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NatWest rule change offers ‘welcome relief’ for homeowners looking to boost savings by £5.5k a year

July 15, 2024July 15, 2024 interestratesinfo

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NatWest has launched an “Airbnb mortgage” to help borrowers who are struggling to pay their mortgage amid the cost of living crisis.

The new mortgage deal will offer homeowners more “flexibility” if they wish to share a spare room or their entire home with guests.

New and existing customers at the bank will no longer need to apply and pay for a “Consent to Let,” providing they follow the listing rules.

Customers must only let a room in their home for up to 90 days of the year and it has to be through an “approved platform” like Airbnb.

According to NatWest, the typical host in the UK earns almost £5,500 a year on Airbnb. This is enough to cover 69 per cent of the average annual mortgage payment which can provide “a significant boost” to families and households who are struggling to make ends meet.

Mortgage competition hots up as rates decision looms

July 15, 2024July 15, 2024 interestratesinfo

Competition between mortgage lenders has intensified ahead of a key decision on interest rates by the Bank of England.

A host of lenders have made reductions to the cost of new fixed-rate mortgages in recent days.

Brokers expect further cuts to come, but mortgage rates remain much higher than homeowners became accustomed to for a decade.

Lenders’ funding costs have hinted at falling with the Bank forecast to cut benchmark interest rates for the first time in four years.

Analysts believe that move, from the current 16-year high of 5.25%, could come on 1 August, although this remains far from certain.

A fifth of future homebuyers will go green for better mortgage rates – MAB

July 8, 2024July 8, 2024 interestratesinfo

More than a fifth, 22%, of prospective homebuyers plan to improve the energy efficiency of their residences if it means they get a cheaper mortgage rate, research from a broker found.

A study from Mortgage Advice Bureau (MAB) found that 36% would make their homes greener to enhance the livability of their properties while 32% believe better energy efficiency would make their properties more attractive when it was time to sell.

MAB’s research also revealed that 81% of prospective homebuyers were already planning to make their future homes more efficient.

For 58% of respondents, the reason for doing this was to lower their energy bills, while 32% wanted to make their future home more appealing. Some 44% felt this was the best thing to do for the environment.

House prices flat in June with marginal annual growth: Halifax

July 8, 2024July 8, 2024 interestratesinfo

House prices in the UK were largely flat in June, down just 0.2% on a monthly basis, the latest Halifax House Price Index has found.

On an annual basis, house prices were up marginally, with growth of 1.6%, similar to the 1.5% recorded a month prior.

The average house price now stands at £288,455, down slightly from £288,931 in May.

The strongest property price growth was recorded in Northern Ireland, where growth of 4% was seen in the year to June and on a monthly basis, houses rose 3.3%.

The average price of a property in the country is now £192,457.

Of England’s regions, the North West saw the greatest house price rise, up 3.8% annually to an average of £231,351.

Comment: Look below the surface

July 8, 2024July 8, 2024 interestratesinfo

This spring has delivered signs for cautious optimism.

The number of mortgages approved by lenders in March was 61,330; up from 60,400 in February and an 18-month high. The market is outpacing the expectations of most economists.

There are other causes for guarded celebration: effective interest rates are down to their lowest since last summer, and wage growth is outpacing house prices.

It seems likely we will edge back towards ‘business as usual’, except with slightly fewer amateur buy-to-lets

Can Labour really bring down mortgage rates?

July 8, 2024July 8, 2024 interestratesinfo

Higher mortgage rates have been battering homeowners for the best part of two years.

Average five-year fixed rate mortgages remain above 5 per cent while two-year fixed rate mortgages are close to 6 per cent, according to Moneyfacts – a far cry from the 2.5 per cent averages seen in early 2022.

Labour’s campaign promised change for the country – and falling mortgage rates would certainly represent a positive change for many.

Higher mortgage rates are due in part to the Conservative Government’s mini-Budget in 2022, when unfunded tax policies caused a market panic and sent average rates soaring close to 7 per cent.

Now Labour claims it will deliver economic stability, with tough spending rules to keep mortgage rates as low as possible.

Activists demand immediate rent controls from Starmer government

July 8, 2024July 8, 2024 interestratesinfo

In a blog released within minutes of Sir Keir Starmer becoming Prime Minister, activist group Generation Rent calls for rent controls.

It says: “In order to be effective, we believe the new government must limit the rent increases landlords can impose to tenants stay put, rather than continue to allow landlords to push rents up faster than tenants’ wages.”

The activists also want to stiffen Labour’s policies on so-called bidding wars.

Starmer spoke in broad terms during the election campaign about giving tenants the right to challenge ‘high’ rent rises, and stopping agents and landlords from effectively auctioning tenancies to the highest bidder.

But Generation Rent’s blog states: “While plans to challenge increases are welcome and bidding wars must be outlawed, any system that would allow tenants to offer so-called ‘voluntary’ offers over asking prices would undoubtedly be exploited by some landlords and letting agents to allow back-door bidding wars.”

UK needs 120,000 new rental homes to cut record-high rents, Rightmove warns

July 8, 2024July 8, 2024 interestratesinfo

An additional 120,000 homes are needed to fix Britain’s broken private rental market, Rightmove has warned, after revealing that advertised rents have hit new record highs.

The average rental price on the market has hit £1,316 a month outside London, rising 7% in the last year. In London renters can expect to see average rents of £2,652 a month advertised.

Although the pace of rental growth has slowed, a mismatch between supply and demand is preventing it from returning to what Rightmove called “normal growth” of around 2% per year – in line with the Bank of England’s inflation target.

The next government must accelerate housebuilding and incentivise landlords to invest in more homes to bring 120,000 rental homes on to the market and address the supply issue, according to Tim Bannister, Rightmove’s property expert.

Mortgage misery led voters to turn against Tories

July 8, 2024July 8, 2024 interestratesinfo

Tory voters lost faith in the ability of Rishi Sunak’s party to manage the housing market ahead of the election, figures reveal.

A results breakdown shows the Conservatives haemorrhaging support to Labour and the Liberal Democrats in seats with the most mortgage holders.

It came despite inflation falling to the 2 per cent target and rate cuts expected this summer.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said mortgage holders were ‘unconvinced’ that Sunak’s plan to fix the economy was working.

The Bank of England began to hike rates in late 2021 to bring rising prices under control.

But the mini-budget unveiled by Liz Truss – who has now lost her seat – sent borrowing costs up in September 2022.

Rates are still at a 16-year peak of 5.25 per cent, which has piled on financial pressure.

Low-deposit deals hit two-year high: Moneyfacts

July 8, 2024July 8, 2024 interestratesinfo

The report says: “This marks the fifth consecutive month of rises. These rates remain slightly lower compared to December 2023. The average two-year fixed rate is slightly higher compared to January 2024.”