What are the mortgage and homebuying headlines?

The Spring Statement is an opportunity for the Chancellor Rachel Reeves to update Parliament and the country on the state of the UK finances and to announce any changes to government spending. It is positioned as a fiscal update as it follows on from the main budget which took place last autumn.

Presented in the House of Commons, this Spring Statement focused mainly on cuts to welfare and government budgets, as well as an increase in defence spending as the Chancellor responds to both economic pressures and escalating tensions at home and abroad.

But what were the headlines for mortgages and around the government’s plans to build 1.5 million homes? Let’s take a look.

Homebuilding

Alongside every Spring Statement, the Office for Budget Responsibility (OBR) will review the government’s plans and provide a forecast. In its forecast for this Spring Statement, the OBR has concluded that the planning reform the Government has put in place will lead to a 40-year high for housebuilding – reaching 305,000 houses per year.

As the Chancellor explained, this will help them build 1.5 million homes during the course of this parliament, putting them in “touching distance” of their headline target. If this is achieved, this would clearly be fantastic news. However, it is a big if, given the current economic climate for both buyers and developers, as well as ongoing skills gaps in the construction sector.

Prior to the Spring Statement though, the Chancellor did announce £2bn of extra funding to help kickstart building projects and deliver 18,000 affordable and social homes – which is a good start. And to answer those skills gaps in construction, she announced £600m towards training to develop the next generation of construction workers.

So while no earth shattering announcements in the statement itself, there were updates on the Government's plans to increase the number of homes and a clear ambition to reach its target – good news for hopeful buyers.

Mortgages

By comparison, any news on support for those looking to purchase a property or thinking about taking out a mortgage did not come in the Spring Statement. Nor was there any plans to prevent the change to stamp duty thresholds or at least extend the current relief, as some would have perhaps hoped for.

While no news to speak of in the Spring Statement, the FCA has recently announced it is planning to review its responsible lending and advice rules for mortgages later this year, as part of efforts to support homeownership and make it easier to remortgage. In June, they will discuss alternative affordability testing and production innovation, which will be welcomed by many.

Although mortgage lenders would have been hoping for more government incentives and support for buyers, they do still remain active in the market and continue to innovate themselves - whether that’s through new products or in the criteria that they lend against. Across different areas of the market, such as in residential and buy-to-let, we have been seeing some lenders announcing mortgage rate reductions too.

Speaking of new products, we have seen lenders working with developers to launch their own equity loan schemes for new build properties – providing a similar solution to the Government’s previous Help to Buy scheme. In the latest example announced by one lender, the buyer brings a minimum 5% deposit and takes out an 80% LTV mortgage. The lender will then provide a 15% interest free loan, with the help of the house builder.

Navigating the housing market

While the Spring Statement may not have offered the headlines that many potential buyers would have hoped for, it does potentially offer some positive progress towards increasing the number of available houses. The hope is that as supply increases, so does availability and some of the affordability pressures felt by some potential buyers will begin to ease.

Add to this innovation from mortgage lenders, along with some potential reform from the regulator that governs them, we could be set to see opportunities open up for those looking to buy or remortgage.

At any time, navigating mortgages and the wider housing market can be a tough task. Whether you’re buying or remortgaging, a great place to start to talk to us. Not only can we answer all your questions and queries, we have access to a wide range of mortgage lenders and can help you explore a full range of options – including ones not available to your bank or to members of the public.

To book your appointment, please call Mohammed on 07711 308339 or email mohammed@rasoolwealth.co.uk

 

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Most Buy to Let mortgages are not regulated by the Financial Conduct Authority.

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