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“Good news for mortgage holders and first-time buyers as Bank of England freeze interest rates”

Posted 12th February 2024 by ctatax-admin

Cornerstone Tax is the UK’s leading property tax advisers, specialising in Stamp Duty Land Tax. We’ve reclaimed over £15 million in overpaid SDLT in the last 12 months. Contact us for property tax advice, or to see if you are eligible to claim a refund from HMRC on overpaid Stamp Duty

The Bank of England has announced that it will freeze the base rate at 5.25 per cent once again after its Monetary Policy Committee (MPC) meeting on Thursday (February 1). The MPC, who meet eight times a year to decide the official interest rate in the UK, voted by a majority of 6–3 to maintain the rate at its current figure.

After many consecutive hikes over the last year, the base rate has now been sat at 5.25 per cent since August 2023. But despite this being at a 15-year high, there is some good news for mortgageholders and first-time buyers looking to get on the property ladder this year.

Read: How an annexe can save you thousands on stamp duty land tax

New data from the Bank of England (BoE) reveals that the average UK mortgage rate has fallen for the first time in two years. According to the report, interest rates on newly drawn mortgages dropped from 5.34 per cent in November to 5.28 per cent in December – the first fall since November 2021 – and some fixed-rate deals are now on offer below the 4 per cent mark.

According to Rightmove, the average 5-year fixed mortgage rate in the UK is now 4.66 percent, down from 4.81 per cent a year ago. The average two-year fixed mortgage rate is now 4.99 per cent, down from 5.12 percent a year ago.

Rightmove’s mortgage expert said that the market has been extremely busy since the start of the year. “We’ve had the busiest month for people getting a mortgage in principle since we launched the service in 2022, which shows that many future movers want to understand what they are likely to be able to borrow from a lender if taking out a mortgage soon,” Matt Smith said.

“Average mortgage rates continue to trickle down on the whole, however we’re now seeing those with smaller deposits benefit the most, whereas those who need to borrow less have seen some small increases in rates due swap rate trends. We should see a stable few weeks for the mortgage market ahead of the Spring Budget.”

Read: How much stamp duty do I pay on a second home?

Mortgage approvals have reportedly risen to a six-month high following two months of consecutive increases, and data from Nationwide’s latest house price index also reported that house prices rose 0.7 per cent month-on-month in January, beating forecasts as affordability eased for buyers.

Jake Stott, founder of Manchester-based Mondo Mortgages, has also seen a positive start to the year amongst house-hunters. He said: “January has been an absolute belter for the housing market. The Nationwide House Price Index for January highlights the optimism that is emerging after a turbulent 2023.”

Jake added: “Since lenders decided to slash rates right from the start of the month, we’ve seen first-time buyers popping up like daffodils in spring. They’re not just window-shopping now but are serious, with a mortgage in principle clutched in their eager hands and ready to haggle. Confidence is sky-high.

“Even those houses that have been languishing on the market are finally getting a second glance. Buyers are swooping in, backing themselves to secure a discount off the asking price. If January’s anything to go by, the property market is in for a corker of a year.”

David Hannah, Group Chairman of Cornerstone Tax, also said: “It should come as welcome news to prospective buyers across the country that mortgage rates are finally starting to demonstrate a noticeable fall, we should expect to see a continued flurry of activity within the property market in the coming months as further opportunities crop up amidst the ongoing mortgage price war.”

Cornerstone Tax is the UK’s leading property tax advisers, specialising in Stamp Duty Land Tax. We’ve reclaimed over £15 million in overpaid SDLT in the last 12 months. Contact us for property tax advice, or to see if you are eligible to claim a refund from HMRC on overpaid Stamp Duty

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Here at Cornerstone Tax, we are Stamp Duty Land Tax (SDLT) experts.
You can call us on 01858 894349 or email us at newbusiness@ctatax.uk.com