As we wrap up 2024, Mortgage Strategy reflects on a year filled with significant developments in the mortgage market.
From changes in Budget forecasts and stamp duty policies, to the ongoing battle for mortgage prisoner compensation, these stories have defined the industry.
Read all 10 stories below to discover the key moments that made 2024 a notable year in mortgages.
Budget 2024: OBR lifts forecast for mortgage rates and house prices
The Office for Budget Responsibility revised its forecasts for house prices and mortgage rates in Budget 2024. Average mortgage rates were expected to rise from 3.7% in 2024 to a 4.5% peak by 2027. House prices, up 3% in early 2024, were projected to grow modestly, reaching £310,000 by 2028, 2.5% above March’s forecast. Property transactions and housing starts were also forecast to rise significantly by 2029. Reforms to planning policy could further impact housing supply positively, according to the OBR.
Budget 2024: Right to Buy discounts to fall and social rents to rise
The Chancellor announced reductions to Right to Buy discounts in the Autumn Budget, allowing local authorities to retain sales proceeds for reinvestment in social housing. Rachel Reeves also confirmed a £500m investment to build 5,000 social homes and proposed higher rents for social tenants to ensure financial stability for providers. Current discounts of up to 70% will decrease, raising concerns about affordability. Shelter highlighted risks to social housing supply, as over two million homes have been sold under the scheme since its inception.
Leasehold charges to be capped at £250 rather than cut to zero: Report
Leasehold reforms under the Leasehold and Freehold Reform Bill will cap annual ground rents at £250 for up to 20 years instead of eliminating them entirely, following Treasury opposition. Michael Gove initially proposed reducing charges to zero, but concerns over a potential £37bn impact on pension and insurance investments prompted the change. Critics argue the amendment falls short, leaving leaseholders with burdensome charges. Legal experts highlighted that full elimination could trigger significant compensation claims. The Bill remains under review in the House of Lords.
Budget 2024: Stamp duty on second homes rises to 5%
Chancellor Rachel Reeves raised the stamp duty surcharge on second homes and investment properties from 3% to 5%, effective immediately. Announced in the Autumn Budget, the reform aims to fund first-time buyer support and facilitate 130,000 additional property transactions over five years. Industry reaction was mixed, with some expressing disappointment over increased costs for landlords and reduced demand for second homes. Experts warned of market challenges, especially for first-time buyers in high-cost areas, but emphasised resilience and adaptability in the buy-to-let sector.
Reeves to ditch lower stamp duty thresholds for FTBs: Report
Chancellor Rachel Reeves planned to abolish the increased stamp duty threshold for first-time buyers introduced in the 2022 mini-Budget. Set to end in March 2025, the change would cost buyers up to £2,500 and raise £1.8bn annually by 2029-30. The move would particularly impact London and South East buyers. Critics warned it could reduce affordability and deter first-time buyers. Industry experts predicted a rush to complete purchases before the changes, straining the housing market during the holiday period.
Spring Budget: Stamp duty and holiday let tax breaks abolished
Former Chancellor Jeremy Hunt abolished stamp duty relief for multiple property buyers and tax breaks for holiday lets in the Spring Budget. Citing abuse and lack of private rental sector investment, he ended stamp duty relief from 1 June, saving £385m annually. Tax breaks for furnished holiday lettings will cease from 6 April 2025, saving £245m per year. These changes, aimed at eliminating short-term letting advantages, may reduce the financial viability of holiday lets, impacting local tourism and landlords’ net incomes.
News Analysis: Will the market hit sub-3.5% mortgage rates by Christmas?
Roger Baird analysed the potential for UK mortgage rates to fall below 3.5% by Christmas 2024, influenced by inflation, US rate cuts, and Rachel Reeves’ Autumn Budget. The Bank of England’s August base rate reduction to 5% spurred optimism among brokers, though inflation stabilising at 2.75% and potential tax hikes cast uncertainty. Experts offered differing predictions, with rates possibly settling between sub-3.5% and 4.5%. Global economic pressures, energy prices, and fiscal policies were highlighted as key factors shaping mortgage rate outcomes.
First ‘mortgage prisoners’ court trial starts tomorrow
Becky Bellamy reported that the High Court trial for 2,500 TSB Whistletree mortgage prisoners began on 23 July 2024, with claims for compensation up to £30,000 each. Harcus Parker, representing 15,000 former Northern Rock customers, alleged that TSB unfairly charged these borrowers higher interest rates. The trial follows years of campaigning by mortgage prisoners, who argue they were exploited after the government sold their loans to inactive lenders post-2008. TSB denies the claims and is defending the case.
NatWest’s sub-4% direct deal frustrates brokers
NatWest launched a sub-4% mortgage deal, limited to direct customers, frustrating brokers. The five-year fixed rate at 3.97% up to 60% LTV with a £1,495 fee is 6 basis points cheaper than NatWest’s broker offering. Chris Sykes criticised dual pricing, emphasising its complexity. Nicholas Mendes called the move short-sighted, highlighting brokers’ value. Moneyfacts noted falling fixed-rate potential, stressing overall mortgage costs matter most. Nationwide’s sub-4% deal remained available to brokers, contrasting NatWest’s exclusivity.
NatWest launches sub-4% deals, cuts rates by up to 79bps
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