Santander’s update to its affordability calculator shows it is “willing to fight for business beyond simply interest rates”, according to Barnsdale Financial Management principal adviser, Scott Taylor-Barr.
Santander announced its affordability calculator would be updated to reflect the recent reduction in national insurance contributions from 12 per cent to 10 per cent.
Taylor-Barr described this as a “great example of how competitive the UK mortgage market is”.
“A relatively small change in the tax burden on households is immediately used to drive what will be a relatively modest boost to people’s affordability, because it gives lenders who can do it quickest a competitive advantage,” he explained.
Positivity was also displayed by R3 Mortgages founder and director, Riz Malik, who argued affordability tweaks are “not as rock and roll” as rate cuts but their impact on the mortgage market “should not be underestimated”.
Meanwhile, Fairview Financial Management director and chartered financial planner, Ross Lacey, predicted the announcement could “trigger more competition between lenders who are desperate to get money into the market”.
Harmony Financial Services director, Imran Hussain, praised the announcement specifically for its impact on affordability, stating: “Rates are dropping but affordability remains an issue”.
Hussain mentioned this would be of particular benefit to first-time buyers who “continue to face challenges” despite house prices being “slightly more palatable”.
Lucra Mortgages director, Ben Tadd, described the announcement as “another small win for mortgage borrowers with a boost to affordability”.
He explained the small increase in net pay to people’s pay packets will mean that, across several lenders, there will be “scope” to borrow a little bit more money than people could do previously.
Limitations
But, Montgomery Financial founder, Charles Breen, cautioned that “affordability cuts are like taking a knife to a gunfight, way too little to make a serious impact”.
He explained that, while affordability cuts make “a slight difference”, it is not enough to make “an impactful difference”.
“With most things at the moment, it is always too late, or too little, or both,” Breen commented, “and that is the road to disaster we are currently on when it comes to housing."
Thanks to the Newspage community for sharing their thoughts with FT Adviser.
tom.dunstan@ft.com
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