Mortgage rates to rise by 100bps, house prices up by £40,000: OBR

The Office for Budget Responsibility forecasts a 100-basis-point rise in mortgage rates over the next three years, peaking at 4.7% in 2028, while house prices are expected to increase by £40,000 by 2029.

A slower-than-expected reduction in interest rates has raised mortgage repayment estimates, affecting the 1.8 million mortgages up for renewal this year.

Although house prices grew faster than anticipated in late 2023, this momentum is expected to slow due to higher interest rates. However, the government’s plan to build 1.5 million homes could ease price growth slightly by increasing housing supply.

Halifax Intermediaries makes rate changes, Precise adds new products

Halifax Intermediaries has adjusted rates on product transfer and remortgage products, cutting some by up to 0.16% while increasing others by up to 0.14%, alongside extending completion dates across multiple product ranges.

Meanwhile, OSB Group’s Precise has introduced new residential mortgage products with rate cuts of up to 0.70%, starting at 4.89%, and an increased maximum loan-to-value of 95%.

Loan limits have risen from £2m to £5m, stress rates on shorter-term products have been lowered, and debt consolidation is now available up to 90% LTV, aiming to improve affordability for a wider range of buyers, including the self-employed and those with imperfect credit histories.

Stamp duty thresholds fall today

From today, first-time buyers will start paying stamp duty on homes above £300,000, down from £425,000, with the tax threshold for other buyers also halving. This change, initially introduced in 2022 but set to end in March 2025, means an estimated 59,400 additional home purchases will now be subject to stamp duty.

Experts warn this could reduce demand, potentially lowering house prices while making homeownership more challenging for those with smaller deposits. Lenders and advisers urge prospective buyers to seek guidance, with some mortgage providers offering incentives to ease the burden.

Meanwhile, house price growth remains steady at 3.9% annually, with sub-4% mortgage rates returning, offering some relief to buyers.

FCA to consult on using pension savings to buy first home

The Financial Conduct Authority is considering whether pension savings could help first-time buyers raise deposits, as seen in countries like Australia and the US.

While this could boost homeownership, FCA chief Nikhil Rathi warns of trade-offs, including the impact on house prices and long-term savings. With 39% of renters expecting to rent in retirement, Rathi calls for radical action and a holistic approach to pensions, mortgages, and savings.

The FCA will launch a consultation on the mortgage market in June to explore potential solutions.

Govt vows to strip back green rules to ‘unleash’ new housebuilding

Labour plans to streamline green regulations to accelerate the construction of 1.5 million homes over five years.

A government review found the current system outdated and complex, prompting recommendations to simplify regulations, appoint a lead infrastructure regulator, and set clearer objectives for environmental bodies.

Measures aim to balance development with nature recovery while cutting legal and administrative costs for developers. The reforms follow past failed attempts to ease environmental rules, which builders blame for slowing housing projects but conservationists argue are crucial for protecting natural resources.

UK house price growth in North outpaces sluggish South: Nationwide

House price growth remained steady at 3.9% in March, with Northern Ireland leading at 13.5% and London lagging at 1.9%.

Experts attribute this stability to buyers rushing to complete purchases before stamp duty changes. While the market may soften in the short term, activity is expected to pick up over summer.

Regional disparities persist, with northern England seeing stronger growth than the south.

Affordability remains a challenge, but potential rate cuts could boost demand later in the year.

HSBC teams up with charities to combat joint mortgage abuse

HSBC has partnered with Surviving Economic Abuse to tackle financial control in relationships, affecting over four million women, including 750,000 trapped in exploitative joint mortgages.

The initiative will train bank staff to recognise and support victims while exploring ways to improve mortgage policies. HSBC will also collaborate with Money Advice Plus to develop tools for assisting those facing economic abuse.

The bank emphasises the financial sector’s role in addressing this issue, aiming to prevent victims from being left in debt or homelessness.

Chorley BS introduces exclusive FTB mortgages

Chorley Building Society has launched exclusive first-time buyer mortgages, offering two-year fixed rates at 5.29% (90% LTV) and 5.79% (95% LTV), both available until July 2027.

These products come with no application or scheme fees and include £250 cashback. Applicants qualify as long as one party has never had a mortgage before. The society aims to continue its 165-year mission of helping people buy their first home.

Homes England heads £100m Leeds city centre housing project

Homes England is leading a £96.7m development deal for a major residential scheme near Leeds city centre, which will include 618 one-, two-, and three-bedroom apartments. The project, located on a five-acre site along Kirkstall Road, is set to be completed by 2027.

The development is backed by a £91m loan from Greater Manchester and West Yorkshire Pension Funds, plus a £5.7m grant from West Yorkshire Combined Authority. It forms part of the government’s plan to build 1.5 million homes in five years. The project is a joint venture with developer Glenbrook, which will retain a stake and manage the development.

Trump tariffs raise prospect of four Bank of England rate cuts in 2025

Markets are speculating that the Bank of England could cut the base rate up to four times this year, driven by rising fears of a global trade war. This follows US President Trump’s announcement of new tariffs on Mexico, Canada, and China, which has created uncertainty over global trade and market stability.

The FTSE 100 dropped over 1% in response, and money markets now predict an 80 basis points cut to the base rate by the end of 2023, up from the previous 75 basis points forecast.

The UK economy remains sluggish, with inflation at 2.5% and weak growth, making rate cuts more likely to support economic activity. Both Goldman Sachs and Deutsche Bank expect a 0.25% reduction in the Bank’s rate.