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Mini Budget fall-out one year on: how has the mortgage market fared

Journalist: Emma Simon, Mortgage Strategy

ended 30. September 2023

It's been a year since Liz Truss's disasto-budget - which caused chaos in mortgage markets.

What have the short- and long-term effects been for mortgage brokers and borrowers?

Is there the same choice of mortgage products as there was pre-mini Budget?

Have rates moved higher than they would have without the mini-Budget - ie has the BoE been forced to move rates faster and further? Do you think it has had a knock-on effect on house prices? 

Or would the market look pretty similar today - given inflation has forced BoE to raise rates? 

Have there been any sectors of the market that have been particularly hard hit - eg BTL, first-time buyers, lifetime mortgages, mortgage where borrowers have poorer credit record? 

Was the mini-budget one of biggest and unexpected shocks seen to the mortgage market? , was the immediate damage in terms of borrower's confidence? 

What do you think the long-term impact of the mini budget will be ? Is there still a crunch point coming as wave of low-cost fixed rate mortgages expire? 

Many thanks. If I could have comments back by end of play Friday that would be appreciated. 

5 responses from the Newspage community

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Stephen PerkinsVerified
Managing Director at Yellow Brick Mortgages
Mortgage rates would have risen in the last 12 months to combat inflation even if Liz Truss was only a nightmare we woke up from in sweats. However, the disastrous mini-budget spooked the markets over 5 weeks before Halloween. This caused dramatic uncertainty, and a drop in confidence across the markets sending lenders into panic and withdrawing products left and right. The speed of rate increases and the level they have had to rise to restore some sense of stability was largely due to the mini-budget. Whilst that short-term pain was bad we are now through the worst of the market instability. However, the longer-term implications of the cost-of-living and decade-high interest rates are only now starting to be felt by most households and it is going to continue to get worse before it gets better, with many homeowners clinging on by their fingernails.
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Mike StatonVerified
Director at Staton Mortgages
The mini-budget was a bigger mistake than Captain Edward Smith believing the Titanic wasn't sinkable. Unfortunately, Liz Truss lasted 41 days longer than the Titanic. Interest rate increases were always inevitable following the increases in inflation, however, I don't believe we reacted quickly or harshly enough to reduce rates. The US quickly upped rates which saw a very quick reduction in inflation, whilst we slowly turned the tap on, prolonging the agony of homeowners throughout the UK. We are starting to see rates drop now with UK swap rates dropping but we are still 18 months away from seeing any sense of normality and i doubt we will achieve the governments inflation target of 5% by christmas.
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Gareth DaviesVerified
Director at South Coast Mortgage Services
The disastrous 'mini-budget' was certainly a shock to the system of many. It created uncertainty across the markets and lenders and put the fear of god into many customers. For me, BTL has been the biggest casualty in terms of mortgage sectors. The stress-rates that are now used make it inconceivable for a swathe of landlords to either refinance or extend their portfolio, without having serious equity to play with. Many landlords have had no choice but to increase rents to try and cushion the blow. Without question, they have increased rents faster and higher than they would've done had the budget not happened.
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James Bull0
Mortgage Broker at JB Mortgages
Quarter 4 last year was of course an absolute disaster for the mortgage industry and no doubt many brokers alongside myself were worried about what the future might hold. Now we are well into 2023, it is fair to say it has been business as usual so far this year. This can only be a good thing. The worst seems to be over now and most people in the industry seem to be feeling much more optimistic about the future.
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Austyn JohnsonVerified
Founder at Mortgages For Actors
How to shake a nation of people's confidence... Well, just like that! Its coming back, but what a way to start making your mark on the history books! The measures were too sudden and harsh. One of the busiest years was cut short by that ludicrous policy and now, things are coming back together again. We have had an extremely busy month where a few of our clients were waiting for things to settle before moving forward. That's happened now and it's bringing some confidence back and the property market is starting to lift up again. Lomg may it last.