BoE reduces rate

The Bank of England has announced an emergency unscheduled 0.5% cut in the bank rate.
The interest rate cut is part of a series of a comprehensive and timely package of measures to help UK businesses and households bridge across the economic disruption that is likely to be associated with Covid-19.

UK House Prices

UK house prices fell by 0.1 per cent last month taking growth over the year to only 0.9 per cent, according to the latest monthly survey of the property market by Halifax. The slowdown means that prices rose at their slowest annualised rate this year and the cost of an average house this month stands at £232,249, the Halifax said.

Tesco has pulled out of the mortgage market

Tesco has pulled out of the mortgage market amid a price war among lenders that has pushed down rates for borrowers and piled pressure on smaller providers. The 23,000 mortgage customers of the supermarket’s banking business will not see any immediate change to existing arrangements.

Interest-only Mortgages

Yorkshire Building Society has become the latest big name to launch an interest-only mortgage. If you have a reasonable deposit saved up please give us a call.

Interest-only mortgages were once common but virtually disappeared after the financial crisis, amid fears that many borrowers were not setting aside enough money to repay their debt. Borrowers do not repay any capital during the course of the loan, so when their mortgage term ends they need to pay back their equity.

Under new lending criteria, borrowers have to show lenders that they have a repayment strategy in place.

There were twice as many interest-only products on the market earlier this month as there were six years ago, according to Moneyfacts.

House price growth slows

Annual house price growth has slumped to 1.7 per cent in January 2019 – the lowest rate since 2013. The latest House Price Index from the Office for National Statistics showed the average UK house price was £228,000 in January 2019, an increase of 1.7 per cent over the year, but down from the 2.2 per cent annual growth in December 2018.

100% LTV Mortgages are back

Lloyds Bank has launched a 100 per cent loan-to-value mortgage linked to a savings account to help first-time buyers get a foot on the property ladder.

The Lend a Hand mortgage was launched following research by the bank that found buying a home was among the top life goals for millennials, but half of those surveyed said the deposit was the biggest obstacle.

Lloyd’s latest launch removes the need for a deposit from the first-time buyer and instead up to 10 per cent of the loan is provided by the savings of a family member.

The mortgage is a three-year fixed with a rate starting at 2.99 per cent. The maximum term for the product is 30 years, and Lloyds will only lend up to a maximum of £50,000.

Alongside the mortgage is a savings account offering 2.5 per cent, fixed for three-years.

House prices are slowing

Halifax has found that hose prices are increasing at the slowest rate for 6 years. Prices were down 1.4% from October 2018, with the average home worth £224,578. Prices have fallen three in the past four months in a row.

Stamp Duty Land Tax (SDLT) first-time buyers relief

…will be extended in England and Northern Ireland to apply to all first-time buyers purchasing residential property worth up to £500,000 through a qualifying shared ownership scheme. The relief will also apply to shared ownership property buyers who have already paid SDLT on the initial equity stake and rental amount since the introduction of the relief on 22 November 2017. They will have a year to make a backdated claim for the relief. This measure will be effective from 29 October 2018.

Currently lettings relief can be claimed by individuals who let out a property that is, or has in the past been, their main residence. From April 2020, the government will reform lettings relief so that it is only available to individuals in shared occupancy with a tenant.

Currently, the final period exemption means that people do not have to pay CGT on gains made in the final 18 months of ownership. From April 2020, the exemption will be reduced to 9 months. There will be no changes to the 36 months final period exemption available to disabled people or those in a care home. 

Individuals who replace their main residence can reclaim the SDLT where the new home was purchased before selling the old, subject to the old residence being sold within 3 years of the new home purchase.

The residence nil-rate band (RNRB) increases to £150,000 from £125,000 from 6 April 2019 and to £175,000 from 6 April 2020; allowing some couples to leave up to £950,000 to future generations free of IHT.