Property & Mortgage Outlook – November 2021

The average cost of a UK home increased by £25,000 in the 12 months to August, official figures show, with rises recorded in all regions.

The annual rate of price inflation hit 10.6% during the month, up from 8.5% in July, the Office for National Statistics said, bringing the average price to £264,000.

The rebound in the property market since the Covid restrictions were eased in spring 2020 has been fuelled by a “race for space” among buyers and stamp duty holidays across the UK. The tax break in England, which was the most generous initially and fully phased out only at the end of September, helped drive up prices by 9.8% in the year to August, to an average of £281,000.

The ONS figures show that prices in London hit a new high of £526,000 despite the capital recording the lowest level of growth among the regions for the ninth consecutive month. Although the stamp duty holiday has ended, experts suggest prices will not fall because demand for homes remains higher than supply. One of the UK’s biggest lenders, Halifax, increased the sum it is willing to lend wealthy borrowers in late October, in a move that will put more money into the market. The bank will consider loans of up to 5.5 times salary to those who earn more than £75,000, up from five times previously.

With high-income earners now able to borrow 5.5 times their income on the high street, commentators believe this will help to maintain price growth as buyers have more ability to increase their bids, especially as it much easier to borrow at high loan-to-values today than it was this time last year.

Best Buys* (as of 4 November 2021)

INTEREST RATE COMMENTARY

All eyes are on the MPC’s decision on Thursday 4th November where the markets are pricing in a hike in base rate from 0.10% to 0.25%. If the economic recovery continues base rate is expected to rise back to around 0.75%, where it was before the pandemic struck. The effect on payable mortgage rates is likely to be minimal as mortgage pricing did not come down in line with the emergency cut.

TAX EFFICIENT INVESTMENTS

With market leading mortgage rates hovering around 1% there is a strong argument for Clients to consider maximising their tax efficient investment allowances before simply repaying debt. Via our partners, we can offer all Clients a comprehensive mortgage review, which may provide ways to free up capital for investments into pensions, ISA’s and the like.

Whether you are coming to the end of your mortgage product or keen to compare your current rate to the best available elsewhere, please contact your adviser who can put you in touch with our mortgage partners.

* Lending criteria restrictions apply to all products, always seek independent advice.

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Source: Professional Mortgage Services, ONS & Techlink.