After the turbulent and chaotic Autumn Budget, and the latest interest rate cut from the Bank of England, there’s plenty to break down for mortgage borrowers. Tanya Elmaz, managing director of intermediary sales at Together has summarised what borrowers can expect going forward.
Tanya Elmaz, managing director of intermediary sales at Together said: “Following a Budget full of tax rises, the pressing question for current and aspiring homeowners will be how the mortgage market stands to be affected. When it comes to making decisions on buying and selling, a favourable mortgage market is crucial, and house prices will fall and rise according to this.
“To the relief of many, most of the more radical changes to the property tax system which were floated ahead of the Budget - including an overhaul to Stamp Duty and Council Tax - were left alone.. That said, borrowers can also look forward to reduced rates in the near future following the Bank of England’s December rate cut, as well as continued projected falls in inflation. However, left unaddressed, the same systemic issues in the current tax regime will persist, and we have a few additional changes which we need to be wary of.
“One of these is the Mansion Tax, which affects properties valued at over £2 million. The government won’t carry out affordability checks, so lenders will need to factor this additional cost into mortgage assessments for homes above the £2m threshold; the majority of these being in London and across the South of England. As high-value homes become less attractive due to the tax, house prices for middle-range properties will increase and new mortgage deals on these will become more costly as a result.
“Our research into consumer attitudes in the aftermath of the Budget found that a fifth of the UK public (21%) don’t think it’s fair that people who own properties worth more than £2 million will now have to pay an extra new annual charge (the “mansion tax”), and this number is likely to increase once the wider impact on the mortgage market kicks in.
“So, for the most part mortgage borrowers should be able to breathe a sigh of relief but it's worth looking at your council bracket to see if you’ll be directly affected by the Mansion Tax, or if it’s something which might affect you down the line as house prices creep up.”
