Earlier today, Mortgage Solutions reported that Rishi Sunak was the likely choice to be new Prime Minister and this was confirmed by the government’s 1922 Committee at 2.00pm today.
Chair of the 1922 Committee, Graham Brady, announced the beginning of Sunak’s premiership just six weeks after Liz Truss was sworn in. He is one of the youngest to hold the position, and the first British Asian to take the top spot.
Brady said: “I can confirm that we have received one valid nomination. Rishi Sunak is therefore elected as leader of the Conservative Party.”
His last remaining rival Penny Mordaunt bowed out at lunchtime.
She said: “We have now chosen our next Prime Minister. This decision is an historic one and shows, once again, the diversity and talent of our party. Rishi has my full support.”
Prior to his accession as Prime Minister, in a tweet yesterday, Sunak said the UK is a great country “but we face a profound economic crisis”.
“That’s why I am standing to be your next Prime Minister and leader of the Conservative Party.
“I want to fix our economy, unite our party and deliver for our country,” his statement read.
Considering the assessment on his predecessor’s departure and September’s disastrous mini Budget, the reaction from brokers, industry insiders and economists have been relatively upbeat.
Rishi brings relief, resignation and renewed ‘hope’
It appears that the majority of experts see Sunak as safe pair of hands after the calamities that have befallen the UK economy in the past two months.
Riz Malik, director at R3 Mortgages, said: “Even if Rishi sat with his feet on the desk at Downing Street drinking mojitos, he would do less damage to the UK mortgage market than his predecessor.
“The markets will be settled with Rishi in charge and he is our best chance for returning to some sense of normality. However, don’t expect miracles overnight.”
Ruth Gregory, senior UK economist at Capital Economics, agreed, stating that markets had already reacted favourably to the news.
She said: “The news that Rishi Sunak will become the next Prime Minister appears to have gone down reasonably well in the markets.
“At the time of writing, the 20-year gilt yield was 4.07 per cent, 18 basis points lower than at 08:00 BST (4.25 per cent). So markets appear to be further pricing out the risk premium built into gilt yields.
“Overall, the news that Rishi Sunak will be the next Prime Minister means that the big downside risks to the economy posed by a prolonged period of political instability and a significant fiscal tightening have receded.”
Samuel Mather-Holgate, IFA at Mather and Murray Financial, agreed: “We all know what Sunak stands for and markets will be reassured now he’s heading into number 10.”
Meanwhile, Mike Staton, director at Staton Mortgages, is even more optimistic, believing that “Rishi is the man to take us forward”.
He said: “I hope that the country can get behind him, this will take time and as we have seen that knee-jerk reactions do not work. Our issue as a nation is we are the Amazon Prime generation, we expect things to happen immediately. My biggest fear is that [Sunak] will be hounded out quicker than a Prime Next day delivery.”
How Sunak can help the housing market
When asked how the new Prime Minister can actively help the beleaguered housing and mortgage markets, there were a number of diverse views including abolishing Right to Buy, extending Help to Buy, building more homes and introducing mortgage payment holidays.
Graham Cox, director at Self Employed Mortgage Hub, said: “The best thing Sunak can do for the housing market is build more houses and abolish Right to Buy.
“And stop intervening to prop up the property market with stamp duty holidays, Help to Buy, and any of the other ridiculous schemes that make it more expensive to buy a home.
“As mortgage rates have increased so sharply, some help will need to be put in place for those homeowners who get into financial difficulty. But, otherwise, the market needs to recalibrate to a new normal.”
Bob Singh, founder of Chess Mortgages, went even further, laying out a series of occasionally contrasting proposals he’d like to see from the new Prime Minister.
“Rishi needs to instruct the Bank of England to aim for three per cent inflation not two per cent,” he said.
“He then needs to extend Help to Buy by another year; introduce payment holidays on mortgages without affecting credit scores including buy to let; loosen planning laws; encourage builders to build basements which can be let out and supplement people’s mortgage payments and provide useful retirement income (like in Canada); freeze rent to ensure landlords do not pass on increased mortgage payments; and scrap the abolition of no fault evictions.”
Finally, Mather-Holgate added that it was important for Sunak to retain some of Truss’s reforms.
He said: “He can help the housing market by keeping the stamp duty cuts, but more importantly the supply side reforms introduced by Truss. These will make it easier to renovate, extend and build houses that should stimulate the market in price brackets that need emergency support like the lower income, affordable housing.”
Whatever happens next, it appears the new Prime Minister won’t be short of advice on how to fix the housing market.
