Welcome to your weekly property market and economic update. This week, we’re seeing some intriguing developments in the mortgage sector, ranging from the bemusing to the potentially beneficial for homebuyers.
Firstly, let’s address an odd quirk in mortgage applications. Metro Bank has raised eyebrows with their expenditure section, lumping “Alcohol drinks, tobacco and narcotics” into one category. While this may seem a touch overzealous, it serves as a reminder to be thorough and precise when detailing your monthly outgoings on mortgage applications.
On a more positive note, the mortgage rate war continues to heat up, bringing good tidings for borrowers. Major lenders including Halifax, TSB, NatWest, and Nationwide have implemented further rate reductions. This trend is largely driven by market expectations of future Bank of England base rate cuts, aimed at stimulating economic growth.
In a significant move for first-time buyers, Nationwide has increased its maximum Loan to Income ratio from 5.5x to 6x. This change, applicable to their Helping Hand mortgage available up to 95% loan-to-value on 5- and 10-year fixed rates, could allow first-time buyers to borrow up to 33% more. It’s a substantial boost for those looking to step onto the property ladder in today’s challenging market.
However, prospective buyers should be aware of upcoming changes to Stamp Duty Land Tax (SDLT). Barring any announcements in the autumn Budget, SDLT thresholds are set to decrease from 1st April 2025. The nil-rate threshold for first-time buyers will reduce from £425,000 to £300,000, and the general threshold will drop from £250,000 to £125,000.
To put this into perspective, a first-time buyer purchasing a property for £425,000 currently pays no SDLT. Post-April 2025, they would face a £6,250 tax bill. Similarly, on a £450,000 property, the SDLT liability will jump from £1,250 to £7,500. These impending changes may incentivise buyers to act sooner rather than later.
It’s worth noting that property transaction times are currently longer than usual due to bottlenecks in the conveyancing process. Buyers should factor this into their timelines, especially if aiming to complete before the SDLT changes take effect.
In conclusion, while the mortgage market presents some peculiarities, it also offers opportunities. Falling rates and increased borrowing capacities are positive signs for buyers, but the looming SDLT changes add urgency to decision-making. As always, potential buyers should carefully consider their financial situation and seek professional advice before making any significant property decisions.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Author:
Founder and mortgage and protection adviser in Albion Financial Advice
Dariusz Karpowicz is a seasoned adviser in the financial services industry. After gaining valuable experience working with an established broker, he founded his own practice, Albion Financial Advice. This firm is dedicated to assisting clients in acquiring properties and advising on various mortgage options. Born and raised in Gdańsk, Poland, Dariusz moved to the United Kingdom in 2006.
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