The UK Chancellor of the Exchequer, Jeremy Hunt, has delivered his first Spring Budget. While it had very little mention of first-time buyers or mortgage rates, we share our thoughts on what it means for homeowners.
The plight of first-time buyers
With the affordability of home ownership at its worst point for 150 years, it is clear that support for first-time buyers must be a key battleground at the next General Election. The property market could benefit from a sense of economic calm, particularly if inflation continues to fall and interest rate hikes come to an end.
Unfortunately, the budget had little to offer for first-time buyers, who are currently tackling the highest cost of homeownership on record. While there were no new stamp duty reprieves, a commitment to building more homes would have been a start. Instead, Hunt’s first budget focused on getting the nation back to work, with a number of plans aimed at making work more accessible to the economically inactive. The “returnerships” programme will be introduced to offer skills training to the over-50s in an attempt to aid economic growth. Coupled with an increase to the cap on tax-free pension contributions, this offers some promise to those in this age group with rising mortgage and general living expenses.
Help for working parents
A dramatic rise in the cost of childcare in recent years has made it increasingly difficult for families with young children to return to work. Chancellor Jeremy Hunt has finally offered some help on the horizon to working parents with the expansion of free childcare for those aged over 9 months to three years. This expansion of free childcare in 2024 will make unmortgageable families with crippling childcare costs, mortgageable, enabling them to get on or climb the property ladder.
Bye bye Help To Buy
The media hype about a property downturn has now been proven to have been blown out of proportion. Now is the time for the Chancellor to reintroduce some much-needed levelling up and help vying first time buyers in the way that 300,000 before them were given assistance to become homeowners. Reintroducing Help to Buy would have been a reasonable decision as it was self-funding. However, the complete abandonment of Help to Buy makes no sense, particularly as first-time buyers are now rarer than ever, leaving a generation of young people with limited opportunities to purchase homes.
Energy price cap fix
After experiencing a year of consistently increasing household expenses, families in the UK will feel relieved to hear that the energy price cap will remain at £2,500 per annum. While this is positive news, the Government shouldn’t become complacent and should take this time to focus on how we retrofit our homes to improve energy efficiency.
So, while not offering much for first-time buyers or mortgage rates, there were some Spring Budget initiatives that could make homeownership more achievable for certain groups, such as the over-50s and families with young children. The absence of a recession is likely to improve sentiment among buyers and sellers, who are adjusting to the new reality of higher mortgage rates. Overall, the Spring Budget may not have been everything homeowners were hoping for, but it could provide hope for those struggling with the high cost of homeownership.
Have you got a question about your mortgage in 2023?
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