MomenTUM Mortgages

The Chancellor will deliver the UK Budget later today, and anticipation is high about its potential impact on the housing market. At Momentum Mortgages, we’re particularly focused on how any changes might affect self-employed individuals and first-time buyers. Based on the latest news and expert predictions, here’s our take on what to expect and how it could impact you:

The Market Mood and Swap Rates:

Financial markets have been bracing for a “painful” Budget, with expectations of increased government borrowing and spending (source: The Independent). This has led to a rise in the cost of government bonds (gilts) and, importantly, swap rates. Swap rates are the rates banks use when lending to each other, and they play a significant role in determining fixed-rate mortgage pricing. As Chatham Financial’s data shows (source: Chatham Financial), these swap rates have been trending upwards in recent weeks, reflecting the market’s uncertainty ahead of the Budget.

But there’s a potential silver lining: Recent positive inflation figures suggest the Bank of England might cut interest rates at its next meeting (source: BBC). If the Budget delivers a less austere outlook than anticipated, this could trigger a fall in swap rates, leading to more competitive fixed-rate mortgages. This would translate to lower borrowing costs and potentially smaller monthly repayments for homeowners.

Potential Budget Changes and Their Impact:

• Stamp Duty:
  • What We Expect: With the current stamp duty holiday ending in March 2025, many anticipate the Chancellor might extend it or even introduce targeted cuts to stimulate the property market (source: Morningstar). This would be welcome news for first-time buyers and those looking to upsize.
  • Impact on You: Lower stamp duty costs could make homeownership more attainable, especially for those with limited deposits.
• Mortgage Rates:
  • What We Expect: While direct intervention in mortgage rates seems unlikely (source: Sky News), the Chancellor might focus on measures to improve affordability. This could include initiatives to increase competition among lenders or support for those facing repayment difficulties.
  • Impact on You: Increased competition could lead to more favourable mortgage deals, while support measures could provide relief if you’re struggling with rising interest rates.
• Housing Supply:
  • What We Expect: Addressing the housing shortage is a key challenge. The Budget may include plans to boost construction, potentially through planning reforms or incentives for developers to build more affordable homes (source: The Guardian).
  • Impact on You: Increased housing supply could lead to more choice and potentially lower prices, making it easier to find a suitable property.
• Capital Gains Tax:
  • What We Expect: There’s speculation that the Chancellor may increase Capital Gains Tax (CGT) rates, particularly for higher earners and landlords (source: BDO).
  • Impact on You: If you’re a landlord or considering buy-to-let investments, higher CGT could affect your profitability when selling properties. It’s essential to factor this into your investment decisions.

What You Should Do:

• Stay Informed: Keep an eye on the news and our blog for updates on the Budget announcements.
• Talk to Us: We’re here to help you navigate the mortgage market and find the best solutions for your individual needs, even with potential changes on the horizon. Contact us for a free consultation.

While the UK Budget 2024 holds uncertainties, we’re committed to helping self-employed individuals and first-time buyers navigate the evolving housing landscape. At Momentum Mortgages, we’re here to provide expert guidance and support every step of the way.

Disclaimer: This blog post is based on speculation and forecasts ahead of the UK Budget 2024. The actual announcements may differ, and this should not be taken as financial advice.