Welcome to December’s Market Update…..the last one of a brilliant year.
This month, we reflect on the recent budget, and Shawbrook detail the state of the nation’s finances…..
We have seen a clear downward trajectory in rates, by at least 10bps in across most LTVs from, which is really positive..
Scroll on…..
The recent Autumn Budget introduces higher property-related taxes and long-term housing investment plans that will reshape parts of the UK housing and mortgage market, particularly for landlords and high‑value homeowners.
While there were no headline changes to stamp duty or direct mortgage schemes, the tax environment around property is tightening at the same time as forecasts still point to modest house price and transaction growth over the next few years.
From April 2028, a new annual levy – widely dubbed a “mansion tax” – will apply to homes valued above £2 million, collected via council tax and banded by property value.
The government expects this to raise several hundred million pounds a year and it is clearly targeted at wealthier, equity‑rich owners in prime locations.
There were no changes to mainstream Stamp Duty Land Tax in this Budget, despite speculation about both cuts and targeted reliefs for first‑time buyers. For the broader market this means existing thresholds and the current “frictions” on moving home remain in place, which the OBR links to a slightly lower outlook for housing transactions over the medium term.
The Budget confirms higher tax rates on property income from April 2027, with basic, higher and additional rates on rental income set to rise by 2 percentage points to 22%, 42% and 47% respectively.
At the same time, the existing restriction on mortgage interest relief remains in place, with relief moving to the new 22% property basic rate rather than being deductible at a landlord’s full marginal rate.
For leveraged landlords, this combination points to lower net yields and more pressure on highly geared portfolios, particularly in higher‑tax bands. Industry commentary suggests some landlords may choose to deleverage, incorporate, or exit the sector altogether, which could tighten rental supply and keep upward pressure on rents in some areas, even as tenants themselves face no new direct protections in this Budget.
The OBR expects UK house prices to grow by just under 3% in 2025 and then by around 2.5% a year on average, broadly in line with earnings, rather than the double‑digit rises seen in the previous decade.
Property transactions are forecast to rise from about 1.1 million in 2024 to around 1.3 million by 2029, but still remain below earlier projections due to higher taxes, somewhat higher mortgage rates than pre‑pandemic norms, and demographic shifts.
On the supply side, the Budget places emphasis on planning reform, new housing investment and infrastructure, which the OBR expects to lift residential investment growth from around 1% in 2025 to roughly 7% in 2027–28 as looser monetary policy feeds through.
Over time, even a modest increase in housing stock is expected to slightly temper price growth compared with earlier forecasts, helping affordability at the margin without triggering a broad‑based correction.
For residential borrowers, the Budget does not directly move mortgage rates, which remain driven mainly by Bank Rate, gilt yields and swap markets. However, a tighter overall tax stance, frozen income tax thresholds and higher property‑related taxes all weigh on household disposable income, meaning affordability assessments will need to stay conservative and borrowers may place even more value on competitive, advice‑led product selection.
First‑time buyers receive no new stamp duty breaks or large‑scale schemes in this Budget, so saving for deposits and managing outgoings remain the main constraints on getting onto the ladder. In this environment, tailored mortgage advice – from structuring deposits and using allowances efficiently, through to stress‑testing future rate and tax scenarios – becomes central to helping clients navigate a market where price growth is moderate but the tax landscape is increasingly complex.
We are here to help – please just let us know if you have any questions!
Below we have listed the lowest rates available across a range of LTVs.
Please note these are for illustration purposes only – not all clients may qualify for these. If you need any additional detail, please let us know,
| 95% | 90% | 85% | 80% |
|---|---|---|---|
|
4.73% - Santander
|
4.30% - Santander
|
4.08% - Santander
|
4.07% - Halifax
|
| 75% | 70% | 65% | 60% |
|---|---|---|---|
|
3.90% - Barclays
|
3.90% - Barclays
|
3.90% - Barclays
|
3.82% - Santander
|
| 95% | 90% | 85% | 80% |
|---|---|---|---|
|
4.67% - Santander
|
4.34% - Virgin
|
4.10% - Barclays
|
4.07% - Nationwide
|
| 75% | 70% | 65% | 60% |
|---|---|---|---|
|
3.99% - Nationwide
|
3.99% - Nationwide
|
3.99% - Nationwide
|
3.92% - Santander
|
Shawbrook’s “Home‑A‑loan: The State of the Nation’s Finances” paints a picture of households under sustained financial pressure, with many people juggling rising living costs, debt repayments and day‑to‑day expenses.
While some remain relatively comfortable, a significant proportion feel anxious about money and uncertain about their ability to cope with financial shocks such as job loss, illness or higher housing costs.
The research highlights that younger borrowers, renters, the self‑employed and those experiencing major life changes are particularly exposed. These groups are more likely to have variable or non‑standard income, limited savings and existing credit commitments, which can make traditional affordability assessments and access to mainstream borrowing more challenging.
As a result, more people are turning to credit cards, overdrafts or personal loans to plug gaps, and dipping into savings to cover everyday spending. This pattern can erode financial resilience over time, especially when combined with higher interest rates and inflation that has recently eaten into disposable income.
For advisers, the report underlines the growing importance of detailed, empathetic fact‑finding that looks beyond simple income multiples to understand a client’s whole financial picture. That includes identifying vulnerability, discussing debt consolidation where appropriate, and considering protection and later‑life needs alongside the core mortgage recommendation.
Finally, the findings suggest that lenders and brokers who can blend human insight with smart technology will be best placed to support today’s borrowers. By using more nuanced underwriting and flexible product design, they can help customers feel more in control of their money and more confident about big decisions such as buying, remortgaging or borrowing in later life.
Net mortgage borrowing fell back to £4.3bn in October from £5.2bn in September as Bank of England data showed a modest slowdown in lending and approvals ahead of the Autumn Budget, despite rates on new mortgages edging down and overall activity remaining relatively resilient.
Link opens a third party website
Link opens a third party website
“Jack, Joshua and Charlie from the Mortgage Advice Bureau offered excellent and timely service.
They found me a better rate than what I could find on the market myself and guided me through the entire process supportively.
Huge thanks to you all!”
– T Pickford
Collated and developed by Maven
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