Nouran Moustafa says the chancellor faces a national security test on 28 October, not just a financial one
UK inflation rose to 3.5% in the year to September, up from 3.1% in August and well above the Bank of England's 2% target, the Office for National Statistics (ONS) confirmed on Wednesday.
Nouran Moustafa (pictured top), executive financial and mortgage adviser at London-based Roxton Wealth, said the timing could not be more pointed.
"It means the market will just get worse and worse," she told Mortgage Introducer. "You've got the inflation yesterday, and then next week you have got the chancellor's bombshell budget. That's how most people are calling it now."
With chancellor John Healey set to deliver his first Budget on 28 October, Moustafa believes the stakes extend far beyond tax and spending. Her assessment of what happens if the government gets it wrong is striking.
Stay ahead of the UK mortgage market. Subscribe to the Mortgage Introducer daily newsletter for broker news, rate updates, and the industry latest delivered to your inbox every morning.
A warning from France
Moustafa's central concern is what a sustained rise in mortgage rates would mean for ordinary households, and for social stability.
She points directly to France, where protests that began over school conditions and teacher shortages in working-class suburbs broadened into a nationwide movement against inequality, public spending cuts and the rising cost of living, leaving one demonstrator dead, thousands arrested and hundreds of police injured. More than 3,000 businesses were ransacked or damaged last weekend.
"If the mortgage rate goes higher, each and every household in the country is going to feel it," Moustafa said. "And when each and every household in the country feels it, you will end up like France."
Asked directly whether the situation in France represented a warning to Healey, her answer was unequivocal: yes.
The argument rests on a straightforward view of where British household wealth sits. Savings are minimal for most people, Moustafa said, and financial security comes down to two things – a home and a pension. With cost-of-living pressures already pushing younger workers out of pension saving, the family home is often the only meaningful asset left.
"Put that at risk and take that security away from them, and you will end up creating the most dangerous population ever – a population that has got nothing to lose," she said. "And when people have nothing to lose, they behave in an extremely violent way."
She is equally direct about the systemic risk. "There are millions of mortgage deals coming up for renewal this year and next year," she said. "Do not put those people in a position where they can't afford their homes."
Why does the Budget matter for mortgage rates?
What Healey delivers next week is no longer just a financial policy question for the UK mortgage market, it is something more fundamental, in Moustafa's view.
The Budget is expected to confirm the detail of prime minister Andy Burnham's Your First Home scheme, which would allow buyers to purchase a new-build property with a 2.5% deposit backed by a 20% government equity loan – a structure under which the state takes a stake in the property in exchange for reducing the upfront deposit required – alongside further measures on leasehold reform and landlord regulation before Christmas.
"The Budget is no longer a financial security measure," Moustafa said. "Right now, it's a national security measure."
What she wants from the chancellor is not complexity, it is clarity and restraint. She wants the government to ease pressure on the Bank of England and provide firm assurances that taxes will not rise, so that markets and lenders can plan with confidence. Uncertainty in government policy feeds directly into gilt yields and swap rates – the wholesale borrowing costs that determine how lenders price fixed-rate mortgages for consumers.
"Give the markets the assurance that no more clown shows are happening," she said. "But if you come out in the Budget and start saying how you're going to spend money and make the care system free for all, it's going to get worse and worse."
She points to the pre-Budget signals already visible. The government retreated on aligning capital gains tax with income tax and dismissed calls to scrap stamp duty. Both reflect the pressure Healey is under, and the uncertainty that creates across the UK mortgage industry.
The danger of government interference
On the question of whether the government might lean on lenders to price mortgages lower, Moustafa sees three possible outcomes, and none of them are good.
"The first is that some banks will say we are too big to bully and refuse," she said. "Other banks will take on the pressure and go to bankruptcy very soon, creating another financial crisis. And the third option is that banks decide this is becoming an extremely dangerous country to invest in and pull out their investments from the UK."
All three, she argues, would damage the mortgage market and the broader economy. The simpler path is for the government to step back and let the Bank of England operate free from political pressure. The Financial Conduct Authority, which regulates mortgage lending in the UK, has also come under scrutiny from advisers who argue that clearer regulatory signals would help stabilise the market.
"We are just asking to lift the pressure from the Bank of England and let them decide what's best," she said. "Spending money is easy. Finding the money is hard."
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
