The date 23 September marks one year since former Prime Minister Liz Truss and Chancellor Kwasi Kwarteng unleashed their mini-budget.

As Quilter mortgage expert Karen Noye explains this acted as a catalyst to a year of mortgage chaos that homeowners and prospective buyers are still battling today.

In the immediate aftermath of the ‘budget’, Moneyfacts reported that lenders withdrew more than 40% of mortgage products from their shelves, before hiking mortgage rates to highs not seen since the financial crisis of 2008.

In the months that followed, property transactions plummeted as prospective buyers and home movers were priced out, and house prices wavered as a result.

Over the year we have seen a £510 increase in the average monthly cost of a £250k mortgage. A £15,000 decrease in the average UK house price.

A 16% fall in monthly property transactions. A 23% fall in monthly mortgage approvals and a £16.9bn increase in value of mortgage balances with arrears.

Reflecting on these figures Noye says: “The 12 months since the mini-budget have been nothing short of mayhem for the mortgage market. The Bank of England has hiked interest rates by 3% since the mini-budget was first announced, only just yesterday hitting pause for the first time since its cycle started.

“Persistently high rates have piled continuous pressure on those with mortgages and have even forced some to sell up. A great number of people have had their plans to take the first step onto the property ladder or to move home scuppered, and those that have pushed ahead have been forced to stomach astronomically higher costs to do so”.

Noye adds that for those coming to the end of their mortgage deal and needing to remortgage this year, the past 12 months will have been nothing short of terrifying.

“The mortgage market became incredibly turbulent following the infamous mini budget, with lenders ripping products from the shelves increasing rates on both residential and buy to let mortgages rapidly, and with very little notice”.

“At the start of 2023, it was estimated that over 1.4 million UK households were set to renew their fixed rate mortgages this year. Given they likely would have locked in at a time when interest rates were below 2%, they will have faced huge increases in their monthly payments when they came to renew, and their finances will therefore have been stretched considerably during a time when money was already getting much tighter thanks to high inflation.”

First time buyers have been hit hard too. “Often considered the lifeblood of a healthy housing market, FTBs are among those hit the hardest by the events of the past year. Many who were gearing up to take their first step onto the property ladder were rapidly priced out and their budgets were stretched beyond affordability”.

Noye insists that despite the immense challenges, the market has remained remarkably resilient for the most part. And going forward, she suggests a more stable interest rate environment, even if high, could bring some predictability.

“For aspiring homeowners, notably first-timers, this will be invaluable. A more stable mortgage rate landscape can help these buyers budget better and not have to deal with unpredictable rate spikes that can disrupt financial plans. What’s more, as commercial entities, lenders will increasingly need to compete for custom so price wars may materialise which could help push rates further down somewhat”.