U-turns put us back where we were – Comment on the Chancellor’s statement
Following the Chancellor’s speech this morning, Richard Pike, Phoebus Software’s chief sales and marketing officer, says “They say “a week is a long time in politics”, and it is likely to feel like a very long week as we wait to see how the markets adjust to the latest U-turns announced by the Chancellor today. The initial market reactions are calm, which is a big positive. Some borrowers would have been assisted by the 19% rate now reversed, and the additional uncertainty of the review of the fuel allowance now being 6-months instead of 2 years will be a concern, even though media headlines will stoke fires in this area. The reality is that wholesale fuel prices could change in six months and in April the need for lighting and heating is a lot less over the summer months ,and so this is a sensible approach.
“For the housing market we only have to look at the latest Rightmove HPI released today, which shows that house prices have hit another new record average, despite recent economic turmoil. Something that highlights the continuing problem of supply and demand. While the demand is there and the changes to stamp duty remain, along with an imminent increase in interest rates, pressure is almost certainly going to be on lenders. The reduction in the number of mortgage products available since the mini-budget is a cause for concern, especially for first-time buyers. Now is the time for lender innovation to ensure that the continued demand can be catered for.
“It is still early in the peace but rising interest rates and high inflation have yet to quell borrower appetite. How long that will be the case remains to be seen, but for now we all need to keep adapting to the ever-changing landscape. The interest rate decision later this month will be a big barometer of what the Bank of England thinks of this U-turn.”