Mortgage turmoil — should I panic?

In the mini-budget delivered on 23 September, new Chancellor Kwasi Kwarteng had good news for people considering, or actually in the process of, buying a property. The threshold for the imposition of stamp duty tax was raised from £125,000 to £250,000, and for first-time buyers it is now set at £425,000. This will lift some pressure on buyers as house prices continue to rise.

However, the mini-budget brought a severe reaction from the financial markets and there were rumblings of panic in the property arena with the announcement that several lenders are withdrawing mortgages and that interest rates are likely to rise substantially.

We know the economy is under pressure and that prices are rising. Nevertheless, the property market is looking surprisingly resilient, with buyer demand up 20% compared with the pre-pandemic five-year average, and the stamp duty changes likely to stimulate more demand over the next few months. Asking prices this month have risen in line with the average September increase of 0.6% over the last ten years.

So, keeping a cool head would seem to be the best way to proceed. As the saying goes, ‘keep calm and carry on’.

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