Autumn Statement 2023 – What it means for mortgages and the property market

Reduction in national insurance

For the self-employed, class 2 contributions that were £179 per year have been abolished. Additionally, the rate for class 4 contributions - previously 9% on earnings between £12,570-£50,270, has been reduced to 8%. For employees, the previous rate for the same band of income was 12% and this has been significantly reduced to 10%. For an individual earning £50,000 or above, the savings are £754 per annum (employee) and £556 (self-employed). These reductions will be worked into lenders’ affordability calculators from February and are likely to boost maximum loan sizes by around £5,000 for a sole applicant and £10,000 for joint applicants.

Increase in state pension

Once again, the ‘triple lock’ has been retained meaning an increase of 8.50% from April 2024. We continue to act for many retirees that seek to raise capital from their main residence. Equity release is unpopular right now due to lenders only offering fixed rates for life, which are expensive. The alternative is a more conventional retirement interest-only mortgage (RIO), and the increase in the state pension itself will increase borrowing capacity by £4,000 per applicant, and a lot more if defined benefit pensions are equally uprated. Please do contact our expert later life advisor Paul Jordan (paul@jordanlynch.com) for any mortgage queries.