24-01-2025
Mortgage News
Metro Bank has lifted maximum loan sizes across the entire buy-to-let range.
The challenger lender adds its limited company BTL product, launched last July, is included in the move.
It new loan amounts are:
- Maximum 75% up to £2m loan amount
- Maximum 70% up to £2.5m loan amount
- Maximum 65% up to £3m loan amount
- Maximum 60% up to £10m loan amount
- Maximum 50% over £10m loan amount
The bank says it was previously unable to lend over £2m due to lending policy restrictions.
Barclays hikes mortgage rates again
Barclays has announced a 0.2 percentage point increase in its fixed mortgage rates. This adjustment follows similar moves by other banks, including Santander and HSBC, as rising swap rates influence mortgage pricing. Justin Moy, managing director at EHF Mortgages, said: “The Government needs to intervene to bring the cost of borrowing down before we head into a messy recession in the months to come.” The cheapest two-year fix for buyers with a 40% deposit will rise from 4.23% to 4.43%, while the lowest five-year fix will increase from 4.11% to 4.31%. Borrowers are advised to explore their options promptly as rates continue to climb.
Nationwide increase income for FTB product offering up to 6 x income.
Nationwide increased the minimum income for its Helping Hand mortgage from £35,000 to £40,000 for sole applicants in January 2025. The minimum income for joint applicants increased from £50,000 to £55,000.
Housing
House-Builders Brace for Uncertainty Amid Market Challenges
Vistry, one of Britain’s largest homebuilders, has issued a cautious outlook for the year ahead, citing ongoing issues with housing affordability and broader economic challenges. The company highlighted that the market has been unpredictable, influenced by interest rates and economic conditions in England. This sentiment reflects a broader industry concern about slowing down due to potential buyers’ reluctance to commit in such an unstable financial environment.
Government Pledges to Ramp Up House Building in the UK
The UK government, through the National House Building Council (NHBC), has reaffirmed its commitment to significantly increase housing output. During the 2024 NHBC Pride in the Job Regional Awards, discussions focused on the future of home construction, especially in light of the government’s target to build 1.5 million homes over the next five years. This ambition was underscored by the visit of Gordon Lyons MLA to a high-quality housing development in Jordanstown, showcasing modern construction practices and high standards in house building.
Construction News UK Reports Decline in Planning Permissions
The latest data from Construction News UK indicates that planning permissions for new homes have hit a new low in the third quarter. This decline is a worrying sign for housebuilders, potentially impacting the supply of new homes at a time when demand remains high. The drop in permissions could be attributed to various factors, including local council hesitancy, regulatory hurdles, or economic considerations. This news comes at a time when the industry is already navigating through uncertain market conditions.
Development Finance
Homes England Doubles Development Fund for SME Builders
Homes England, the UK government’s housing and regeneration agency, has nearly doubled the funding available through its lending alliance with Invest & Fund for small and medium-sized enterprise (SME) builders. This expansion aims to support the construction of an additional 600 homes, building on the 107 homes previously supported. The initiative provides development loans up to £4 million, with a maximum loan-to-gross-development-value of 70% and a loan-to-cost of 85%. This move is part of the government’s plan to deliver 1.5 million new homes over the next five years, emphasizing the importance of SME developers in achieving this goal.
Shawbrook Secures £150m Facility to Boost Development Finance
Shawbrook has secured a £150 million facility through the ENABLE Build scheme in partnership with the British Business Bank to increase its development finance offerings. This scheme is expected to support over £300 million in finance for creating new homes over its lifetime. Shawbrook, which has already surpassed £2 billion in lending to UK property developers, becomes the third delivery partner for this expanded program, which was increased from £1 billion to £2 billion at the 2024 Autumn Budget. This partnership highlights Shawbrook’s commitment to supporting smaller housebuilders and contributing to the UK’s housing needs.
Government’s Housing Fund Expansion Continues to Support SME Developers
In a move to bolster the UK’s housing market, the government has extended its support for SME developers through Homes England and Invest & Fund’s expanded lending alliance. This commitment aligns with the government’s target to deliver 1.5 million new homes, emphasizing the role of small builders in this endeavour. The alliance now offers increased loan limits and terms, aiming to empower SME developers to grow and accelerate housing delivery across the country. This development finance initiative is a direct response to the need for more diverse and resilient housing solutions in the UK
Economy
Warning Lights Flash Over Jobs Market
The British Chambers of Commerce (BCC) has sounded the alarm on the UK jobs market, warning that “warning lights” are flashing due to increasing unemployment and decreasing job vacancies. Recent statistics reveal an unemployment rate of 4.4% for the period ending in November, a slight rise from 4.3%. Additionally, there was a sharp decline of 47,000 in the number of payrolled workers in December, the most significant drop since November 2020. Despite a wage growth of 5.6% in regular pay, businesses are bracing for higher employment costs, with Labour’s upcoming policies set to increase national insurance contributions and the minimum wage in April. Analysts are forecasting that the Bank of England might cut interest rates in February in response to these concerning trends in the job market. Matt Swannell from the EY Item Club commented that the Bank of England is increasingly worried about employment weakness, anticipating a 25 basis point rate cut by the Monetary Policy Committee in February.
Britain’s Shrinking R&D Budgets Pose Hurdle in ‘Global Race’ on AI
The UK’s standing in global research and development (R&D) has notably declined, with the number of British companies among the top 2,000 global R&D spenders nearly halving from 118 in 2013 to only 63 in 2023, potentially impacting the country’s competitiveness in the rapidly advancing field of artificial intelligence.
Santander Denies UK Exit Amid Strategic Review
Santander has publicly refuted claims that it intends to leave the UK due to excessive regulatory burdens. Over the weekend, various media outlets reported that the Spanish banking giant, which has a significant presence on UK high streets, is in the preliminary phase of considering various strategic pathways, including a potential departure from the UK.
This strategic assessment coincides with Santander facing lower returns in its UK operations compared to more lucrative markets like Mexico, Brazil, and its home country, Spain. The bank, under the leadership of executive chair Ana Botín, manages approximately 14 million accounts and employs around 20,000 people across nearly 450 UK branches, with its mortgage portfolio valued at £170.8 billion as of the end of June.
This review marks a significant juncture nearly twenty years after Santander’s acquisition of Abbey National in 2004, which marked its entry into the UK market. Despite the rumours, Santander continues to maintain that the UK remains a key market for its operations.
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