduced their fixed rates which are now priced from 3.78%.
- Halifax reduced rates on their remortgage range.
- NatWest cut rates by up to 0.16% across their purchase and remortgage rage.
Where are mortgage rates heading?
Borrowers are increasingly prioritizing payment stability and peace of mind over just interest rates, with more opting for longer-term fixed rates to avoid volatility. Investments points to optimism in the mortgage market due to the Bank of England’s recent rate cut and anticipated further reductions, but advise caution given the uncertain economic landscape. The unpredictability of future mortgage rates, with expectations that rates will stabilize around 3%, but the era of ultra-low rates is unlikely to return soon.
Securing your rate early can see a large reduction as rates reduce
With frequent rate cuts by lenders, we understand the importance of staying vigilant to secure better mortgage rates for our customers between offer and completion. We have saved thousands for our customers by continuously monitoring and adjusting mortgage applications to reflect rate reductions. This ongoing oversight, is crucial in a volatile market where lenders are unlikely to inform borrowers of better rates, making the role of a diligent broker like Kerr & Watson invaluable.
Property Market Outlook for Late 2024
As the year progresses, the ongoing rate cuts by lenders, such as Nationwide’s recent 5-year fixed rate offer, are likely to stimulate increased buyer activity in the property market. Many experts predict that the market could see a significant boost in September as families refocus after the summer, with further momentum building if the Bank of England implements another rate cut before year-end. While the market is expected to maintain some buoyancy, broader economic factors like inflation and consumer confidence will also be crucial in shaping the property market’s performance through to Christmas.
New MPC member appointed – Alan Taylor
Chancellor Rachel Reeves has appointed economist Alan Taylor to the Monetary Policy Committee following Jonathan Haskel’s departure, ensuring the committee remains at nine members for their September meeting. Taylor favours lower interest rates, though he is cautious about keeping rates too low for extended periods. His recent research suggests concerns about the long-term economic impact of high interest rates, but he also warns that ultra-low rates could lead to financial instability in the future. Professor Alan Taylor confirmed as new member of Monetary Policy Committee
Individual Insolvency Statistics – 20th August
The Insolvency Service reported that 10,524 individuals entered insolvency in England and Wales in July 2024, a figure consistent with June 2024 but 24% higher than July 2023. The month’s insolvencies included 634 bankruptcies, 4,163 debt relief orders (DROs), and 5,727 individual voluntary arrangements (IVAs), with DROs reaching their highest monthly numbers since their introduction, likely due to recent changes in fees and eligibility. Despite a 12% year-on-year increase in IVAs, the overall insolvency rate for the 12 months ending July 2024 decreased slightly compared to the previous year. Individual Insolvency Statistics, July 2024
Mortgage Guarantee Scheme Quarterly Statistics
The Mortgage Guarantee Scheme facilitated 44,368 mortgage completions from its launch in April 2021 to March 2024, accounting for 1.5% of all residential mortgage completions in the UK during that period. First-time buyers made up 86% of these completions. The total value of mortgages supported by the scheme reached £8.5 billion. Mortgage Guarantee Scheme Quarterly Statistics 21 August 2024
Help to Buy: Individual Savings Account (ISA) Scheme Quarterly Statistics
HM Treasury reported that by the end of March 2024, 782,299 bonuses had been paid through the Help to Buy: Individual Savings Account (ISA) scheme, supporting 601,476 property completions. The total value of these bonuses was £998 million, contributing to property purchases worth £107 billion. The average bonus value was £1,276. Help to Buy: Individual Savings Account (ISA) Scheme Quarterly Statistics 21 August 2024
Private registered provider social housing stock and rents in England 2022 to 2023
The report on private registered provider (PRP) social housing in England reveals that as of March 31, 2023, PRPs owned 3.18 million units, marking a 1.3% increase from the previous year, with general needs units experiencing the largest growth since 2017. Rent data shows that the average weekly net rent for general needs social housing was £102.15, reflecting a 4.2% increase from 2022, while Affordable Rent units saw a 5.2% rise. Additionally, the sector is gradually returning to pre-pandemic levels of activity, with eviction rates still below 2020 levels but rising since 2022 as restrictions have eased. Private registered providers stock and rents in England
2 and 5 Year Swap Rates
Over the past month and year, there has been a significant decline, with the 2-year rate down by 0.283% since last month and 1.415% since last year, and the 5-year rate down by 0.187% since last month and 1.141% since last year.
| Swap Rate | 22-Aug-24 | 23-Jul-24 | 23-Aug-23 |
|---|---|---|---|
| 2 Year | 4.076% | 4.359% | 5.491% |
| 5 Year | 3.683% | 3.870% | 4.824% |
Mortgage News – 19th August 2024
Mortgage Rate Changes
- NatWest reduced purchase and remortgage new business rates with cuts up to 0.20%
- Nationwide announced further cuts for new and existing customers, reducing rates by up top 0.20% with their lowest now 3.83%
- Halifax reduced rates by up to 0.37% on 3 year remortgages
- TSB reduced rates on their residential range by up to 0.35%
- Virgin Money reduced selected fixed rates, with their lowest rate 3.99%
Major Lenders Raise Maximum LTV Limits to Support New-Build Property Market
- Nationwide is boosting support for the new-build sector by raising the maximum loan-to-value (LTV) for new-build house purchases from 85% to 90%.
- HSBC increased their maximum LTV tiers for new build houses and non-new build flats to 90% and new build flats to 85%.
- Leeds Building Society also increased their maximum LTV to 95% and new build flats to 90%.
Recent labour data reduces the chances of a September rate cut
Total pay growth slowed to 4.5%, its slowest pace in almost three years, but wage growth remains above levels consistent with 2% inflation. Regular earnings growth also slowed but stayed higher than expected at 5.4%, while the unemployment rate fell to 4.2%. This could lead to higher-than-expected services inflation, reducing the likelihood of a rate cut in September. Labour market overview, UK: August 2024
Inflation July 2024
Inflation July 2024. Headline CPI inflation rose to 2.2% in July, surpassing the Bank of England’s 2% target. However, core and services inflation showed signs of easing, with core inflation falling to 3.3% and services inflation dropping to 5.2%. Experts are now questioning the likelihood of a September rate cut and its potential impact on mortgage pricing and the property market. Consumer price inflation, UK: July 2024
House Price Index and Price Index of Private Rents
The Office for National Statistics has released the latest House Price Index and Price Index of Private Rents (PIPR). The data revealed that average UK house prices rose by 2.7%, reaching £288,000 in the 12 months to June 2024. Additionally, average UK private rents increased by 8.6% in the 12 months to July 2024, remaining unchanged from the previous month. Private rent and house prices, UK: August 2024
GDP Growth Q2
The UK economy grew by 0.6% in Q2, continuing its recovery from a late 2024 recession and building on a strong Q1 performance. This brings year-on-year growth to 0.9%, the highest in seven quarters. Although the economy stalled in June with 0% growth compared to 0.4% in May, annualising the GDP growth from the last two quarters would position the UK as the fastest-growing G7 economy this year at 2.6%, surpassing the IMF’s forecast for the US.
Financial Strain Among UK Adults Amidst Stable Living Costs
New ONS data reveals that 25% of adults feel they couldn’t afford an unexpected £850 expense. While 54% reported no change in their cost of living over the past month, 45% experienced an increase. Additionally, 13% of adults disagreed or strongly disagreed that their household income meets their basic living needs. Public opinions and social trends, Great Britain: July 2024
2 and 5 Year Swap Rates
The 2-year swap rate remained unchanged compared to last week, while the 5-year swap rate decreased slightly by 0.014%. However, over the past month and year, there has been a more notable decline, with the 2-year rate down by 0.255% since last month and 1.609% since last year, and the 5-year rate down by 0.158% since last month and 1.345% since last year.
| Swap Rate | 15-Aug-24 | 16-Jul-24 | 16-Aug-23 |
|---|---|---|---|
| 2 Year | 4.062% | 4.317% | 5.671% |
| 5 Year | 3.642% | 3.800% | 4.987% |
Mortgage News – 12th August 2024
Last week mortgage rates have dipped below 4%, with major lenders like Barclays, HSBC, Halifax, and Coventry offering competitive rates for eligible customers, signalling potential further rate cuts as lender competition intensifies. In the housing market, Halifax reports a 0.8% rise in house prices for July, marking the highest annual growth rate of 2.3% since January 2024. Meanwhile, UK Finance data shows a slight decrease in residential homeowner arrears and a modest rise in buy-to-let arrears, with repossession actions continuing to climb but still well below levels seen during the 2009 financial crisis.
Mortgage Rate Changes
- HSBC reduced several residential and buy to let rates for new and existing customers.
- Barclays reduced a selection of their purchase and remortgage rates with notably their 60% LT product reduced to 3.84%
- Halifax reduced selected products by 0.16% with a 5 year fixed rate now 3.99% up to 60% LTV
- Coventry reduced all fixed rates at 65-85% for new and existing customers.
- Santander announced rate cuts up to 0.19% for Tuesday 13th.
- NatWest reduced rates by up to 0.18% across their purchase and remortgage range.
- The Mortgage Works (TMW) the buy to let lender reduced selected rates up to 0.45%, with new business rates now starting at 3.49%.
- Accord Mortgages reduced their rates on its buy to let product range by up to 0.15% across all loan-to-values (LTVs) up to 75%.
Mortgage rates now below 4%
Barclays, HSBC, Halifax and Coventry now have rates starting with a 3 for eligible customers with a 40% deposit. This trend as a promising sign for borrowers, suggesting that more rate cuts may be on the horizon as competition among lenders intensifies.
Halifax House Price Index
House prices increased by +0.8% in July, following three relatively flat months, according to Halifax. Meanwhile, the annual growth rate of +2.3% is the highest since January 2024. Halifax House Price Index – July 2024
UK Finance arrears and repossessions
UK Finance’s latest data shows a slight decrease in residential homeowner arrears, with 96,070 mortgages in arrears in Q2 2024, and a small increase in buy-to-let arrears to 13,570. While possessions of mortgaged properties have risen, largely due to courts clearing historic cases, the overall numbers remain significantly lower than during the 2009 financial crisis. Experts attribute these trends to easing pressures from higher rates and cost of living, with expectations of further improvements as inflation and energy costs decline. UK Finance Arrears and possessions – Q2 2024
Repossessions has continued to rise
The Ministry of Justice’s report for April to June 2024 shows that both mortgage and landlord possession actions have continued to rise this quarter. Mortgage claims have reached their highest level since Q2 2019, nearing pre-COVID volumes, with increases seen across all mortgage possession actions. Landlord possession actions have also risen compared to the same period in 2023, but at a slower rate than mortgage actions and still below pre-COVID levels. Mortgage and landlord possession statistics: April to June 2024
2 and 5 Year Swap Rates
The 2-year swap rate has decreased slightly by 0.015% compared to last week, while the 5-year swap rate has increased by 0.050% over the same period. However, the overall trend over the last month and year shows a more significant decline, with the 2-year rate down by 0.351% since last month and 1.342% since last year, and the 5-year rate down by 0.257% since last month and 1.080% since last year.
| Swap Rate | 08-Aug-24 | 09-Jul-24 | 09-Aug-23 |
|---|---|---|---|
| 2 Year | 4.062% | 4.413% | 5.404% |
| 5 Year | 3.656% | 3.913% | 4.736% |
Mortgage News – 5th August 2024
Last week The Bank of England made significant economic updates, including a reduction of the base rate to 5%, reflecting the Monetary Policy Committee’s concerns over inflation and economic growth. The latest Money & Credit report shows a notable increase in mortgage borrowing, while the government has set ambitious new housing targets to tackle the UK’s housing crisis. Additionally, recent property market data highlights fluctuating mortgage approvals and a rise in Stamp Duty Land Tax (SDLT) transactions and receipts, indicating a dynamic housing market.
Mortgage Rate Changes
- NatWest reduced their fixed rates up to 0.15%
- Virgin Money reduced their fixed rates by up to 0.23% and launched a number of free valuation deals.
- Halifax announced rate cuts on a selection of mortgage products for home movers, remortgages and product transfers.
- Leeds BS reduces rates up to 0.12%
- Skipton announced rate reductions across their residential high loan to value range and buy to let range.
- BM Solutions (BTL Lender) reduced rates by up to 0.16%
Bank of England cuts base rate to 5%
The Bank of England has cut the base rate by 0.25% to 5%. The Monetary Policy Committee (MPC) voted 5–4 to reduce the Bank Rate by 0.25 percentage points to 5%, with some members preferring to maintain it at 5.25%. The MPC’s latest projections indicate that while CPI inflation is expected to rise to around 2¾% later this year, domestic inflationary pressures are anticipated to fade over the coming years due to the restrictive stance of monetary policy, though the committee remains vigilant about the risks of persistent inflation. Bank Rate reduced to 5% – August 2024
Money and Credit – June 2024
The Bank of England released its latest Money & Credit report showing that individuals borrowed a net total of £2.7 billion in mortgage debt in June, up from £1.3 billion in May. Net mortgage approvals for house purchases remained largely unchanged at 60,000 in June, while approvals for remortgaging fell from 29,300 to 27,500 during the same period. Money and Credit – June 2024
Housing targets increased to get Britain building again
The government announced a significant overhaul of the planning system aimed at addressing the country’s severe housing crisis and boosting the economy. All councils in England will be assigned the goal of delivering 1.5 million new homes. Also A review of the greenbelt to identify ‘grey belt’ land for development, with a focus on ensuring 50% of new homes are affordable and a requirement for every area to have local housing plans, with the government ready to intervene if progress stalls. Housing targets increased to get Britain building again
UK monthly property transactions
The ONS has published data which showed a significant rise in net borrowing of mortgage debt, increasing from £1.3 billion in May to £2.7 billion in June. Despite this increase, net mortgage approvals for house purchases remained stable at 60,000, while approvals for remortgaging declined from 29,300 to 27,500. The data indicates a mixed picture of the mortgage market, with steady home purchase activity but a drop in remortgaging. UK monthly property transactions commentary
Residential property transactions and Stamp Duty receipts
The ONS confirmed that total SDLT transactions in Q2 2024 (April to June) were 15% higher than in the previous quarter, and 9% higher than in Q2 2023. Meanwhile, residential property receipts in Q2 2024 were 25% higher than in the previous quarter, and 8% higher than Q2 2023. Further evidence of the pent-up demand in the UK’s housing market
Nationwide July 24 House Price Index
Nationwide confirmed that UK house prices increased by 0.3% month on month in July, after taking account of seasonal effects, according to the Nationwide. This resulted in a slight pickup in the annual rate of house price growth from 1.5% in June, to 2.1% in July – the fastest pace since December 2022. House price growth edged up in July
Bank of England has hit inflation target just 30% of the time since 1997
The ONS has published data showing that the Bank of England has only maintained its inflation target of 2% (specifically between 1% and 2%) 30% of the time since gaining independence in 1997. Analysis indicates that inflation has often deviated from this target due to external factors like the Global Financial Crisis and other geopolitical events, prompting questions about whether a more flexible inflation target might be appropriate. Instances where the Bank allowed inflation to run above target include periods following the Dot Com bubble and the 2008/09 financial crisis, highlighting the potential need for a broader mandate that accounts for economic and geopolitical circumstances.
2 and 5 Year Swap Rates
The 2-year swap rate has decreased by a whopping 0.228% compared to last week. Similarly, the 5-year swap rate has decreased by 0.236%. These changes indicate a notable downward trend in swap rates.
| Swap Rate | 01-Aug-24 | 02-Jul-24 | 02-Aug-23 |
|---|---|---|---|
| 2 Year | 4.077% | 4.480% | 5.484% |
| 5 Year | 3.606% | 3.983% | 4.779% |
