If changes to capital gains tax (CGT) expected to be announced in the impending emergency Budget come to fruition, the buy-to-let mortgage market is one area expected to be affected.

Guy was struggling with his next property decision

According to government sources, the coalition has agreed to raise CGT on non-business assets, including buy-to-let properties, from 18% to a figure that could be as high as 50%. In a separate blow the annual exemption limit for CGT, currently £10,100, may come down to as low as £2,500. This will bring hundreds of thousands more people into the tax net.

One of the possible outcomes of announcing these CGT changes months before they’re introduced is a sizeable increase in the amount of the preferred investor properties on to the market as people scramble to take any current gains. This could spark a downward price spiral that could, however, create opportunities for both homebuyers and potential landlords.

Buy-to-let is of course a long-term investment and investor landlords taking this view will simply continue to let tenants cover their mortgage costs and reap an eventual reward, regardless of CGT.

It is not certain when the rate change will take effect from, or if the Chancellor will introduce some sort of transitional arrangement, but the law of supply and demand means that it will make sense for existing landlords to reduce asking prices in order to sell a property rather than face a potentially huge post-budget loss. Likewise, buyers can consider their offers carefully and make the most of this opportunity to land a bargain.

The buy-to-let sector has been particularly hard hit by the economic downturn as lenders have withdrawn products and tightened criteria across the board, with the number of current deals a mere 8% of those available in August 2007. The past few weeks has, however, witnessed buy-to-let mortgage providers warming up to the new challenges of a very different lending landscape. Product numbers are slowly returning, average mortgage rates are falling and more products are available at higher loan to value tiers.

The last month has seen new entrants to the sector in the form of Aldermore and Kensington; Saffron and Melton Mowbray Building Societies return to offering products and Bank of China successfully finding its niche within the market, both signs that this vital sector is starting to become a more viable and safer option for lenders again. With other lenders reportedly close to launching or re-launching competitive deals, more funding will arrive bringing with it welcome liquidity.

Tenant demand has been particularly strong for a while with landlords confident they would let their properties. If the growing reports concerning CGT are true it appears that their confidence in the house purchase market is about to be tested too.

Lee Tillcock, Editor, Moneyfacts Group

Not content with making history in cutting base rate to its lowest ever level of 0.5%, the Bank of England has now left it sitting there for a whole year.

Clyde regretted vowing not to shave until base rate started to rise

Throw in £200 billion of money straight off the quantitative easing printing press and it would seem the economy has been given every chance to find its feet.

Indeed, latest figures show that the recession has officially passed, but at what cost to the finances of Joe Public?

Mortgage borrowers who kept to their lender’s standard variable rate or on a tracker deal are likely to have been celebrating, as each month the Monetary Policy Committee announced there would be no change.

Two year fixed rate mortgage deals remain relatively cheap too, costing on average 4.74% today compared with 6.28% in October 2008, just before the base rate started its descent.

However, with one man’s pleasure often another’s pain, it is savers who have had an unhappy 12 months and more.

Before base rate began to drop, the average rate available on a no notice account stood at 3.71%, but stands at just 0.72% today

Notice accounts have seen their rates fall in that time too, dropping from 3.91% to 1.02%.

Also suffering have been cash ISA rates, dropping from 4.99% to 2.09% during the same period.

A year ago the average cash ISA rate stood even lower at 1.99%, but the slight improvement could soon slip away once ISA season draws to a close on 5 April.

That’s not to say decent savings deals can’t be found, it’s just they’re a little harder to nail down.

In the meantime, savers will be praying for a base rate rise soon, but would be unwise to start holding their breath.

Although the convalescence of the economy appears to be underway, most commentators agree that we’re not out completely of the woods just yet.

Uncertainty still lies round almost every corner. Which direction will house prices go next? Will inflation obediently follow Bank of England predictions and hit its 2% target in the medium term? And what will the outcome be when the ballet boxes are finally dusted down?

All are unknowns which combine to baffle far greater minds than my own.

Most predictions suggest the earliest chance of action would be a base rate rise towards the end of the year.

But your guess is as good as mine, or that of anyone else.

Tim Leonard, Senior Reporter, Moneyfacts Group

So Skipton Building Society has decided to scrap the ceiling on its standard variable rate (SVR) and increase the rate from 3.5% to 4.95%.

The promise that mortgage borrowers on the SVR would never pay more than 3% over base rate is no more…well, temporarily no more.

Image: ‘What’s all the fuss about scrapping ceilings?’

The society says that it had to respond exceptional market conditions, ones which have seen the Bank of England keep the base rate of interest at an historic, 315 year low of 0.5% since March last year.

The credit crisis has seen the funding that most banks and building societies rely upon to function become unusually expensive too.

Having had an exceptional circumstance clause written into its contracts since 2002, Skipton is perfectly within its rights to make the change that it has.

What is more, the rate remains below the average SVR of the top ten building societies of 5.12%.

But does this justify an action that will reportedly have a significant financial impact on around 30,000 borrowers immediately and possibly another 35,000 in the coming months?

Some clever people somewhere have worked out that the rate rise means a borrower with a £130,000 interest only mortgage will see £157 added to the cost of their monthly repayments.

Those with a similar sized repayment mortgage would see their monthly outlay rise by £105.

Perhaps the Skipton customers who can’t afford to meet their revised repayments could claim exceptional circumstances too and keep on paying their old amount?

To be fair to Skipton, it has not been the first lender to raise its SVR (other smaller lenders have done so while base rate has remained unchanged), and it is highly unlikely to be the last, particularly now that one of the big providers has broken ranks.

Borrowers with other providers could therefore soon find themselves in the same boat too.

All this suggests the time to move away from the SVR might soon be nigh.

Skipton’s SVR borrowers will undoubtedly be looking forward to the exceptional circumstances soon passing so that the ceiling can be reintroduced.

Let’s hope the ceiling hasn’t fallen in on their home ownership dream before then.

Tim Leonard, Senior Reporter, Moneyfacts Group

Figures showing evidence of up to a million homeowners meeting their mortgage and rent payments should have a real capacity to shock, but it seems the story has almost passed us by, such is the level of desensitisation that more than two years of constant headlines and announcements detailing record levels of public and personal debt has caused.

Image: The ramifications of Seb’s decision quickly became apparent

To recap, research conducted by Shelter has revealed that as many as one million people households have used credit cards to pay for their mortgage or cover their rent in the last year. The problem is not one suffered exclusively by the working class, either, with figures showing that four per cent of middle/upper classes have also resorted to this dangerous method

With the acute possibility of redundancy becoming reality for many, it is understandable that households which once comfortably made their monthly payments are struggling to make ends meet. But paying off one debt, while accruing another, is simply delaying the inevitable for all but the brightest financial minds. After all, if you’re in the position where the mortgage can’t be paid, how on earth are you going to pay of additional credit card debt?

The problem does not appear to be an especially widespread one, the headline number of one million is an estimate based on six per cent of respondents saying they had used plastic to keep a roof over their head. However, those doing this consistently (the survey includes anybody that has done so in the last 12 months, again suggesting that the scale of the problem may be exaggerated) are taking a huge risk, and face the very real prospect of having their home repossessed.

This is because credit card firms are not subject to the same rules as mortgage lenders, Shelter has advised, meaning they can force through a property order in order to push through a property sale.

Statistics show that repossessions were less widespread than was originally predicted in the first nine months of 2009, but the worry now must be that decisions made by those in the upper echelons of the Bank of England could see number jump.

Opinion is divided on when the historic low base rate of interest will be increased. Some experts have said that the measure is unlikely to move above 0.5 per cent until very late in the year or into 2011, but there seems to be a growing consensus that it is more likely to start creeping up in mid-2010. For those on tracker mortgages, a rise in interest rates could be the difference between being able to afford repayments and not, the difference between having a home and losing it.

Local housing agencies, charities and councils must do all in their power to educate homeowners that sticking their heads in the sand is not the answer and that help is at hand. It is help that should be sought, and sought quickly.

James Henderson, Online Reporter, Moneyfacts Group