21/08/2023
It’s not all doom and gloom…
While the initial response to the mini-budget was an immediate reduction in the number of mortgage products, these are slowly showing signs of returning. Average rates are falling marginally, while tracker rates are becoming more readily available, as well as discounted variable rates.6 In some cases, lenders have cut rates by 0.5%, with many products now falling below the 6% threshold.7
The increase in interest rates is ideal for savings accounts, as it encourages them to spend less and save more. Average savings rates for one year fixed rate bonds are at 10-year highs, according to Moneyfacts.8 This is great news for savers, with 49% of consumers in a survey held by Yapily admitting to saving 5% or less of their salary each month.1
In addition, while the vast majority of policies in the mini-budget have now been axed, cuts to stamp duty were not, meaning homeowners could save up to £6,250 on their home purchase.9 This may give those looking to relocate the encouragement they need to move, which is great news given current consumer sentiment around spending. In fact, 95% of consumers admit that the cost of living crisis is a real worry1, with 9 out of 10 having used money saving and management tools in the last year1.
The pound is beginning to show signs of stabilising, with gilt yields and the price of natural gas also stabilising, all of which should contribute to the market settling.8 This has also had a knock-on effect on swap rates, which serves as a leading indicator for mortgage rates.8 All of this will begin to boost buyer demand levels, stabilising house prices and investment into the housing market.
