Knight Frank Daily Update Wednesday 8th July
A big day for stamp duty, mortgage rates drop for some borrowers and the case for a Help to Buy extension
2 minutes to read
Good morning,
Need to know
The UK Chancellor Rishi Sunak will today announce a number of measures aimed at shoring up employment and boosting spending.
His 11:30am speech is likely to include the much trailed six-month stamp duty exemption for homes worth less than £500,000. The Telegraph appears sure enough to put it on its front page and the Times says the policy is expected to come into effect immediately to prevent the market seizing up.
We talked yesterday about Beijing's successful use of mass testing to contain a virus flare-up that infected 335 people. Following outbreaks across southern and western states, the US is now setting up “surge” testing sites in several states, including Florida, Louisiana and Texas.
Meanwhile, Australia will likely slow down the return of its citizens from abroad as it grapples with a fresh outbreak.
Bloomberg takes a closer look at the pandemic's impact on Chinese luxury spending and finds a greater proportion of the $111 billion annual outlay will take place domestically due to the disruption.
More than half of Chinese purchases for luxury goods will happen domestically by 2025, compared to a third in 2019, according to a Bain & Co study cited in the piece.
The property market
UK house prices dipped 0.1% in June, Halifax said yesterday. That's the first time prices have declined for four consecutive months since 2010.
The lender echoes reports of a bounce back in June. Mortgage enquiries were up 100% compared to May and transaction volumes rose sharply. You can read the statement here.
We mentioned two weeks ago a split emerging in the mortgage market as banks began to retreat from higher LTV lending ahead of the wind up of government support schemes in the autumn.
Activity up to 80% LTV has now surpassed pre-pandemic levels as lenders compete for borrowers with larger deposits, according to Hina Bhudia of Knight Frank Finance.
Borrowers can now access 2 year fixed rates of 1.09% and 5 year fixed rates of 1.38% at 60% LTV on loans up to £10 million.
Lenders continue to grapple with a backlog of mortgage applications built up during lockdown and any cut in stamp duty could well add to that workload, which may impact the time it takes to obtain an approval.
Ahead of today's announcement by the Chancellor, it's well worth revisiting our Intelligence Talks stamp duty special, recorded last month with Tony Travers of the London School of Economics, Sean Randall, Stamp Duty Partner at Blick Rothenberg and our own Tom Bill and Anna Ward.
Finally, around 18,000 new homes sales could fall through this year due to construction delays unless Help to Buy is extended, the HBF said yesterday.
Any questions, please contact me, or the team.