One year later: Market remains tough for buyers after...

It is just over one year since former Prime Minister Liz Truss and Chancellor Kwasi Kwarteng’s ill-fated mini-Budget and homeowners and first-time buyers are still facing a “difficult and unpredictable” time, wealth manager Quilter claims.

The controversial policies, including £45bn of unfunded tax cuts, acted as a catalyst to a year of mortgage mayhem that homeowners and prospective buyers are still battling today.

Karen Noye, mortgage expert at Quilter, said: “First time buyers, who are often considered the lifeblood of a healthy housing market, 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.

“The spending power of many first-time buyers will have been rapidly eaten into as high inflation has eroded their hard-earned deposits, and persistently high mortgage rates will mean many are no longer able to achieve their goal of buying their first home due to the monthly repayments being simply too high.

“House prices have not fallen as much or as rapidly as was initially predicted, and therefore in order to afford to buy many prospective first-time buyers have had to either opt for a smaller property or to put their plans on hold entirely.”

Despite the challenges, Noye said the market has remained remarkably resilient for the most part.

She added: “While they have wavered, the dearth of supply has largely kept things ticking where house prices are concerned, and though there has been a definite slowdown in the market, where possible prospective buyers appear to have ploughed ahead with purchases – particularly as rent costs continued to soar.

“The government’s Mortgage Charter, which it was forced to implement to protect borrowers following a rapid spike in mortgage rates, brought some relief to those who were struggling.

"This should reduce the number of homeowners being forced to sell their properties, so we are unlikely to see a flood of properties to the market which is expected to limit the amount house prices fall.”

Noye suggested a more stable interest rate environment, even if high, could bring some predictability, adding: “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.

“Though things are beginning to look a little brighter, it remains a remarkably difficult and unpredictable time for those needing to make decisions on remortgaging, buying a first property or moving home.