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Review of the Mortgage Industry 2014

Adam Swalwell from Carver Financial Services comments on 2014 and how introduced changes affected the housing and mortgage market across the UK.

2014 has certainly been a busy year in the housing and mortgage market. With the introduction of the Mortgage Market Review, the Stamp Duty and pension reforms and the ongoing mortgage rate war between lenders, it has definitely been a year of recovery and growth.



Coming into force in April, the Mortgage Market Review (MMR) was introduced by the Financial Conduct Authority (FCA) to prevent the reoccurrence of the ‘careless’ lending that had been seen in the pre-credit-crisis days.

Under the new rules, potential borrowers now have to face ‘stress tests’ where their monthly outgoings are put under scrutiny to see if they can cope with future rate rises.

The general consensus is that the industry has been deemed successful in implementing the MMR, with the amount of lending growing by more than 15 per cent in 2014.

Stamp Duty

There were a few surprises in George Osbourne’s Autumn Statement– and not least was the reformation of Stamp Duty. In what was his last statement before the General Election, Osbourne announced that there was to be a complete overhaul of the system. Under the new system, the amount of Stamp Duty owed will work in a graduated way, much like income tax.

For example;

If you bought a property worth &130,000, you would pay &100 Stamp Duty - 0% on the first &125,000 and 2% on the remaining &5,000.

If you bought a property worth &255,000, you would pay &2,750 - 0% on the first &125,000, 2% on the next &125,000 and 5% on the remaining &5,000.

This all means that you would pay a total Stamp Duty amount of &2,750 on a property worth &255,000.

The new rules will save 98 per cent of homebuyers thousands of pounds, with the buyer of an average family home bought at &275,000 saving &4,500. However, homes that cost their buyers over &937,000 will see their Stamp Duty increase.

Pension Reforms

Savers have always been able to take 25 per cent of their pensions in a tax-free lump sum, but from next year, they will be to do whatever they like with their pension pot.

From April 2015, savers over the age of 55 will be given the option of taking out a number of smaller lump sums instead of one large one, with 25 per cent of each lump sum being tax-free.

Mortgage Price War

With the introduction of the MMR and the uncertainty of when the Bank of England bank rate would eventually rise,mortgage rates began to rise in the middle of the 2014.

But, once the impact of the MMR had settled down, banks and building societies began to gain confidence in the market and offer lower deals again, as a means of meeting their end-of-year targets.

Deals included ten-year fixed rates and variable rates as low as 0.99 per cent. Record price cuts have brought rates to their lowest levels since 2007 and, as the rate war continues into 2015, we may see even further discounts from lenders in the months to come.

Bring on 2015!


The Government have already announced the new Starter Home initiative which will see 100,000 new homes built for first-time buyers under the age of 40, and we can only anticipate that this will be the first of many new schemes brought in to help boost the number of properties built.

With the market showing continued signs of returning to normality, 2015 will no doubt prove to be yet another year of economic recovery.

Adam Swalwell is from Carver Financial Services. For further information please call: 07872 822720

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