27 October 2022
Market Update | October 2022
Another month has passed by and now we are on the countdown for the final months of 2022; just where has it gone? I’m sure I speak for all of us when I say that as we enter these autumn months, it’s been a whirlwind of a year and the turmoil in government feels more like a soap opera than reality!
In September, we saw the government’s ‘mini-budget’ to help bring stability back to the current economic state across the UK. The irony is it did the complete opposite. Any advantages around stamp duty may seem obliterated to some, with the hike in interest rates and the ensuing tug-of-war with the Bank of England. The carnage played out with lenders withdrawing products as interest rate expectations quickly rose. Then, Jeremy Hunt’s reversals took another toll on finances. I think it’s safe to say, it’s not working!
In business, just as much as in government, once trust is lost it’s difficult to regain. Once judgment is questioned, making the big calls can be catastrophic.
The recent short-lived appointment of Liz Truss showed us all how quickly things can change, and even though we are hopeful that the introduction of Rishi Sunak will bring a qualified and succinct positive path, we are still reeling from the recent reversals from Jeremy Hunt’s new mini-budget.
The two major narratives and only succeeding actions from ex-Chancellor, Kwasi Kwarteng, of the initial mini-budget focused on the elimination of stamp duty and the extreme rise of interest rates.
The removal of stamp duty is familiar to us, with many of us remembering its temporary cut during the peak Covid-era, however, since then, the payable amount has doubled from £125,000 to £250,000! For first-time buyers, they’ve seen a huge increase in non-payable stamp duty, from the old £300,000 to £425,000!
But what has this meant for buyers coming to the market so far? Well, Rightmove has reported that since the announcement of the mini-budget, house listings have risen, and are on a similar path to what they were at pre-pandemic levels.
As for the rise of interest rates, there was a huge spike from the average of 2.25% to the current projected 5%+, which has put many movers on the edge, and certainly, there are some that won’t really be able to carry through with their plans. Let’s remember, before the announcement of the mini-budget, interest rates had already risen several times since December 2021, so the direction of travel was already set.
Though the higher interest rates have put more pressure on many buyers to rethink their initial budgets when purchasing their next home, there is evidence that house prices have remained stable and strong throughout August and September. With further changes now expected in an anticipated government U-turn, it could result in the next episode of the soap opera having a different script, yet again!
Where we go from here lies in the hands of the new Prime Minister, Rishi Sunak, and his new cabinet. Though we can say the economy and the cabinet itself have been through a shakeup, the markets seem to be stabilising under Rishi’s rule, giving us hope for the year to come.
I also want to let you know, that we are here for you. We get that right now, pockets across Britain are being squeezed, and all of us are feeling the pinch of this crisis. If you are looking for some extra mortgage advice, you can call one of our expert mortgage advisors to help you.
Until next month,
Group Managing Director