Property & Mortgage Outlook – October 2021


The temperature has been rising in the housing market since the start of the year. The introduction of the Stamp Duty holiday meant that the average price of a house in the UK climbed to the heady heights of £265,000 in June 2021. However, the phasing out of the tax break has meant that house prices have started to level off.

While they were still 8% higher in July 2021 than in July 2020, they fell 13.1% compared to the previous month. According to Rightmove, the national average asking price of a home fell by 0.3%, or around £1,000, during August. So, as we move into autumn, can we expect to see more of the same?

The big change this autumn is that Stamp Duty thresholds returned to normal on 1 October. This means that buyers will pay Stamp Duty on properties worth £125,001 or more. While some may be concerned that this could lead to a big drop in house prices, other factors are still in place that should prevent prices from falling off a cliff edge.

Market sentiment still remains positive. In fact, buyer demand has remained strong, particularly for smaller properties. This has led some market experts to forecast an ‘autumn bounce’ in prices. The supply of houses remains low. And if there is low supply and high demand, house prices inevitably go up. There is also the fact that mortgage providers have relaxed their lending rules. There are a lot more low-rate mortgages available. And in some cases, lenders are considering borrowers’ overtime and bonuses as income again.

While we are unlikely to see house prices climb as high as they did in the middle of the year, it is also unlikely that there will be a sudden drop. A shortage in supply, high demand from first-time buyers and second steppers, and increased mortgage availability will all support the market. So house prices are likely to continue to move upwards, just not at the record pace we have seen so far this year.

There has also been a reduction in property transactions following the decrease in the stamp duty nil rate band.

It was inevitable that property statistics would have decreased as a result of the coronavirus pandemic when the Government announced a UK wide lockdown. In the summer of 2020, restrictions were gradually removed. Between 5 January 2021 and 19 July 2021, there were further regional and national lockdowns in England although the property market remained active, and, as a result of the stamp duty holiday, transactions in June 2021 increased significantly. From July 2021, the temporary increase in the nil rate band went down from £500,000 to £250,000, resulting in fewer transactions taking place.

The figures also show:

  • the provisional seasonally adjusted estimate of UK residential and non-residential transactions in August 2021 is higher than August 2020;
  • the provisional non-seasonally adjusted estimate of UK residential and non-residential transactions in August 2021 is also higher than August 2020;
  • between July 2018 and February 2020, UK non-residential transactions had been stable, but had followed a very gradually decreasing trend.

Finally, as lenders battle for year end market share, there have never been so many mortgage products priced at sub 1%. These products are not likely to be around for too long as the market is starting to price in a base rate increase against a backdrop of inflationary pressures. Indeed, SWAP rates are already ticking up.

It must be remembered that base rate was cut last year from 0.75% to 0.10% to prop up the economy as the Pandemic started to rage. Although a little tightening is expected, the MPC cannot risk choking off the recovery by acting too quickly. Bearing in mind it took over ten years for rates to rise after the Credit Crunch, base rate and mortgage rates are likely to remain low for the foreseeable future.

Best Buys* (as of 4 October 2021)

Initial Rate Description Subsequent Rate Overall Cost For Comparison (APR) Early Repayment Charge Max Loan Fee
0.79% 2 Year Fix 4.34% 3.70% 2% Year 1, 1% Year 2 £2m £1,495
0.85% 2 Year Tracker 3.59% 3.20% None £2m £999
1.19% 2 Year Fix Offset 4.49% 3.80% 2% Year 1, 1% Year 2 £2m £999
0.91% 5 Year Fix 3.54% 2.60% 5% Year 1, reducing by 1% annually to 1% in Year 5 £5m £1,499


With deposit savings rates at all-time lows, there has never been a better time to take advantage of an offset mortgage arrangement. The offset facility effectively offers the opportunity for higher rate taxpayers to receive the equivalent of gross interest. Offering total flexibility, offset monies can either be used to reduce the monthly mortgage payments or repay the loan earlier.


With bank base rate at an all-time low the big question facing mortgage holders at the moment is whether to seek the comfort of longer term fixed rates or take advantage of the more competitive and flexible shorter term arrangements. Taking into account individuals’ views on likely interest rate movements and future plans, our partners can provide a report highlighting the pros and cons of each option.


There are now estimated to be over 100 mortgage products with payable rates of under 1%. However, the market is predicting that mortgage rates cannot go much lower and are likely to rise towards the end of this year and into quarter one 2022. Whilst rates are at rock bottom it is possible to book funds for up to six months in advance

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.

Articles on this website are offered only for general information and educational purposes. They are not offered as, and do not constitute, financial advice. You should not act or rely on any information contained in this website without first seeking advice from a professional.

Past performance is not a guide to future performance and may not be repeated. Capital is at risk; investments and the income from them can fall as well as rise and investors may not get back the amounts originally invested.

Your home may be repossessed if you do not keep up with payments on your mortgage.

You are now departing from the regulatory site of Finura. Finura is not responsible for the accuracy of the information contained within the linked site.

Source: Professional Mortgage Services & Techlink.


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