The mortgage industry has reacted to the Autumn Statement this lunchtime, with some suggesting it will “restore confidence” while others claim areas of the sector “have been bypassed”.
Lodestone Mortgages & Protection founder and director Craig Fish suggests the mortgage market “has escaped relatively unscathed” from today’s announcement.
Delivering the budget earlier today, chancellor Jeremy Hunt has confirmed that the stamp duty cuts announced in the September mini-Budget will end in early 2025.
Hunt said that the Office for Budget Responsibility expects housing activity to slow over the next two years, “So the stamp duty cuts announced in the mini-Budget will remain in place, but only until 31 March 2025.”
Fish says: “It’s good to see that the stamp duty measures will remain until March 2025 during what is likely to be a slower property purchase market.”
MT Finance director Tomer Aboody believes the government is maintaining the stamp duty reduction for now “in the hope that banks can also be more flexible regarding mortgages”.
“This will enable the housing market to continue to perform, along with associated businesses within the sector, which is important for the wider economy.”
“By the time the stamp duty cuts are phased out by 31 March 2025, the UK should hopefully be in a much better place, particularly as long-term interest rates should be lower as inflation is brought under control.”
Together head of introducers Scott Clay says the chancellor “gave fair warning” in the setup of today’s statement, “difficult decisions to keep mortgage rates down were clearly touted with promises of the government and bank working in lockstep to fight inflation and avoid spiralling interest rates”.
“However, with the OBR expecting housing activity to slow significantly next year; the decision to “sunset” stamp duty cuts in March 2025 in a bid to jumpstart the market is short-sighted.”
“While this will likely force first-time buyers (FTBs) and those looking to move house to jump before they’re pushed and missed out on a good deal; there are swathes of potential homeowners who have been overlooked by this decision.”
Rightmove’s property expert Tim Bannister says the “clock now ticking on potential stamp duty savings”.
Bannister suggests this will “bring a bit more urgency for people trying to get on the ladder or trade up in the next few years”.
“As it’s still in place for a couple of years we don’t foresee a significant number of people bringing their plans forward to 2023, especially due to current affordability challenges, but we may see a jump in new sellers towards the end of next year and into 2024 to ensure they can move in time.”
Bannister says it’s likely to be “most challenging for FTBs with smaller deposits, as we know it’s currently taking them an average of five years to save up enough for a deposit”.
“However, the current savings are lower than the stamp duty holiday of 2020, so we don’t foresee the removal having a significant dampening effect in 2025, with factors such as mortgage rates and house prices likely to have a much bigger impact on activity levels.”
R3 Mortgages director Riz Malik says the retention of former chancellor Kwasi Kwarteng’s stamp duty changes until 2025 “will be welcomed by FTBs”.
However, Malik highlights that cutting capital gains allowances from next April “could accelerate the disposal of buy-to-let (BTL) property”, suggesting there could be a BTL “bonfire” in the next 12 months.
“Hunt commented that the recession will be shallower and reduced. Coupled with the Bank of England’s expectation that inflation will fall by the end of next year, interest rates could fall. This signals that tracker products’ recent popularity could continue especially if there is a spread between them and fixed rates,” he adds.
Dimora Mortgages director Jamie Lennox says the cuts to the capital gains allowance threshold “could be the final nail in the coffin for small BTL owners”.
“They’re already facing rising rates and the reality is that they can’t borrow enough on a remortgage to switch lenders. This could lead to a huge sell-off from landlords that could lead to house prices dropping at a faster rate than they already are.”
Meanwhile, Henchurch Lane Financial Services mortgage broker Paul Holland says today’s statement “will have the intended impact on the market and completes the U-turn carried out on the mini budget announced in September”.
Holland explains: “I imagine markets will respond positively and the mortgage market especially should see some short-term improvements as a result. We should see confidence restored to a degree and rates should start to fall in the coming weeks.”
EHF Mortgages managing director Justin Moy says he is “pleased to see minimal impact on mortgages”.
However, he states: “Landlords have been largely bypassed, the capital allowance reductions may be an issue if rates don’t stabilise soon – that may be a can to kick down the road another day.”
“But I think we all expected the relative increase in taxation, and as a result, we should see the financial markets react ‘positively’ and continue the gradual reduction in mortgage rates we have seen over the last few weeks.”
Woolbro Group director Ben Woolman says: “By side-stepping Britain’s crippling housing crisis, the Government has again kicked one of the biggest socio-economic crises of our time into the long grass.”
“The prospect of owning a home is fast becoming an unachievable dream for many. And despite claiming to be the party of ownership, the Tories have done very little to help struggling FTBs onto the property ladder.”
“It has been well over a year since the then chancellor Rishi Sunak vowed to turn ‘Generation Rent into Generation Buy’. Since then, we have seen house prices surge to eyewatering new highs, soaring mortgage rates and the looming end of the Help to Buy scheme.”
Woolman says he believes Britain’s “antiquated planning must be reformed in order for the country to build the new homes it so desperately needs. It is not right that new homes for young families are being blocked by local politicians who care only about appeasing anti-development constituents”.
He also urges the government to implement a replacement Help to Buy scheme “as quickly as possible to avoid a slowdown in the construction of new homes over the coming years”.
