It all still seems a bit unbelievable when reflecting upon the past few weeks since the previous chancellor’s not-so ‘mini’ Budget. If it had been an episode of The Thick of It, you might have found the whole thing a little too far-fetched.

What would be even more unbelievable is if a home secretary had resigned for breaches of national security and then been rehired a few days later, and another MP went off to the Australian jungle to eat kangaroo penis while parliament continued to sit…. Oh, hold on….

Swap rates have smashed back down to some semblance of sensibility

In that short space of time, and after all hell broke loose in the markets, we seem finally to be in an atmosphere of calm, for which the whole country is grateful. The markets have been chastened, for now at least, but the cost for this has been the biggest political U-turn of all time, another new prime minister, a new chancellor, and a revolving door of ministerial positions as some come, go and even come back again!

Trussonomics

We have also witnessed the fundamental destruction of ‘Trussonomics’ as we knew it, and many are actually daring to ask the question: should it really all be about “growth, growth, growth”?

This wholly unnecessary and self-inflicted devastation caused all of us in the industry and everyone with a mortgage intense worry. And, although the markets have reacted well, thankfully, since Sunak and Hunt took over, with gilt yields falling and the pound rising once more the damage has left scars that are not easily healed.

Get this bit right and the start of next year in the property and mortgage market may well be a lot brighter than many first thought

The good news is that all of this has led to swap rates falling, with two-year swaps down by 1.3% from their previous high and five-year swaps down by 1%. Meanwhile, 10-year money is under 4% once more.

The markets therefore currently show that three-month Sonia is up a smidge by 0.03% but stable at 3.36%, while swap rates have smashed back down to some semblance of sensibility.

Since the last column:

2-year money is down 0.78% at 4.50%

3-year money is down 0.84% at 4.41%

5-year money is down 0.78% at 4.19%

10-year money is down 0.67% at 3.74%

As I write, we have another Bank of England (BoE) base rate move tomorrow and, while this may not be the 1%-plus rise some were worrying about, another 0.5% to 0.75% is likely. If it is 0.75%, this will be the biggest single increase since 1989 and the 3% level will be reached for the first time since 2008.

Interestingly, the US Federal Reserve has put rates up by this amount for the fourth consecutive time, but did signal that the pace of increases may well slow soon.

Prices are far more likely to flatline than go through the floor

It now seems that UK interest rates are in general headed for a new ‘normal’ of around 3.5% to 4%, rather than the 6% feared a couple of weeks ago.

While some lenders have begun to put their rates down again, rates may not fall too quickly due to the lenders’ desire to preserve service levels after recent high application volumes. I suspect the pipelines will start to ease and hopefully normal service will be resumed very soon. We may even see some competition for business back in the market before the year is out.

There are so many variables in the property market right now that you need a Silicon Valley algorithm to make sense of it all, but the over-riding theme is uncertainty. House prices are set to come under pressure, but the sizeable drops of 15%+ that some are predicting are unrealistic given the lack of supply. Prices are far more likely to flatline than go through the floor.

With gilt yields falling and the pound rising once more the damage has left scars that are not easily healed

If there’s one thing everyone can agree on, it’s that the age of dirt-cheap money has been relegated to the dustbin of history.

Much now depends on two things. First is the BoE’s language when it explains the next rise. Hopefully it will be calming and hint that rates will not have to rise much further, rather than anything more incendiary.

Second is the government’s long-awaited latest Financial Statement and the accompanying OBR Report later this month. While no one wants to see a full-blown austerity drive again, some tough decisions need to be made to plug the gaping hole in the UK’s finances. Sunak understands this more than most and, although the medicine may be unpleasant, it will be something we all need to take in the short term to keep things calm so we can get stronger once more.

What does Michael Gove, who recently committed to another housebuilding target, have up his sleeve?

In fact, what we all crave now is ‘dull and boring’. Get this bit right and the start of next year in the property and mortgage market may well be a lot brighter than many first thought. Stable interest rates, lenders that want to lend and a softening of house prices will all help to increase transaction levels.

Lenders loosen up

Meanwhile there have been a few interesting things in our beloved market. It has been good to see a wave of lenders reducing rates and reintroducing products such as trackers, and Halifax resuming its fee-based loans.

As many expected, and is understandable, we have also seen the first lender, Nationwide, begin to reduce the amount of time before rates expire that it offers on retention products. This will reduce to five months from November and four months from December.

Hopefully the BoE will be calming and hint that rates will not have to rise much further, rather than anything more incendiary

And it is finally farewell to Help to Buy, the much-loved and much-hated government policy that has supported builders and first-time buyers for so long. It will be interesting to see if anything replaces it, and what happens if lenders do not all flock to lend 95% LTV on new-build flats, which of course they won’t. What does Michael Gove, who recently committed to another housebuilding target, have up his sleeve?

The buy-to-let sector has struggled in the past few weeks. Hopefully lenders will review how they can lend in this space to make it possible for borrowers to get the funding they need.

TMW has brought back its tracker rates, while Fleet Mortgages has a new dedicated underwriting process for landlords with four or more properties.

The Ami site offers a host of resources on career development, codes of conduct, leadership and more

In the green space, among some allegations of ‘green washing’, it was good to see Tandem Bank launch its Tandem Marketplace, labelled as a “dedicated hub that will provide consumers with the key information, resources and choices they need for greener living”.

Much more work needs to be done in this area, as shown by a recent Mortgage Advice Bureau poll where 63% of advisers said their clients had never heard of green mortgages. UK Finance has called for stamp duty to be adjusted to consider a property’s energy efficiency, and for the much-maligned energy performance certificates to be made fit for purpose.

Many are actually daring to ask the question: should it really all be about “growth, growth, growth”?

Even more fabulous are the new Ami websites: one devoted to the green agenda; and one a rich work of art devoted to diversity and inclusivity for anyone looking to work in our industry. This offers a host of resources on career development, codes of conduct, leadership and more.

It is brought to you by Ami in collaboration with the Intermediary Mortgage Lenders Association, and co-developed by volunteers working throughout the industry to deliver a more inclusive environment.

Andrew Montlake is a director at Coreco