"Perhaps of much more immediate relevance is the fundamentals of the buy-to-let market, and the positive news we have seen in terms of rates in recent weeks"
At the time of writing, we are just a couple of days away from the Autumn Statement, and by the time you read this, I’m conscious there might have been some sizeable shifts in the housing and mortgage market, with Jeremy Hunt’s measures being the catalyst for this.
Historically, we would have heard much more in the way of calls for changes to stamp duty for landlords, or a u-turn request or ten on mortgage interest tax relief, but I’m not getting the sense that many in our sector feel it’s worth calling for such changes, particularly given the rumours emanating from the Treasury on what it might focus on.
Which of course is not to say that there won’t be changes to stamp duty, or that we might not get a raft of specific housing market policy, but I’m confident these are likely to be focused far more on first-time buyers, rather than landlords.
That said, a lot is often made of Hunt’s landlord credentials and if anyone should be in tune with the landlord community it is perhaps he. Although, whether he would be prepared to take the political heat of favouring landlords right now is a completely different question.
Supporting first-timer buyers tends to come with very little criticism, while being seen to support ‘greedy’ landlords in any way, shape or form, is often deemed to be the work of the devil itself.
Making the last stamp duty holiday available to landlord purchasers as well as residential buyers wasn’t universally popular, however there’s no doubting that buy-to-let purchase activity could do with a boost, and that landlords tend to welcome a chance to save on stamp duty tax. After all, they are already paying a 3% premium.
We shall however wait and see. One suspects the Chancellor might feel he has other fish to fry right now, and landlords are not exactly an overwhelming priority for his Government.
Perhaps of much more immediate relevance is the fundamentals of the buy-to-let market, and the positive news we have seen in terms of rates in recent weeks, fuelled by greater certainty and stability about what the MPC might do next.
However, it still seems important not to get too carried away with what rates might, or might not, do in the very near future. Clearly, we’ve seen a fair amount of rate reductions – including from Fleet – in the past few weeks, and this has much to do with swap rate falls, plus of course we are now looking at 2024 in a very real sense, as business that comes in now is all to fill next year’s completion pipeline.
I continue to believe that buy-to-let rates closer to the 5% mark will mean a far greater number of landlord borrowers can breach the affordability barrier, and this will have benefits not just to the remortgage ‘bread and butter’ but for those who have been waiting for such rates before they commit to further purchases.
Add in some Government support around stamp duty, and we could have a much more benign environment for landlord borrowers to work within, however even without any Autumn Statement mention, we’re still expecting to see more purchase activity and transactions simply because rates are trending lower.
There are also positives here for remortgaging landlords. Again, any drop in rates eases the increases in monthly mortgage costs they have been feeling over the last year, and while of course we are nowhere near the rates available just 18 months-two years ago, it is far better for mortgage rates to be cut than increased.
We are not so far from 2024 now, and it is difficult to say what the next year will bring. Many are suggesting it could follow 2023 and they might be right. What we perhaps would hope for is a 2024 that followed the first three to four months of 2023 which we might have forgotten were pretty positive for all manner of reasons – rates, activity, and the like.
After the ‘Mini Budget’ debacle we had climbed down off that cliff edge, and were only pushed back up there when inflation increased in the Spring and everyone feared the worst in terms of required rate movements in order to curb it. As inflation has fallen, that fear has ebbed away, and we’ve seen the change in swaps and product rates reflecting that.
For those reasons, I am positive about the short-term future, and with a good prevailing wind, we should see both a stronger remortgage market and more purchase activity as we progress through the year.
