What do the changes in the market mean for you?
Following the mini budget announced on Friday, the councillor has confirmed a permanent Stamp Duty cut, which increases the amount that a purchaser pays for residential property before they become liable to pay Stamp Duty tax (SDLT).
The repercussions of these announcements have also had impacts on the mortgage market.
Changes in Stamp Duty
The threshold for purchasers paying Stamp Duty has risen to £250,000 compared to £125,000 previously. For First-Time buyers the Stamp Duty threshold has risen from £300,000 to £425,000.
This First-Time Buyer Relief cap has also been increased to be applicable for properties up to £625,000, previously £500,000
As a First-Time buyer, these changes mean that in the majority of cases you'll end up paying less Stamp Duty:
- On a £425,000 property - you wouldn't be charged Stamp Duty at all
- On a £625,000 property - you would be charged no Stamp Duty on the first £425,000, and 5% on the remaining £200,000. This means you'd only pay £10,000 in Stamp Duty
For more information please visit www.gov.uk/stamp-duty-land-tax
Mortgage insights - an expert view
Roger Phillips, a senior partner at specialist mortgage and insurance brokers MTGE, has provided some valuable insights following the recent uncertainty in the financial markets:
"There has been largely inaccurate reporting in the press regarding mortgage offers being withdrawn.
Firstly, a lender cannot withdraw a mortgage offer within the first seven days, unless there are due diligence reasons such as suspected fraud. In addition, we are not seeing offers exceeding the seven days being cancelled…."
Roger Phillips, MTGE
“…The rates being pulled are fixed rates, simply because the lender is unable to commit due to the current volatility. We have to remember that lenders borrow too and need to have clear information on interest rates”. Roger continues,
Tracker rates remain in place and some lenders offer track to fixed rates, which provides a certain refuge if rates start climbing, of course there needs to be an available fixed rate at the time. With The Help to Buy: Equity Loan ending and rate volatility, it's a tough time. However, I would urge you to reach out to us or your chosen broker if you wish to discuss your options.
We must remember that this is history repeating itself. In 1992, rates rose from 7.4% to 15% between June 1992 and October 1992. The average house price in 1992 was £65,000. In 2022, it is £283,496 - a return of 436%.
The biggest monetary return remains with property over the last 25 years. This may change, of course, but we have to remember interest rate rises have happened before and the above example reflects the long-term rise in house values."
Correct at time of publishing 30.09.22