Will mortgage rates fall? Your Budget questions answered

2024-10-30 19:48:00

BBC

Will mortgage rates fall?

Asks Melania Benincasa

Of course, we don’t know the answer to this for sure, but the rates on new, fixed deals have been dropping in recent months.

In fact, the best deals are now on a par or lower than they were before the mini-Budget when Liz Truss was PM.

The bank rate – which is the benchmark interest rate – is expected to fall further, according to independent forecasters at the Office for Budget Responsibility.

However, owing to spending by the government fuelling some price rises, they say interest rates won’t fall as far and fast as they had previously predicted.

How will stamp duty change?

Asks Ross, 27, from Bristol

Two things are happening here – one mentioned in the speech, one not.

Firstly, a stamp duty surcharge on the purchase of second homes and buy-to-let residential properties in England and Northern Ireland will rise from 3% to 5% on Thursday.

Commentators say that could add to a squeeze on the number of properties landlords want to buy and rent out, hence potentially raising rents for tenants. The chancellor says it will give first-time buyers more of a chance to buy.

Secondly, thresholds at which stamp duty is paid looks set to return to original levels in April. Analysis by property portal Zoopla suggests about 80% of first-time buyers currently pay no stamp duty, but this would now fall to about 60%.

Scotland and Wales have separate, but similar, taxes on property purchases.

Will NI payments by businesses impact their hiring power and possibly backfire on staff?

Asks Laura, from London

This is clearly one of the main points of debate in this Budget.

The National Insurance bill for all but the smallest businesses is likely to rise. Analysts – as well as the independent official forecaster – say that this is likely to mean businesses paying lower wages than would otherwise have been the case.

Business groups say it could also reduce the number of staff companies take on.

The chancellor says she was left with little choice as tax rises were required.

That’s before we get into the political debate over whether the NI change breaks a manifesto promise or not.

Has the 25% tax-free lump sum when taking a pension been affected?

Asks Keith Anderson, 75, from Newport, who says there was speculation of this being limited to £100,000

From the age of 55 (or 57 from 2028), anyone with pension savings can take a quarter of their money as a tax-free lump sum up to a maximum of £268,275.

Keith is correct that there was plenty of speculation that this cap would be lowered, in order to raise more in tax for the government. It prompted some people to act earlier than they might otherwise have done.

I’ve covered lots of Budgets and lots of pension changes are often mooted, then don’t happen. This is another one.

It will be a relief to some people hoping, for example, to pay off a mortgage (or help their children or grandchildren to get one) in the future by taking some of their pension pot as a tax-free lump sum.

Can I know more about the announcement on bus fares?

Asks Caro Reed, from Brighton

The chancellor has confirmed that the cap on bus fares on many routes in England will rise from £2 to £3 in January, and will be in place for a year.

Single bus fares in London with Transport for London will remain at £1.75 and those in Greater Manchester at £2, owing to a different funding system in those cities.

It is also a good example of how policy differs in the different parts of the UK, as the devolved nations set their own rules too.

How have pensions been brought into the inheritance tax calculation?

Asks Neil Gilbourne, 67, from Lincoln

Inheritance tax is paid if an estate is valued at more than £325,000, but currently any money saved in a pension does not count towards this.

Anyone who dies before the age of 75 can usually pass on what is left of their pension savings tax-free as a lump sum, or an income.

If they are 75 or older when they die, their pension money can still be passed on, but it is treated as income and the person they leave it to may have to pay income tax.

However, from April 2027, pension pots that are inherited will be part of the tax calculation, potentially bringing more estates into the net.

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Has been extended until the end​ of the year.⁢ This means that ‌for many journeys across the country, bus operators will have to limit their fares to a maximum of ‌£2 per journey. The‍ aim is to make public transport more ⁤affordable and encourage ⁢people to use buses more frequently, especially in light of rising ​living costs.

Furthermore,⁢ local authorities are expected to receive additional funding to support bus services, ensuring⁢ that routes remain operational and accessible. This extension aims to strike‌ a⁢ balance between financial sustainability for transport companies and affordability for passengers.

the initiative reflects the government’s ⁣commitment to reducing⁢ transport costs and enhancing public transport options while looking ‍to support local economies as they recover.

If ⁣you have any more specific questions regarding this announcement ⁣or ⁢any other related topics, feel free to‌ ask!