Mortgage lenders could withdraw products within hours of the Chancellor’s Budget speech on Wednesday, according to warnings from financial industry experts.
John Healey is scheduled to deliver his first Budget at lunchtime this Wednesday, with mortgage advisers cautioning that market reactions could trigger rapid changes to lending products and rates.
Market sensitivity to fiscal policy
Nouran Moustafa, Practice Principal of Roxton Wealth, told Newspage that unfunded spending commitments or overly optimistic revenue forecasts could trigger market volatility. “Markets will punish a lack of fiscal credibility, and ordinary mortgage borrowers could end up paying the bill,” Moustafa said. “If gilt yields spike and swap rates follow, lenders could withdraw products within hours and reprice within days.”
The warning comes as industry confidence remains fragile, with first-time buyers and households approaching remortgage particularly exposed to sudden rate changes.
Estate agents could experience immediate impacts as buyers who have not yet secured rates face higher costs before completion. Stephen Perkins, Managing Director of Yellow Brick Mortgages, noted that the Budget could move mortgage rates quickly if it alters financial markets’ view of inflation, Government borrowing or future interest rates.
Swap rate implications
Perkins explained that market reaction to the Budget can push swap rates higher, on which mortgage rates are based, with lenders able to start repricing within days. “The biggest risk would be a significant increase in borrowing without a credible plan for how it will be funded,” he said, adding that a Budget reassuring markets on public finances could help yields and swap rates settle.
He advised borrowers not to attempt to predict Wednesday’s market reaction, recommending they secure suitable mortgages now whilst continuing to monitor the market for potential improvements.
Mike Staton, Director of Staton Mortgages, warned that if financial markets react negatively, borrowing costs could rise and mortgage lenders could increase rates within days. Conversely, he noted that if the Budget is well-received, rates could fall instead.
Advice for borrowers
Staton recommended that borrowers whose current deals are ending soon should speak to their broker and consider securing competitive rates immediately. He noted that if rates improve following the Budget, borrowers may be able to switch to cheaper products before their new deal starts.
The warnings highlight the sensitivity of mortgage markets to fiscal policy announcements, with the potential for rapid changes affecting both property transactions and household finances. Financial experts emphasise that market credibility, rather than political messaging, will determine whether borrowing costs rise or fall in the days following the Budget speech.
