After September’s ill-fated Budget where Kwasi Kwarteng’s raft of tax cutting had to be undone by his replacement Jeremy Hunt, by which time the damage was done and mortgage rates had soared, it was mostly a relief that the March Budget left the housing market well alone.
The Chancellor’s main focus was on pensions and childcare. In order to encourage the over-50s to return to, or stay in, work, Jeremy Hunt abolished the Lifetime Allowances, a cap on the level of pension contributions that can be accumulated before a charge is applied. The annual allowance was also increased from £40,000 to £60,000, enabling a higher level of pension contributions to be made every year.
The other big announcement was 30 hours of free childcare a week for working families of children aged under five. It will be available for 38 weeks of the year in term time from September 2025, with the introduction phased in from April 2024. With lenders looking carefully at childcare costs when assessing a borrower’s affordability, this should help families take on bigger mortgages.
Given that there will be a delay before the free childcare hours are introduced, parents with young children who want to move to a bigger property to accommodate their growing family should seek advice to maximise their borrowing as much as possible. This is where AWS Private Finance can help – we are whole-of-market brokers who can help arrange the right mortgage for your circumstances and can advise on which lenders will consider your situation most favourably. Please get in touch for more information.
House price growth slows gently while transactions also decline.
The housing market continues to demonstrate remarkable resilience, given the challenging conditions. Despite forecasts of a significant drop in house prices this year, house price growth continued to slow gently in January, with prices rising by 6.3 per cent in January compared with 9.3 per cent in December, according to the Land Registry. This means that despite all the turbulence, higher inflation and mortgage rates, the average home still rose £17,000 in the past year, taking the average UK house price to £290,000.
While house price growth continues to slow gently, transactions have inevitably dipped as the uncertainty in the autumn created by the mini-Budget led to many buyers and sellers sitting on their hands while they waited to see how events pan out. Seasonally adjusted figures from HM Revenue & Customs show that transactions dipped by 18 per cent in February compared with the same month last year and were 4 per cent lower than January 2023. After a couple of frantic years of activity in the market fuelled by the stamp duty holiday, this calmness is more akin to what you would see in a ‘normal’ housing market.
Conditions are more challenging, particularly with borrowers finding affordability is more of an issue giving rising costs. But even in more challenging markets people need to move so it is important to plan ahead as much as possible and seek advice. Mortgage products can be booked up to six months before you need them, while a whole-of-market broker such as AWS Private Finance has access to all the deals on the market and can advise as to the right one for your circumstances. Please get in touch for more information.
