Impact of National Insurance hike on affordability
ended 08. September 2021
A journalist at the Telegraph is putting together a story this morning on the impact of the NI hike on first-time buyer affordability, against a backdrop of already rising house prices. Is the combination of the two likely to further price this demographic out of the market? Deadline is tight. Keep your responses to 2-3 sentences max!
Samantha Bickford
MD, The Mortgage Girl at Ocean Mortgages Ltd
"First-time buyers this year are feeling dazed and confused. The complication of the Stamp Duty reductions and then gradual price increases this year has created a booming property market. Many have missed out on their dream first home and are hoping that prices drop later in 2021. They are then faced with a reduced income to support a policy that they may not benefit from for 60 years."
Doug Miller
Director at Lansdown Financial Services
"Someone earning £24,000 per year, which is below the national average wage, will pay an additional £180 per year in NI contributions which is almost 1% of their net income. First-time buyers save for many years to be able to get even just a 5% deposit, and as both rent and property prices continue to soar this is yet another hurdle that they will have to overcome to get on to the property ladder if the bank of mum and dad is unable to help. It's hardly surprising to see the average age of a first time buyer continuing to rise."
Rob Gill
Managing Director at Altura Mortgage Finance
"Generation First Time Buyer are entitled to feel the scales are tipping even further in favour of 'Boomers' with the National Insurance hike following a year of strongly rising property prices. Where mortgages are concerned, however, it's unlikely lenders will adjust affordability models as for most borrowers it will amount to a relatively modest cut in net income. Indeed, recent months have seen many lender affordability models move in the other direction and become more generous."
Director at Magni Finance
The continuous rise in house prices is making it challenging for first time buyers. In particular, those who may have been able to afford properties in their local area before covid, but is now a hotspot for people purchasing holiday homes.
Aaron Strutt
Product and Communications Director at Trinity Financial
"Mortgage lenders use affordability calculators to work out how much people can borrow and pay reductions reduce maximum loan sizes. Many homebuyers are already stretching themselves to get a large enough mortgage to get on the property ladder."
Director at Harmony Financial Services
"It's absolutely diabolical as this is hitting the lowest earners in society the hardest as every pound counts. The slightest knock to net monthly income can massively impact the monthly budget to keep a roof over your head. It will impact mortgage affordability by reducing a borrower's take-home pay, so first-time buyers have every right to feel hard done by. "
Lewis Shaw
Founder & Mortgage Expert at Shaw Financial Services
The National Insurance hike will affect younger people who are already squeezed with staggeringly high rents coupled with wage stagnation when you take into account the current rate of inflation. On the one hand, Boris was talking about 'generation buy', and he's taking it away with tax rises, giving us a tax burden the highest the UK has seen in peace-time. Do they have a clue what they're doing? Talk about a kick in the teeth for first time buyers.
Matthew Fleming-Duffy
Director at Cherry Mortgage & Finance Ltd
"A hike in National Insurance will hit low income workers the hardest and, with even a slight reduction in their take home pay, proving mortgage affordability will definitely become more difficult. This, in turn, will move the dream of home-ownership further away for many."