The Autumn statement, due to take place tomorrow, will see Chancellor Jeremy Hunt make a range of tax rises and spending cuts announcements.
Rhys Schofield, managing director at Peak Money, said that he didn’t want to see any intervention when it came to residential mortgages.
“That’s right, no meddling needed right now. Available stock levels are good, rates are coming down and the mortgage market isn’t as much of a nuclear wasteland as the public fears. Talk to a good mortgage broker who displays their glowing client reviews with pride and you’ll be in safe hands,” he noted.
Graham Cox, director at Self Employed Mortgage Hub, agreed and said that he hoped to “hear nothing” from Hunt on the housing market as there had been more than enough interventions to prop up house prices, which had partially fuelled the housing crisis.
“The best thing Hunt can do if he’s really concerned about helping first-time buyers is let house prices fall, so they become more affordable. We cannot continue sucking ever greater amounts of money out of people’s pockets on mortgages and rent. Time to end this madness,” he added.
Lewis Shaw, owner and mortgage broker at Riverside Mortgages, concurred that he wanted Hunt to “stay as far away from mortgages and the property market as possible”.
“The last thing we need is any more schemes or tax changes. So put down the quill and move away from the red box. Let the market do what markets do, find its natural equilibrium, and stay out of the way.”
David Robinson, co-founder at Wildcat Law, said that the “best thing” Hunt can deliver for mortgages, and the economy as a whole, was a “costed budget that restores faith in the government’s ability to run the economy resulting in a stronger sterling”.
He added: “That will help us fight inflation and take the pressure off the Bank of England to raise interest rates. This in turn will mean mortgage rates will continue to stabilise benefitting homeowners but also people renting as landlords won’t be forced to raise rents to meet increasing mortgage costs.
“Sounds simple, doesn’t it? But recent weeks have shown that to be anything but the case.”
Riz Malik, director at R3 Mortgages, said that the statement would set the scene for the next 12 months and it had to be “balanced”, have no “nasty surprises” and get a good reaction from the market as it could be a “catalyst for a price war”.
“Lenders are liquid and want to lend responsibly as they also have targets to hit. We all have our fingers crossed,” he noted.
Buy-to-let an ‘area of concern’
Schofield said that the buy-to-let sector was one area of the mortgage market that needed looking at quite urgently.
He continued: “I know landlords are a convenient and popular group to kick to show how ‘tough’ you are, but when rents have gone up 20 per cent in the last year and 25 per cent of landlords plan to sell properties as the combination of higher rates, tougher taxation, and a mounting pile of legislation [come into play], then it’s not worth the hassle.”
Schofield said that whilst swathes of the public may not like landlords, if they pull out of the market then there would be no one to rent out properties to those who need them and if rents continue to ris,e it would be more challenging for first-time buyers to get on the property ladder.
Matthew Jackson, director at Mint FS, concurred that the buy-to-let sector was an “area of concern” especially on the remortgage side.
He explained that Interest Coverage Ratio calculations, which have become more stringent as stress rates have had to rise in light of economic uncertainty, meant that many landlords were struggling.
He said: “Perhaps a scheme similar to that of the Mortgage Indemnity Scheme provided to high loan to value LTV purchases for landlords would address this and ensure we do not see a rush from landlords to dispose of rental properties leading to a shortage of available property to rent.”
Justin Moy, managing director at EHF Mortgages made it clear that any ‘raids’ on landlords and buy to lets would be a disaster.
He said: “Landlords are already struggling with increased taxation, stamp duty, and legislation, and any further intervention will see significant numbers of landlords putting their properties put up for sale, flooding some parts of the market.
“This will probably feed the first-time buyer catchment quite nicely, but with the number of tenants looking for rental properties at an all-time high, the government will end up spending even more money on social home provision. That’s not fixing the issue, just booting it down the road a bit further. ”
First-time buyers hit with cost of living and rising rent
Kylie-Ann Gatecliffe, director at KAG Financial, said that many in the sector were “desperate to see help for first-time buyers”, especially as Help to Buy closed for new applications earlier this month.
She explained: “Those that are renting are being hit with not only the cost of living, but they will also be seeing their rent increasing, due to landlords facing extra costs.
“It’s becoming harder for people to save, and I really hope the government will step in and support those that want to buy. Whilst we are now starting to see fixed rates decrease, which is a welcome change – the deposit, whilst battling high living costs, is a stumbling block we continue to see.”
Extend HTB to support FTBs
Gatecliffe said that, without intervention, it is likely that purchases will fall. And while Jackson agreed, he noted that the mortgage market would need to be “pragmatic about our hopes for intervention”.
He said: “The stamp duty cuts are a good start and let’s hope these stay in place but, being realistic, any other interventions which cost money will be unlikely.
“For that reason, maybe the most positive thing this government can do is scrap the end of the Help to Buy scheme and extend it to home movers and first-time buyers for the next two to three years.”
Jackson explained that this would “stimulate the bottom end of the market” and would not cost the government as they make money on equity loans.
Jeremy Leaf, former RICS chairman, agreed that a new version of the Help to Buy scheme could support first-time buyers as “old levers are the best ones and more likely to have a quicker impact on the all-important confidence to make financial commitments”.
He said that a new version of Help to Buy that offers “genuine assistance” for first-time buyers struggling to raise deposits, does not inflate house prices and helps to improve speed and price of new delivery would be “welcome”.
