Autumn Statement extends mortgage guarantee scheme to June 2025 and cuts employee National Insurance by 2p

The Chancellor announced a 2p cut to the main rate of employee National Insurance contributions and an extension of the mortgage guarantee scheme to June 2025, as part of Autumn Statement measures that UK Finance put at around £17 billion per year over the forecast period¹. The package also included uprating working age benefits by inflation and further support for job seekers¹.

UK Finance, the banking and finance industry body, set out the measures in its Household Finance Review for the third quarter of 2023, published in December 2023¹. It said higher nominal tax revenues and falling inflation had provided "some leeway for a few big giveaways for households and businesses", with the National Insurance cut described as the main measure for households¹.

The review also recorded the wider economic backdrop against which the statement was delivered. CPI inflation fell to 4.6 per cent in October, which UK Finance said met the government's commitment to halve inflation by the end of 2023, though it noted the main contributor to the fall was a reduction in the energy price cap¹. Core inflation and services inflation posted annual increases of 5.7 per cent and 6.6 per cent respectively, and food prices were still up by around ten per cent in the year to October¹.

The Bank of England's Monetary Policy Committee voted to retain Bank Rate at 5.25 per cent at both its September and November meetings, with the decisions not unanimous¹. UK Finance said the overall message was that consideration of interest rate cuts was still some way off¹.

On housing, the review found that lending to both first time buyers and home movers had fallen year on year in every month since December 2022, with cost-of-living pressures and higher interest rates presenting a significant barrier to mortgage affordability¹. It said customers with lower incomes were putting down deposits equal to twice their annual income to meet affordability requirements, and that mortgage refinancing remained strong, with more customers taking a product transfer with their existing lender¹. Arrears rose in the third quarter, with signs of further increases ahead, though cases remained mainly older mortgages¹.

Why it matters for households

The National Insurance change affects employees paying the main rate of employee contributions, and the extension of the mortgage guarantee scheme keeps a support route open for eligible buyers until June 2025¹. The benefit uprating means working age benefits rise in line with inflation, and the job seeker measures add further support¹. The review does not set out the exact date the National Insurance cut takes effect, and it does not give the rate before and after the change; those details have not been reported here¹.

For mortgage holders, the review describes a market where affordability pressures are concentrated at higher loan-to-value ratios and income multiples, and where refinancing activity has been strong, with more borrowers staying with their existing lender on a product transfer¹. Arrears increased in the third quarter and more increases were expected, but UK Finance said no possessions related to arrears newly arising amid cost-of-living and interest rate pressures were expected until the end of 2024 at the earliest¹. Households continued to run down savings to cover increased monthly bills, with no sign at that stage of increased reliance on overdrafts or credit cards¹.

What happens next

The mortgage guarantee scheme runs to June 2025 under the extension¹. The Bank of England's next rate decisions follow its September and November holds at 5.25 per cent¹. UK Finance said it expected a further contraction in house purchase lending in the fourth quarter of 2023, and that the full effects of past rate rises on GDP were expected to be felt only in 2025¹.