Mortgage Strategy’s Top 10 Stories of the Week
Stay abreast of the latest developments impacting the mortgage industry. From potential tax hikes proposed by Chancellor Rachel Reeves to strategic leadership appointments like Toni Smith joining Sesame Bankhall, this week’s top stories provide valuable insights into the evolving market landscape.
Read more below:
Reeves targets up to £20bn of tax hikes: Goldman Sachs
Rachel Reeves aims to raise £15bn to £20bn in the upcoming Budget, with Goldman Sachs predicting increases in capital gains and inheritance taxes. Facing a £22bn fiscal shortfall and significant spending pressures, she has ruled out income tax, national insurance, VAT, and corporation tax hikes. Instead, smaller measures are anticipated, such as reforms to capital gains tax and the elimination of certain inheritance tax reliefs. Goldman noted that while some tax hikes might yield modest returns, broader reforms would be essential for financial stability.
Toni Smith joins Sesame Bankhall to lead adviser network
Toni Smith joined Sesame Bankhall Group as the new distribution director, a role aimed at leading its adviser network. With over 35 years in the mortgage market, Smith previously served as chief operating officer and chief distribution officer at Primis Mortgage Network. She will focus on driving growth, enhancing distribution, and developing mortgage and protection propositions for Sesame’s members. Set to begin on 18 November, her appointment awaits FCA approval, and she will also join the Executive Committee. Smith expressed enthusiasm for Sesame’s ambitious plans and the opportunity to collaborate with members and partners.
Interest rates to hit 3% in 2025: Goldman Sachs
Goldman Sachs projected that the Bank of England will cut interest rates, reaching 3% by September 2025. The forecast follows anticipated easing in wage growth and services inflation, prompting the Monetary Policy Committee (MPC) to begin rate cuts from November. Currently at 5% after a 0.25% reduction in August, the MPC is expected to hold rates steady during an upcoming meeting, with a majority vote favouring this approach. However, two rate cuts are anticipated by the end of the year as inflation trends are closely monitored.
Santander extends sub-4% deals, launches resi and landlord PT cuts
Santander is reducing selected fixed-rate deals for residential and landlord mortgages starting 17 September 2024, with some rates dropping below 4%. The lowest offer is a two-year fix at 3.99% for 60% LTV residential purchases, with three-year and five-year options at 3.94% and 3.80%, respectively. Additionally, various product transfer rates will see reductions, while new build fixed rates will decrease by 4 to 23 basis points. New buy-to-let tracker rates will also be introduced.
YBS urges Chancellor to fix ‘broken’ housing market ahead of Budget
Yorkshire Building Society has called on Chancellor Rachel Reeves to address the UK’s “broken” housing market ahead of the upcoming Budget on 30 October. The mutual organisation proposes measures to support first-time buyers, including a new help-to-buy scheme and a dedicated ISA for saving deposits. It also advocates for a review of landlord taxation and regulation to improve private rental quality, an easier energy-saving framework, and an increase in the personal savings allowance. The society emphasises the need for comprehensive housing reform to ensure affordability and availability for all.
BoE keeps interest rates on hold
The Bank of England’s Monetary Policy Committee (MPC) has decided to maintain interest rates at 5%, with an eight to one vote in favour. Despite speculation of a potential cut following the US Federal Reserve’s recent reduction, analysts had largely anticipated the rate to remain unchanged. Ongoing inflation, particularly in the services sector, influenced the MPC’s decision. This follows an August cut from a 16-year high of 5.25%, marking the first reduction in four years, with markets still predicting two cuts by year’s end.
Planning and stamp duty overhaul needed to solve housing crisis: UK Finance
UK Finance has called for significant reforms to address the UK’s housing crisis, highlighting the need for a revamped planning system, a permanent stamp duty cut, and adjustments to housing allowances to align with rising rents. In its report, “Homes We Need,” it emphasises the necessity for consistent planning rules across the UK and recommends maintaining current stamp duty nil-rate bands. Additionally, it stresses the importance of creating age-appropriate housing and improving standards in the private rental sector to meet diverse housing needs.
News Analysis: Will the market hit sub-3.5% mortgage rates by Christmas?
As Christmas approaches, UK mortgage brokers are speculating whether rates could fall below 3.5%. Following the Bank of England’s recent base-rate cut to 5%, lenders have reduced home-loan rates, marking the first decrease in four years. Analysts suggest that ongoing inflation, upcoming Budget announcements, and potential US rate cuts will significantly influence UK rates. While some expect further reductions, others predict rates will stabilise around 4.5%. Factors such as rising energy prices and proposed tax changes may also impact the housing market.
Property Ombudsman updates mould guidance for renters and landlords
The Property Ombudsman has released updated guidelines for renters and landlords regarding damp and mould in homes, highlighting that about one in ten households face these issues. This report, titled “Mould, Damp and Condensation in the Private Rented Sector,” follows over 1,000 inquiries from renters last year, leading to significant compensation awarded to tenants. The updates come alongside the government’s Renters’ Rights Bill, which aims to enhance protections, including banning no-fault evictions and extending Awaab’s law to private landlords, following a tragic incident involving a child’s death due to mould exposure.
BoE rate reaction: Markets look for economic boost
The Bank of England’s Monetary Policy Committee has opted to maintain interest rates at 5%, with an 8-1 vote. Markets are now anticipating potential economic boosts by year-end, particularly as UK GDP flatlined in July. Despite the hold, lenders are reducing mortgage rates, with expectations of two cuts by December, possibly lowering the rate to 4.5%. Analysts suggest that easing inflation and rising wages may enhance buyer sentiment, promoting a more active property market in the coming months, despite uncertainties surrounding the upcoming Budget.
