For context, this piece was written on the afternoon of Friday 14th October.
Given what has been happening both politically and economically, it feels like every article needs to be prefaced with the date and time of its conception, simply because things change so fast and, by the time this is published, it may – probably will – have changed again.
However, we are currently working our way through another momentous day in UK politics, with a Chancellor seemingly fired for carrying out the policies of his Prime Minister, a new Chancellor appointed who appears to be idealogically opposite to his new boss, and a speech from Liz Truss which was designed to bring further stability – including another u-turn on corporation tax increases – apparently (as I write) spooking the markets even further rather than calming the situation.
And I’ve not even really covered how this all might impact further on the housing and mortgage markets that we work within, and particularly what it might mean for ongoing activity levels, rates, affordability, etc, etc.
What will concern many of us stakeholders is that, even if there was to be a calmer period – and there appears no firm evidence to suggest this is likely – then it will take a considerable amount of time and positivity needed to repair anywhere near the damage that has been wrought over the last few weeks.
Recent statistics that came out of Zoopla this week revealed that, since the Mini Budget – and what a complete misnomer that now sounds – buyer demand for homes for sale on the site has dropped by a fifth, placing the current market at the weakest level since the pandemic started.
Lest we forget, that just a few weeks ago, the then Chancellor announced a measure – stamp duty cuts – which would ordinarily have boosted demand, and yet everything else that has accompanied this period, has actually resulted in demand falling.
Some may argue that, well, we didn’t really need a boost to demand anyway, however what we also didn’t require was a huge spike in mortgage product rates, a huge fall in product numbers, an increase in affordability stress-testing, which put together make the lot of the existing or wannabe mortgage borrower far more difficult than they ever needed to be.
Advisers will know only too well how this has manifested itself, particularly in terms of those who were all prepared to purchase but have seen their ability to secure the mortgage funding they needed severely compromised, or quite simply, having escalated in cost to a point where it is simply not affordable for them to carry on with their plans.
How many borrowers have been required to change their plans completely in just a short few weeks? How many have felt the need to act before the damage was deemed to get any worse? How many have felt the severest of payment shocks? How many will now struggle to pay their mortgage and what will be the ongoing impact in terms of ongoing arrears and possessions?
Let’s be clear, we all knew rates were on the rise because of the need to curb inflation, but the moves that have been made, and the anticipation of more on the horizon, instead of taking place over a much longer time horizon providing opportunity to prepare, have essentially been foisted upon us over the course of days.
The resulting bun-fight could have been easily avoided. Instead advisers have been left to either pick up the pieces or navigate a marketplace which has been changeable by the minute, let alone the week.
Business for advisers will have been busy during this period, but how much work, time and energy has been expended on client mortgages which will simply not happen, or how much duplication will be required as clients seek – quite rightly – to hedge their bets, hoping for the best but fearing the worst.
Plus of course as businesses we have to look beyond the here and now in terms of activity levels in the future, especially one in which this is the new norm and we continue to get mixed messages and policy, which result in the lack of certainty we all, plus the markets, need. It’s no wonder that firm owners are feeling trepidation about what comes next.
In the meantime of course, this will remain an advisory sector here to help clients through these difficult times, not just in terms of the mortgage but every other requirement, be that protection, GI, conveyancing, legal services, you name it. Make the most of that opportunity right now – if we’ve come to learn anything over the course of the last few weeks, the future is unknown and could be difficult.
Mark Snape is chief executive officer of Broker Conveyancing
