The mortgage market is buzzing with activity, as a slew of rate cuts from some of the UK’s largest lenders has ignited fresh competition, offering a glimmer of hope to borrowers. Some reductions have gone as deep as 0.53%, helping to ease fears and boost confidence. Nationwide has also made a significant move with its Helping Hand mortgage, upping its Loan to Income (LTI) ratio to 6x, which could open the door to homeownership for more first-time buyers. However, landlords are feeling the heat, with looming Energy Performance Certificate (EPC) targets and potential interest rate hikes threatening their financial stability. As we head into a critical period, with stamp duty changes on the horizon and the Autumn Budget looming, borrowers are weighing whether to lock in a deal now or wait for further developments.

Mortgage Rate Changes

It’s been a busy time in the mortgage market. NatWest has trimmed rates by up to 12 basis points (bps) on residential deals, while buy-to-let loans saw reductions of up to 60bps. This follows the Bank of England’s decision to hold rates steady.

Nationwide isn’t far behind, slashing fixed rates by up to 0.31% on various products. The cuts benefit both new and existing customers.

TSB has been busy, too, cutting up to 0.20% off rates for first-time buyers and home movers on selected 2- and 5-year fixed-rate deals, particularly for those with loan-to-value ratios (LTV) between 85% and 95%.

Halifax has followed suit, reducing mortgage rates by up to 0.3%, fueling the price war among lenders.

Clydesdale and Virgin Money have both cut mortgage rates by up to 0.4%, providing more sub-4% options to borrowers.

Coventry Building Society has gone further, cutting rates by up to 0.53% across its residential, interest-only, and offset products. This makes them a strong contender in the current price-cutting frenzy.

Not to be left out, Barclays has cut rates by up to 0.34% across its residential and remortgage products, with some 5-year fixed deals now starting at just 3.71%.

Changes in Criteria

Nationwide has also raised the maximum loan-to-income ratio on its Helping Hand product from 5.5x to 6x, allowing first-time buyers to borrow significantly more—up to 33% more, in fact. This could make a huge difference for buyers looking to get a foot on the property ladder, especially with up to 95% LTV available.

Buy-to-Let Rates

For landlords, The Mortgage Works has reduced its buy-to-let rates by up to 0.35%, with some new deals starting from 3.49%. While this offers some relief, the broader financial landscape for landlords is becoming increasingly challenging.

Resilience in the UK Property Market

The UK property market has shown resilience, with residential transactions up 5% in August 2024 compared to last year. However, non-residential transactions have declined by 3-4%, revealing a divide in market performance. Residential mortgage rates have been on a steady downward trajectory, which has fueled growing confidence among buyers, with many expecting demand to rise by the end of the year.

Demand for Long-Term Fixed Deals Expected to Grow

Nationwide’s increase in its LTI ratio is a big deal, and other high street lenders are expected to follow suit to compete for first-time buyers. Combined with the rate cuts we’ve seen, this will likely drive up demand for long-term fixed deals, as borrowers look to lock in favourable rates before any further hikes.

Should You Lock In a Deal Now?

Many are wondering whether to lock in now or hold out for even lower rates. Experts are divided. Some say it’s smart to lock in now, especially with uncertainty around the Autumn Budget and potential rate increases. Others believe there may be more room for cuts, but that’s a gamble. Waiting for better rates could be risky, particularly given the unpredictable economic outlook.

Stamp Duty Changes: Act Before April 2025

There’s another ticking clock for buyers – stamp duty changes in April 2025. From that point, first-time buyers will face much higher stamp duty bills, with properties under £425,000 (which currently don’t attract any stamp duty) set to face a charge of £6,250. The tax on properties worth £450,000 will jump from £1,250 to £7,500. If you’re in the market, it might be worth acting now to avoid the sting of these increases.

Landlords Brace for EPC Rules

Landlords are also under pressure, with new regulations requiring properties to meet a minimum EPC rating of C by 2030. The cost of upgrading properties to meet this standard could be as much as £10,000 per home, and many landlords are expected to pass this cost onto tenants. Critics are concerned that smaller landlords may exit the market, reducing rental supply and potentially driving rents higher.

Rent vs Buy: The Big Debate

The age-old debate of whether it’s better to rent or buy continues. While buying often makes sense in the long run due to property appreciation and the ability to build equity, rising interest rates and large deposits can be major hurdles. Conversely, renting offers more flexibility and lower upfront costs, but there’s no long-term financial gain. Ultimately, it’s a decision that depends on your personal financial situation and lifestyle goals.

Swap Rates on the Rise

Swap rates, which influence fixed mortgage rates, have nudged upwards due to inflation and the Bank of England holding its base rate at 5%. While some rate cuts are still being seen, many experts believe we may be nearing the end of this downward trend, with rates either stabilising or ticking back up in the near future.