This week's Top 10 Stories in Mortgage Strategies
This week: Budget 2024 brings changes including a reduction in the right to buy discount, an increase in social rent and improved OBR forecasts for mortgage rates and house prices. Get all the details below. 
Budget 2024: Right to Buy discount falls, social rent rises
Finance Minister Rachel Reeves announced cuts to the right-to-buy discount in her autumn budget. The current discount of up to 70% off for council tenants will be reduced. Local authorities retain the proceeds from the sale of houses to be reinvested in social housing. In addition, the government will consult on increasing social rents to provide financial stability for housing providers. These measures are aimed at increasing the supply of affordable housing, but concerns have been raised about the impact on tenant homeownership.
Budget 2024: OBR raises mortgage rate and house price forecasts
The Office for Budget Responsibility (OBR) has raised its outlook for mortgage rates and house prices in its latest Economic and Fiscal Outlook. Mortgage rates are expected to peak at 4.5% in 2027, while house price growth is expected to slow slightly from 1.7% in 2024 to 1.1% in 2025. However, home prices are expected to increase by 2.5% annually from 2026 to 2030, driven by income. growth. The OBR also forecasts an increase in property transactions and housing starts.
Santander changes mortgage interest rates following central bank decision
Santander has adjusted its mortgage interest rates following the Bank of England's decision to lower its benchmark interest rate by 0.25 percentage points to 4.75%. From 3 December 2024, existing Santander Tracker mortgage products will be reduced by 0.25%, with the Follow-On Rate (FoR) decreasing to 8.00% and the Standard Variable Rate (SVR) decreasing to 7.00%. These changes are intended to reflect the Bank of England's recent interest rate cuts.
Most landlords unfazed by Budget SDLT tax increase
UK landlords are also largely unfazed by a 2% rise in stamp duty on second home purchases, despite fears that capital gains tax could rise in the autumn budget. A survey by Benham and Reeves found that 19% of landlords have paused investment plans due to tax concerns, but 84% plan to maintain their buy-to-let portfolios next year. Stamp duty is seen as a manageable cost, with only 11% of landlords intending to grow their portfolio being deterred from increasing stamp duty.
Bank of England cuts interest rates to 4.75%
The Bank of England cut its benchmark interest rate by 0.25% to 4.75% following an 8-1 vote from its Monetary Policy Committee. This is the second rate cut since August, following 14 consecutive rate hikes. This decision is in line with similar measures by the European Central Bank. Although inflation is lower than expected and the economy is showing signs of growth, there are concerns about potential economic overheating. The central bank is now cautious about cutting rates further in December to avoid overstimulating the economy.
Industry reacts to BoE's benchmark interest rate cut
Industry reaction has been mixed but highlights generally positive sentiment after the Bank of England cut its benchmark interest rate from 0.25% to 4.75%. Ross Turrell of CHL Mortgages says this will provide a boost to the property market despite ongoing challenges. Market Financial Solutions' Paresh Raja expects market momentum to pick up, while Phoebus Software's Richard Pike warns against changes to fixed mortgage rates, predicting limited changes. Overall, despite widespread economic uncertainty, experts agree that this rate cut will stimulate market activity and benefit homebuyers, landlords, and real estate investors.
FTB braces for 20% reduction in stock if stamp duty threshold falls: eXp UK
From April 2025, first-time buyers (FTBs) in England will see a 20% reduction in stamp duty exemptions as the threshold for a home will be reduced from £425,000 to £300,000. Currently, 62% of homes are below the £425,000 threshold, but under the new rules this will fall to 42%, affecting more than 90,000 properties. Some cities are expected to see even bigger declines in SDLT-free homes, with Bristol seeing a 34% decline. FTBs are being urged to act quickly before the changes take effect in March.
Landlords face £6,000 budget tax increase: stock based
The recent Autumn Budget increased stamp duty on holiday homes in England from 3% to 5%, adding an average of £6,191 to your tax bill. For a home with a national average price of £309,572, second home buyers will now be liable for a tax bill of between £12,266 and £18,457. London, the South East and other regions are seeing even sharper increases. Landlords, already suffering from rising costs, face further challenges as rents may be increased to offset the tax burden, Inventory Base warns.
House prices expected to rise by £84,000 by 2029: Savills
Mr Savills expects UK house prices to rise by £84,000 by 2029 as inflation returns to 2% and interest rates are expected to be cut. The real estate agent expects it to rise 4% in 2025 and then 23.4% by 2029 as mortgage rates ease. Despite continued cost of living pressures, home prices are expected to rise due to improved affordability and increased buyer confidence. However, the market may experience short-term fluctuations due to changes in mortgage rates and property taxes.
Mr Parrett retires from Nottingham BS after 42 years in financial services
