Mortgage Strategy’s Top 10 Stories of the Week
This week’s noteworthy developments include Vida Homeloans securing a banking license and undergoing a name change, alongside Knight Frank’s projection of a £140.3 million stamp duty shortfall for the UK. Explore these and other key industry updates in our comprehensive top 10 roundup below:
Vida Homeloans receives banking licence and changes name
Vida Homeloans received PRA and FCA authorisation to become a fully licensed bank and announced it would operate under the new name, Vida Bank. The banking licence enables Vida to offer retail deposits, strengthening its funding base and expanding customer offerings. This move is set to enhance its competitiveness in the specialist mortgage market. CEO Anth Mooney highlighted the significance of the licence, which opens new growth opportunities and will support the launch of Vida’s first savings products.
UK set for £140.3m stamp duty shortfall: Knight Frank
Knight Frank reported an estimated £140.3m stamp duty shortfall due to a decrease in property transactions above £5m. The shortfall was attributed to 107 fewer sales between £5m and £10m, and 35 fewer sales above £10m. The loss follows uncertainty surrounding wealth and property taxation, particularly after the government’s proposed changes to the non-dom regime. The shortfall was measured by comparing forecasted and actual offers between March and October 2024. In the 2023/24 financial year, £11.6bn was collected in stamp duty.
Budget 2024: Right to Buy discounts to fall and social rents to rise
In the Autumn Budget 2024, Chancellor Rachel Reeves announced cuts to Right to Buy discounts, reducing the amount council tenants could save on home purchases. Local authorities will retain proceeds from these sales to reinvest in social housing. The government also plans to consult on higher rents for social tenants to ensure long-term financial stability for providers. The budget included a £500m investment to build 5,000 new social homes. The changes aim to increase affordable housing supply despite concerns over fairness.
Santander lowers BTL affordability rates
On 20 November 2024, Santander lowered its buy-to-let (BTL) affordability rates. The lender reduced its standard affordability rate from 7.31% to 7.15%, while the five-year fixed and pound-for-pound remortgage affordability rates were cut from 5.31% to 5.15%. This followed recent announcements of rate increases, including up to 0.29% on selected standard residential fixed rates for purchase, remortgage, and green products, as well as increases on large loan and new build fixed rates.
Starmer shrugs off blame for rising mortgage rates
Keir Starmer dismissed claims that the Autumn Budget caused rising mortgage rates, assuring borrowers that interest rates would eventually fall. Speaking during a flight to the G20 summit, he acknowledged the growth figures were unsatisfactory but argued the Budget laid the foundation for economic stability. He stated that this would lead to lower inflation and interest rates. Despite a Bank of England base rate cut, average fixed rates continued to rise, with major lenders withdrawing sub-4% deals.
Budget 2024: OBR lifts forecast for mortgage rates and house prices
The Office for Budget Responsibility (OBR) raised its forecasts for mortgage rates and house prices in its latest Economic and Fiscal Outlook. It now expects average mortgage rates to peak at 4.5% by 2027, driven by higher Bank Rate predictions. House price growth is expected to slow slightly to 1.1% in 2025, then rise to an average of 2.5% from 2026-2030. The OBR also predicted an increase in property transactions and housing starts, depending on upcoming planning reforms.
October inflation rises sharper than expected to 2.3%: ONS
UK inflation rose more sharply than expected in October, reaching 2.3%, driven primarily by higher household energy bills. This marked an increase from September’s 1.7%. While a rise was anticipated, the 2.3% figure exceeded market predictions. The Bank of England’s recent base rate cut to 4.75% seemed less likely to be followed by further reductions due to inflation’s uptick. Experts warned this would likely delay rate cuts and keep mortgage rates high, impacting borrowers in the coming months.
Industry reacts to October inflation figures
October’s inflation increase to 2.3% from 1.7% in September has dampened hopes for further Bank of England rate cuts this year. Driven by higher household energy bills, the rise exceeded expectations. Experts now predict no further cuts in 2024, with financial markets assigning a low chance of a December reduction. Analysts warn that inflation and the government’s budgetary measures could keep mortgage rates higher for longer, although some remain optimistic that the property market will perform well over the next few months.
eKeeper launches as finova Broker
finova Broker, previously eKeeper Group, launched under the finova brand to support the intermediary sector. The platform offers a CRM system with features like digital conveyancing, credit checks, and customisable workflows to streamline operations and boost brokers’ profitability. Enhancements include lead verification, an improved customer journey, and automated communications. Additionally, it integrates finova Payment Mortgage Services (fPMS) for faster payment processing and tailored tech solutions. Commercial director Matt Harrison emphasised the launch’s focus on empowering brokers and improving efficiency.
Cash buyers securing discounts of up to £86,000
Cash buyers were securing discounts of up to £86,000 on properties, with sellers offering lower prices to avoid mortgage complexities. Research by Lomond estate agency showed that properties listed as “cash buyers only” had an average asking price of £257,513, 17% or £52,059 below the regional sold price. Cash buyers in some regions, like Yorkshire and the South East, received larger discounts. Lomond’s CEO Ed Phillips noted that cash buyer status continues to hold significant value in the market.
