Industry Update September 2022

Have The Interest Rates Increased?

The government saw the seventh increase in interest rates, as expected. The interest rates were inevitable with the highest inflation rate in decades and a government keen to cut taxes. The Bank of England's decision to raise the interest rate from 1.75% to 2.25% will have an impact on mortgage holders, home buyers, and savers.

Jason Tebb, CEO of OnTheMarket, said: “As long as buyers remain confident about obtaining the mortgages they need and being able to afford them, increases in rates, while unwelcome, are unlikely to result in slamming on of the brakes. Even with this half-point rise, it is still a comparatively cheap time to borrow money but if we continue to see successive rate increases, the picture could be very different” Silva, M. da (2022)

However, the market remains active and will see growth with the recent reform of stamp duty.

Has Stamp Duty Been Cut?

In the mini-Budget published this morning, Chancellor Kwasi Kwarteng confirmed a permanent stamp duty cut. Recent news regarding the reform of Stamp Duty will. The government is reforming stamp duty by doubling the level at which people begin paying from £125,000 to £250,000, saving homebuyers thousands of pounds

What does this mean?

The benefit of doubling this nil-rate band is that ‘up to 29,000’ more people will be able to move home each year. Resulting in confidence in the economy and an even more active market. This reform benefits hard-working people as it allows them to keep more of the money they earn.

How will this affect first-time buyers?

Furthermore, as part of this change, the government would assist first-time home buyers in getting on the property ladder. This is because the reform raised the threshold at which first-time buyers must pay stamp duty from £300,000 to £425,000.

Sources: BBC, The Industry Eye, Gov.