Better Mortgage Rates on the Horizon - November 2024

• The base rate came down to 4.75% in The Bank of England's November meeting.
• Inflation increased to 2.3% due to the Winter fuel cap removal and Christmas overspending, so the base rate is unlikely to come down again before 2025.
• Mortgage lenders have been slow to lower their rates since the base rate fall; expect better deals to come into the market from January 2025.
• The current average 5-year fixed rate mortgage is 5.65% and the current average 2-year fixed rate mortgage is 5.34%.
• The lowest available 2-year fixed rate is 4.22% and the lowest available 5-year fixed rate mortgage is 4.14%.
• The housing market will, as usual, be flat over Christmas whilst the markets look to the New Year for better opportunities.
• The remortgage market is and will be, hit the most from all of this as prospective remortgagers need lower rates to go ahead.
• The average UK salary is at its highest, reaching £36,192. This means the average mortgage you could get on this salary (4.5x annual salary) is around £162,864 based on a good credit score.

Business tax hikes criticised but Chancellor hits back at naysayers

During their General Election campaign earlier this year, Labour put economic stability and growth at the top of the list. However, in the October budget announcement, a £22bn "black hole" needed to be filled meaning tax rises where businesses predominantly foot the bill.

Rain Newton-Smith, director general at The Confederation of British Industry openly criticised Chancellor Rachel Reeve's October budget where taxes increased by the largest amount since John Major's government in 1993.

The director general said "Too many businesses are having to compromise on their plans for growth" and "profits aren't just extra money for companies to stuff in a pillowcase. Profits are investment."

But Chancellor Rachel Reeves hit back noting that no business leaders offered a suitable alternative solution to the challenges Labour inherited from the previous Conservative government.

Reeves said "I have heard lots of responses to the government’s first budget but I have heard no alternatives," adding "We have asked businesses and the wealthiest to contribute more. I know those choices will have an impact. But I stand by those choices as the right choices for our country: investment to fix the NHS and rebuild Britain while ensuring working people don’t face higher taxes in their payslips."

Sources: Sky and The Guardian

Housing affordability is down, London particularly the worst-off

The recent decline in affordable housing starts in London is a significant concern. With an 88% drop from the previous year, only 3,100 affordable homes were started in Greater London between April 2023 and March 2024. A stark reminder of the growing housing crisis in the city.

In the boroughs of Harrow, Bexley, and Richmond-upon-Thames, a mere one affordable property was started during the entire year. This lack of affordable housing options exacerbates the challenges low-income individuals and families face in accessing decent and affordable housing in these areas.

A spokeswoman for London Councils remarked that housing conditions were "incredibly tough" to start building new, affordable housing in the capital city.

She said that "There are 287,000 potential new homes in London with planning permission, including 70,000 affordable homes, that have yet to be built," and "There are a lot of barriers to unlocking these sites – such as skyrocketing construction costs, and in recent years, a lack of capital funding and infrastructure."

The Mayor of London, Sadiq Khan, criticised local Conservatives within London for failing to keep pace on the affordable homes target.

He said "The Conservatives nationally have scrapped housing targets and failed on their affordable homes plans. Meanwhile, Tory town halls in the capital simply aren’t keeping pace in delivering the new homes we need, ripping away the ladder from young Londoners."

Sources: BBC News and City AM.