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What impact will the Autumn Statement measures have on the mortgage market?

Journalist: Becky Bellamy, Mortgage Strategy and Mortgage Finance Gazette

ended 24. November 2022

  • Were you happy with the outcome of the Autumn Statement on 17 November?
  • How will the stamp duty cuts affect the market in the short and long term?
  • How will stamp duty cuts impact first-time buyers?
  • Do you think the cuts will bring more urgency for people trying to get on the property ladder?
  • Going forward, how will the Autumn Statement measures impact the mortgage market? Do you think the market will react positively/negatively?

3 responses from the Newspage community

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Justin Moy
Managing Director at EHF Mortgages
I don't think we were ever going to be 'Happy' with the Autumn Statement. I think we were pleased not to see too much tinkering by the Chancellor. Maintaining the previously announced Stamp Duty cuts for the next couple of years will provide a decent level of incentive to buyers, offsetting the higher mortgage rates. An increase for first-time buyers (up to £425,000) is appreciated I am sure, and that does help those buying in London, and around the South East, in the short term. Confirmation that limits won't change for at least two years stops any pandemonium or panic buying, giving time for more considered purchases. The statement has provided stability to the financial markets, which has then fed into both the cost of money and importantly confidence levels. So whilst there was no direct intervention making an impact, a week on from the statement we are seeing plenty of mortgage rates reduced across the market. That is good news for everyone at the moment.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
The Autumn Statement had no effect whatsoever. Considering the tsunami of bad news in the economy, Hunt’s proposals are like using a bucket to bail out the titanic. The ship is sinking, in the form of higher rates, increasing unemployment and falling property prices. Hunt's budget did nothing to fix this. There should have been a focus on new, truly affordable housing but we got nothing. No new scheme targeted at lower earners like Help to Buy. It was starkly unimaginative. The only positive news is that the recession will force the Bank of England into cutting rates in the summer. Maybe, by then, Hunt will have had time to engage his brain and consider some stimulation in the market.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
The Autumn Statement went a small way towards a period of stability as the UK housing market faces some of its toughest years for quite some time. Gilt yields returned to 3.35% and money markets cooled as mortgage rates fell to below 5%. It was announced that Kwasi Kwarteng’s stamp duty break, a part of his disastrous mini budget in September, is to be reversed. Hunt did confirm, however, that the reversal will not occur until 2025. The government is hoping that the 5-year ‘tax holiday’ will free up housing stock, thus stimulating a crowded property market. It could be argued that the cuts will be ineffective in the short run. An ensuing increase in demand coupled with a time lag on supply will only cause prices, in an already over-inflated market, to further increase. Furthermore, I would expect to see a rush of sales in the months prior to the March 2025 cut off, with investors scrambling to realise tax savings. Post 2025, the cost of a property where you will start paying stamp duty will be down to £125,000 and £300,000 for first-time buyers from £250,000 and £425,000, respectively. A tighter fiscal policy will policy should, in theory, reduce the need for further contractionary monetary policy. This is echoed by the Bank of England as inflation levels are expected to fall in 2023, reducing the pressure on the MPC to increase rates. Such uncertainty could increase the popularity of tracker products as the probability of a greater spread between 5-year fixed rates and base rate increases. Unfortunately, investors will face alternative challenges in a four-pronged attack of rising corporation tax, dividend tax, capital gains tax and income tax. The increase in the tax burden will make owning a BTL portfolio less attractive and reduce the level of savings available to first-time buyers to use as a deposit. It is intuitive to suggest that these downward pressures will precede a reduction in house prices. The Office for Budget Responsibility is expecting a reduction in house prices of 9% over the next two years, a figure I believe to be optimistic. Considering the current recession, rising rates and increase in taxation, my view is we will see a larger drop of circa. 15%.