Optimistic outlook for the housing market following Chancellor's budget

The budget revealed by the Chancellor this week brings with it a sense of stability for the mortgage market. Since Truss’ mini budget just over seven weeks ago, the market has been in a state of nervousness. We saw this in the response from mortgage lenders: in order to price in an unknown element of risk, mortgage interest rates increased and so buyers’ affordability suffered. Because of this, cautiousness had been the general sentiment of buyers too, with many taking a step back to ‘wait and see.’ But now, in light of the budget, we hope that buyers are able to plan their short to medium-term finances with a little more confidence and act accordingly.

Like buyers, lenders are also now equipped with more information and, importantly, more confidence. Hunt affirmed his commitment to keep the housing market moving by retaining the stamp duty relief until March 2025 – a move welcomed by the sector. This confidence and reassurance puts lenders in a better position to gauge the medium to long-term risk of lending and borrowing. And as a result, we’re starting to see some green shoots of stability returning. In the mortgage market, swap rate yields had already begun to stabilise in the run-up to the budget. Within the last week, we’ve even started to see some small reductions in mortgage rates by some lenders – we very much hope rates continue in this direction as we head into the new year.

Whilst we hope these small but powerful changes will start to restore buyers’ confidence and affordability, it remains the case that some buyers simply won’t be able to access the open market. For these buyers, affordable options are more crucial than they’ve ever been. In the same period of time since Truss’ budget, we crossed the final reservation deadline for one of the Government’s affordable home ownership schemes, Help to Buy: Equity Loan, which officially ends in March 2023. Many will lament the end of the popular scheme, but there is still a viable option available for first time buyers in the form of Shared Ownership. Homes purchased with Shared Ownership can be more affordable with shares from 10-75%.

Open market sales have certainly felt the impact of recent economic instability, but evidence suggests demand remains plentiful with buyers almost ‘sitting tight’ while they awaited news from the Chancellor. Over recent weeks, Abri has experienced a healthy sales performance for our Shared Ownership homes. This tells us that, although buyers are still cautious, they do want to buy and home ownership remains an aspiration for many.

The measures in the Autumn Statement are designed by our government to bring down inflation and grow the country’s economy – two elements that will be key in seeing our mortgage market stabilise. This means that there may be some difficult times ahead. During this period we must carry on. Abri is committed to delivering more homes and helping more people get on the housing ladder, even when times are challenging.