Mortgage Freedom Day. It has a nice ring to it, don’t you think? Just imagine: no mortgage. I wonder what that feels like.
According to Halifax, yesterday was UK Mortgage Freedom Day, the point in the calendar when new borrowers will have earned enough to pay off the annual cost of their mortgage. So not quite the mortgage-free day of joy, but good news nonetheless.
Halifax based its calculation on the average annual mortgage repayment cost of £7,968 and the average net annual income of £26,810. However, there is a wide variation in Mortgage Freedom Days across the country. Homeowners in Scotland celebrate March 14, followed by Northern Ireland on March 15 and then the North and Yorkshire and Humber on March 25. Not surprisingly, there is a long wait for Londoners: their Mortgage Freedom Day is June 27.
Then there’s Rental Freedom Day. Halifax says that those in the North achieved rental freedom on April 6, swiftly followed by their counterparts in Yorkshire and the Humber (April 7) and Scotland (April 13). Once again, Londoners have the longest to wait with tenants not achieving rental freedom until July 29.
Of course, these figures should be taken with a pinch of salt. We’re talking averages here, and the situation will vary from household to household. What is more certain is this: the UK housing market is in ‘neutral gear’ and the upcoming general election will have little effect on that status.
That’s according to the Council of Mortgage Lenders (CML) which released new figures this morning. The trade body said that gross mortgage lending totalled £21.4 billion in March, in line with the monthly average over the past year.
Thanks to an increase in stamp duty last year and a rush to buy, March 2017 statistics are, as expected, less than the £26.3 billion lent in March 2016.
CML’s senior economist Mohammad Jamei said: ‘There has been a shift towards first-time buyer and remortgage customers, away from home movers and buy-to-let landlords.’
Mortgage brokers agree. Mark Dyason, director of Edinburgh Mortgage Advice, said: ‘The market overall may be in neutral gear but first-time buyers are in top gear. We are seeing a huge amount of pent-up demand from first-time buyers hit the market.
‘For so long landlords have held all the cards but with the various tax changes applied to buy-to-let, first-time buyers are firmly in the driving seat and are putting the pedal to the floor.With people increasingly wary of rate rises, remortgage levels also remain high. Inflationary pressure to come means the first rate rise in a long time may no longer be too far off.’
He added: ‘At the high end of the market there has been an influx of cash buyers over the past nine months given the weakness of the pound. But with Sterling seemingly in bounce-back mode, we may see this trend tail off. The irony is that the overall neutral market may be good news for the consumer as lenders will miss their targets and so drop rates to make their products look more attractive. Just look at ATOM selling out a 1.29 per cent 5-year fix in a week: lenders are having to try new things to get the volumes through the door.’
Helen Nugent is Online Money Editor of The Spectator