By The ministerial merry-go-round is nothing new.
We‘re accustomed to cabinet reshuffles on an almost monthly basis.
Take the position of Housing Secretary. Since Market Financial Solutions (MFS) was founded in 2006, 17 different MPs have held the title, under its various monikers.
The high churn of housing ministers is a serious issue. One that needs more attention. But the more senior the position, the more the country expects and needs stability.
This is especially true when it comes to the Chancellor of the Exchequer. But since July, we’ve had four different people hold the title.
Kwasi Kwarteng’s ill-fated 38-day stay in 11 Downing Street will go down in history for all the wrong reasons.
Jeremy Hunt has been brought in to tidy up the mess his predecessor left behind.
He’s wasted no time in overseeing a U-turn of almost all the fiscal policies that the “unashamedly pro-growth” coalition of Liz Truss and Kwarteng tried to push through.
The shockwaves emanating out of Westminster over the past month have contributed to a climate of uncertainty.
The cost-of-living crisis, following two years of Covid-induced challenges, was exacerbated by Kwarteng’s misjudgements.
The Bank of England has warned the base rate will now rise more sharply than had been planned, partly to account for the economic fallout of the calamitous mini-budget in late September.
This begs the question; how will the property market respond in the months to come?
Moreover, how can lenders help borrowers and brokers navigate this challenging period?
Property market remains robust
A cut in stamp duty is one of the sole remaining policies from Kwarteng’s brief time as Chancellor.
This tax change has largely flown under the radar, as turmoil in other financial markets dominate news cycles.
The mini-budget removed the 2% stamp duty for properties under £250,000, while raising the nil-rate threshold for Buyers Relief (when first-time buyers start paying SDLT) from £300,000 to £425,000.
First-time buyers will be able to access a discounted rate for purchases up to £625,000 – rising from £500,000.
Chancellor Kwarteng said the reforms would mean that “200,000 more people will be taken out of paying stamp duty altogether”.
Of course, this reform will have a significant impact on first-time property buyers.
Saving for a deposit may become less daunting.
Under the new threshold, the average first-time buyer purchasing a home in London will stand to save £6,250 – a substantial amount that will help towards the fees and logistics of a house move.
These kinds of savings will have knock-on effects.
They should increase demand at the bottom end of the property market, and continuous momentum there can flow into the higher echelons.
Prices and demand for prime properties could push upwards too.
Overall, the market continues to demonstrate remarkable robustness.
The average price of property coming to market in October was a record £371,158, rising by 0.9%, or an equivalent of £3,398, compared with September, according to the latest data from Rightmove.
Lender and broker support is required
Property prices have been holding firm despite the turbulence seen across other financial markets over recent months.
The stamp duty reforms should help keep demand at a healthy level, allaying concerns that there would be an exodus of buyers.
However, the strength of the property market cannot overshadow the challenges buyers are facing right now – and will continue to face in the months ahead.
High inflation is making saving harder. Rising interest rates are affecting the amount people can borrow. Higher interest rates are causing even more concern among existing property owners. Mortgages are becoming unaffordable for many.
Support from lenders and brokers is, therefore, of utmost importance in the current climate.
This support can take various forms.
For one, it means clearer and more proactive communication from lenders to brokers, and brokers to borrowers.
We collectively need to explain the impact of higher rates and how they may force products to change.
Certainty will no doubt become a watchword in the coming months.
If there is one thing that brokers and borrowers value, it’s clarity over products and terms, allowing them to plan effectively.
At MFS, we provide this certainty by underwriting all our buy-to-let mortgages and bridging loans from day one.
This means we’re clear from the outset, ensuring no nasty surprises appear further down the line.
There is a lot to be said for flexibility and creativity at times like these, too.
While some lenders pull products or stop accepting new applications, many brokers and borrowers still need creative solutions.
The most skilful, willing lenders are the ones that will find a way around complex circumstances and help a client out of a difficult situation. This is something MFS prides itself on.
Our fast, flexible bridging finance products are ideal for property investors needing a short- to medium-term solution in the current climate.
A bridging loan could enable a borrower to purchase a property, restructure a portfolio, or repay another loan on which the rates are climbing rapidly.
MFS is working hard to provide speed, flexibility and certainty for brokers and borrowers.
The months ahead will remain challenging, but opportunities always exist within the UK property market.
Our mission is to enable buyers to seize them by delivering the right financial product for their needs.
Comments