Uncle Dave's Monthly Mortgage Update
With October now behind us we wanted share our thoughts on what’s been quite a turbulent month in the mortgage world!
The month started with Liz Truss in power and the mortgage market was feeling the effect of Kwasi Kwarteng’s mini budget. At this point banks feared that the bank of England base rate could go up to anything between 3.5% - 4%, and as a result some lenders temporarily pull out of the mortgage market all altogether, and others increase fixed interest rates to between 5% and 6%...the highest level in 14 years!
We then saw Jeremy Hunt take over as chancellor and implement a reversal of almost all the changes that had caused the problems. The pound began to strengthen and the remaining lenders who had pulled out of market opened their doors again, albeit with rates much higher than before.
Shortly after we saw Liz Truss resign and Rishi Sunak enter no 10, and since then there has been a sense of calm in the markets. As a result, the bank of England base rate has not been increased as much as originally feared and today we saw a rise of 0.75% (taking the base rate to 3%) which is much more acceptable!
In contrast to the base rate increase, over the past week we have seen some lenders begin to reduce their interest rates, with Nationwide dropping certain rates for their existing customers by up to 1.3%! This is a great sign for things to come and a much-needed positive change for the mortgage market. The hope is that this will spark competition and other lenders will soon follow suit?
Who knows what the rest of the year will bring?
All the best,
Uncle Dave
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