Supplement 8 Nov 26 - Remember, Remember
"Confidence is a plant of slow growth in an aged bosom." - William Pitt the Elder, House of Commons, 14th January 1766
This week's quote pertains to the Deep Dive - and to the Bank of England, which picked Bonfire Night to put rates up for the first time since August 2023. Pitt was telling a fairly new government (Lord Rockingham's, six months old) that it would have to earn his trust before it got any, and he meant it. The Bank's bosom doesn't come much more aged (it was founded in 1694), and it lost a good deal of confidence in 2022, when most of us thought it moved far too late. This time it's moved earlier, with inflation at 3.5% (in December 2021 it was already 5.4%, although they only knew October’s figure of 4.2% at the time) and its own forecast heading for 5% instead of already being there - and the question for the next year or so is whether the confidence grows back, or whether we're all just paying more for our mortgages for nothing. Remember, remember the fifth of November? I suspect a few people with a tracker will......
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Welcome back to Trumpwatch. Last week I wondered how the President would take a midterm defeat - and now we know, sort of. America voted on Tuesday, the Democrats took the House and the Senate, oil had its worst (or best, depending on the lens) week since the pandemic, and the President told Fox News he was "a little bit surprised". So were the forecasters, as it turns out - and they're not used to being surprised in that direction.
The results first, as far as they've been counted. The Democrats won the House comfortably - the networks called it late on election night, and on the live count they've more than 250 seats, with 19 still to call. Cook had pencilled in gains of 12 to 25 seats last Friday - the current count has at least 42 changing hands. So much for the cautious forecasters!
The Senate, which was the closer call, went blue as well. Going in, the Republicans had 53 seats to 47 - the Democrats now have 54 (including two independents) to the Republicans' 44, with Alaska and Mississippi still to be decided. Nate Silver's model had the Senate at 77.7% for the Democrats, and I said last week not to take it to the bank - but the favourite has cantered home, this time around.
Some of the individual results are quite something. James Talarico beat Ken Paxton in Texas - the first Democratic Senate win there since 1988 - and Susan Collins lost in Maine after nearly 30 years in the Senate. Roy Cooper took North Carolina - and in Mississippi the Democrat Scott Colom led Cindy Hyde-Smith by 43 votes (yes, 43) with more than 940,000 counted, so you'd imagine the lawyers will be busy there for a while. And in Alaska, where they use ranked-choice voting, the count goes to a second round from 18th November if nobody passes 50%.
So how did the President take it? Much as you'd expect - and then not quite. He told Fox he thought they'd do better, posted that he'd have won "IN A LANDSLIDE" if he'd been on the ballot himself, blamed the candidates and the price of gasoline, and called Greg Abbott (beaten in the Texas governor's race too) a RINO (Republican in Name Only). Then he posted a picture of a red cap with VETO embroidered on it, and the White House put out a message reminding everyone he's still the President (back to business as usual, then).
And yet he also told the New York Times he was "absolutely willing to accept those results" - which, given 2020, might be the most reassuring thing he's said all year! His Vice President was less diplomatic about the cause - JD Vance wrote on X that the war was the reason they lost, and that any honest conversation about what comes next has to start there. That's quite a thing for a sitting Vice President to say in public, two days after an election (I wonder how it went down in the Oval Office?). Trump then admitted that Vance was right, but there’d been “no choice”.
On the other side, Chuck Schumer promised to bring down fuel and electricity costs "with or without" the President, and Hakeem Jeffries called it a massive repudiation of MAGA extremism and launched his bid to be Speaker. Will they manage it? Fuel costs, of course, are set in the Strait of Hormuz rather than in Congress - but you can see where the pressure on the White House is coming from now.
What does a blue Congress actually change? From January the President can't get anything through either house without the Democrats - and the $5,000 cheque for every adult, which was promised on condition that the Republicans held both houses, looks very much like a dead letter. Even Jesse Watters said on Fox on election night that he didn't think the cheques were coming. My call, printed on 18th October and repeated last week, was that the cheque didn't look likely to be paid out - I'll tick that one off. He still has November and December with the old Congress, mind, and the veto pen after that, so I still don’t expect him to go quietly and the notion of the “lame duck” looks extremely unlikely to me.
Now the war, which is what really moves our numbers. On the eve of the vote, overnight on Monday, the US struck Qeshm Island in the Strait - the President called it a "minor attack" on an anti-aircraft site, after an Iranian missile was reportedly fired at an American fighter. My running call before the midterms was "more talking, some bombing, and no Strait". A strike on Monday, a Qatari delegation in Tehran the same day and a Strait that's still all but shut - I think we can say that one landed.
What hasn't happened, yet, is the "short and intense" campaign the Wall Street Journal said Gulf allies had been told to expect after the vote. The President told the FT on election night there was "no immediate plan" to resume strikes - and by Thursday he was saying he'd decide soon whether to "go further", and that 18 American service members have now died in the war. Axios reports that the military is finishing preparations in case he orders it - and that Vance is leading the advisers pushing for a deal. So we're back to waiting for one man to make his mind up, which is where we've been, on and off, since February......
The talking is real enough. President Pezeshkian said on Monday that Iran's Supreme Leader had given "certain authorities" for peace talks, Qatar says it's still "bridging the gap", and Iran has reportedly sent a nuclear proposal to Washington via Doha (unconfirmed, it should be said). Against that, Mohsen Rezaei called the American response to Iran's conditions "not convincing", the Supreme Leader said anyone expecting a change in American policy is seriously mistaken, and Eurasia Group cut its odds of a deal to 10% from 20%.
And the Strait itself? Close to shut - one tracker counted five crossings in 24 hours on Wednesday, against about 73 a day before the war - and a seafarer was killed on Thursday when a tanker was hit, one of 24 to have died since February on the IMO's count. That's the human cost behind the oil price, and it's easy to forget when we're all staring at screens.
Israel next - and a correction. The final count from last week's election has Netanyahu's bloc on 53 seats, not the 54 I gave you on 84% counted, with 61 needed. At President Herzog's consultations this week, parties with 67 seats recommended Gadi Eisenkot and 46 recommended Netanyahu, and Herzog has named Eisenkot as his choice overnight. There are hurdles still in place, and Netanyahu has alleged foreign interference, so we shouldn't count any chickens yet. But I said last week that whoever forms the next government will have a big say in the appetite for a post-election campaign - and a government led by the man who used to run the army might well have rather less of it. Let’s see.
Which brings us to oil - and what a week we've had. Brent's January contract settled at $98.32 on Friday, against $113.43 a week earlier - down 13.3%, and the biggest weekly fall in percentage terms since April 2020. On the front month (December expired last Friday at $117.64), Reuters had it as the biggest drop in dollar terms in a single week since 1988. WTI settled at $90.83, down from $104.12.
The week had a shape to it. Monday took $8.66 off on the peace talk, Wednesday took more than 8% off on the election result and the "no immediate plan" line (to about $94.62, the lowest settle since the end of August), and Thursday put $3.67 back on as tankers were hit again. Phil Flynn at the Price Futures Group called it a bit of unwinding of the war premium, which seems right to me.
So some of the war premium is coming out - but only some. Brent at $98 still isn't cheap (on the Bank of England's own numbers it was somewhere in the $60s before the war), and the market's betting on a deal it hasn't seen yet. If the President decides to "go further", I'd expect a lot of that $15 to go straight back on - and quickly, too. If the difference between what Trump always wanted and what Netanyahu always wanted is solved from the Israel end - that’s a different conversation altogether.
Over to the American economy, which seems to be taking all of this in its stride. October's payrolls, out on Friday, came in at 165,000 against about 65,000 expected, with unemployment at 4.1% and the previous two months revised up by 84,000 between them. Earnings rose 3.1% on the year - that's a strong labour market by any measure, and it makes Kevin Warsh's December decision easier, not harder - a rise on 9th December is priced at about 78% to 80% after the jobs numbers. Mary Daly at the San Francisco Fed said she expects they'll have to tighten further, which from one of the more dovish voices is quite a statement.
The stock market had a volatile week dominated by a wobble, mind. On Thursday the S&P 500 fell 4.4% and the Nasdaq 5.5% - the worst day since April 2025, by one reckoning, and enough to put the Nasdaq into correction territory. Part of it, by some accounts, was worry that a Democratic Congress will take a harder look at AI and the data centres (Trump Media, for what it's worth, was down 14.3% at one point on Wednesday). The Nasdaq ended the week down 3.4%, and I said last week the AI bubble looked a couple of years from bursting and that I wouldn't be stunned at six months - I'll stick with that. All these bull markets have temporary corrections, usually half a dozen of them or more - just wait for the hype around the Anthropic IPO to really get white-hot.
So what does all this mean for a landlord in Stoke or Leeds? Oil first - Brent at $98, against $117 a week ago on the front month, is the best news for our inflation numbers we've had in a while. It takes a few weeks to reach the forecourt (diesel was 198.58p a litre in the government's survey on Monday, from 199.22p, and petrol 172.78p), but it's coming - and it's on its way to the energy cap too.
There's a detail here I'd underline for the Deep Dive, as well - the Bank of England's new inflation forecast, published on Thursday, was built on Brent at $108. By the time you read this, it's already $10 below that. Remember that when you see the headlines!
Then the bonds. American Treasuries fell in yield again (the 10-year from 4.94% to 4.86%, the 2-year from 4.56% to 4.51%), and gilt yields came down with them - despite our own rate rise on Thursday (more on that in the macro). Sterling had a good week until Friday's payrolls, getting above $1.35 at one point and ending at about $1.33.
The usual caveat applies, of course - one decision from the White House could undo the lot. But a blue Congress, an unhappy Vice President and oil under $100 feels like a world where an end to the war has got a bit closer, which is what I said last week a blue Congress would do. We'll find out soon enough if I'm right.
Phew. OK - back to the comparative safety of the real time UK property market.
As is customary, Chris Watkin has been relentlessly crunching the portal numbers and publishing them at Property Industry Eye, and his analysis for Week 43 of 2026 is where it's at, as always. The series continues - two weeks ago the market was dead, last week it was on life support, and this week the title is "The UK property market is dead... who told the buyers?", with Toby Phillips joining him on the Stats Show and a look at the agents of Weybridge. I said last week I was looking forward to the week he asks whether it's in recovery - we're not there yet, but we're getting warmer!
Supply first, as we always do. 27.5k new listings in Week 43, down from 30.3k the week before, against a 2026 weekly average of 35.5k and a 10-year average for Week 43 of 28.9k. So that's two weeks running below the norm for the time of year (I'd put some of that down to vendors sitting on their hands through a Budget and a Bank of England week, and some of it to the clocks going back - nobody photographs a house in the dark if they can help it). The year to date is 1.529m, which is 0.2% below 2025, 1.2% above 2024, 8.8% above 2023, 8.8% above 2017-19 and 7.8% above the average of the last decade.
So my ready reckoner, which sat on 10% for most of the summer, is drifting down - we're now somewhere between 8% and 9% more listings than a normal market, depending on which normal you pick. Still plenty, but it's going the right way for sellers, slowly. Stock on the market was 758k on 1st November, against 742k a year earlier, 724k in November 2024 and 664k in November 2023 - down from 764k on 1st October, which is what you'd expect as the autumn clear-out gets going (last year it fell by 10k over the same month, so we're clearing a little slower than 2025 did).
Demand. Gross sales agreed came in at 21.8k, from 22.1k, against a 10-year average for the week of 23.6k - so about 92% of normal, and that's the fifth week in a row somewhere in the 90% to 93% band. The year to date is 1.032m - 7.5% below 2025, 3.6% below 2024, 10.6% above 2023, 4.1% above 2017-19 and 1.9% below the average of the last decade. It gapped down, and is getting no worse for vendors, is what I would say.
My humble pie trigger, as long-time readers will know, is sales running 20%+ below normal. At 1.9% below the decade average for the year, and about 8% below it for the week, the pie stays in the fridge - and I'm starting to wonder whether it'll still be edible by the time I need it (which looks like years away, not weeks, at this time). Net sales, after the fall-throughs, were 16.5k for the week, from 16.6k, against a 10-year average of 17.8k, and 795k for the year so far - 6.5% below 2025, 3.2% below 2024, 13.7% above 2023 and 2.3% above 2017-19. Another one in the 92%-93% region.
So who did tell the buyers? Nobody, by the look of it - or if we did, they weren't listening - over a million households have agreed to buy a home this year, and they're still turning up at a rate of 21,000 or 22,000 a week. What they're not doing is turning up as fast as the sellers. 1.529m listings against 1.032m sales agreed is about 1.48 new listings for every sale, much as last week (of course - one week doesn’t move this needle), against about 1.37 at this point in 2025. And if we're 7.5% behind last year, we're talking about 84,000 sales, or just under four weeks of trading at this week's pace - so 2026 is running about a month behind 2025, and has been for a while.
Now the number I'd want every agent in the country to read twice. Chris's provisional count for October has 47k homes exchanged against 48.6k withdrawn - so only 49.2% of the homes leaving agents' books in October actually sold. That's the first month this year below 50%, against a 7-year average of 57.6%. Put the other way round, more homes came off the market without a buyer last month than went through to exchange. It's provisional (late exchanges tend to drift in for a few weeks, so I'd expect it to creep up a point or so), but even a revised 50% or 51% would be a poor month.
That's Chris's main point this week, and I think he's right - the measure of an agent isn't how many homes they sell, it's what share of the homes they take on actually get to exchange. Toby Phillips, from what I can gather, takes the other side (the best agent is the one who sells the most), and I'll let you watch the show and decide which of them you'd rather instruct. As a vendor, of course, I know which question I'd be asking at the valuation.
The reductions came off the boil a touch. 21.2k price cuts this week on 758k homes for sale, and 13.7% of the homes on the market were reduced in October, from 14.7% in September. The 2026 average is now 13.1% a month, against a 7-year average of 11%. That's still about 2 points above normal - around 16,000 more cuts a month than a normal year would see - but it's the first monthly fall since the summer.
Here's a sum you can check, from a statistic Chris dropped into the comments this week (he's worked it across about 2 million completed sales, so I'll take it). Homes that go sale agreed without a reduction sell, on average, 0.2% below their asking price. Homes that have been reduced sell 1.8% below their reduced price - another 1.6% of negotiation on top of the cut, or about £4,800 on a £300,000 house. So take a house that's really worth £300,000. Price it at £300,000 on day one and you'd expect to agree about £299,400. List it at £320,000 instead, take the average Rightmove reduction of 6.6% (their September figure) and you're at £298,880 - and then knock off the extra 1.8% and you agree at about £293,500. That's nearly £6,000 worse off for the privilege of starting high, before we count the months on the market and the mortgage payments while you wait. The overpriced listing doesn't just cost you time - it costs you money, too. I’ve been speaking to Chris for some time about the “real cost of over-instruction from agents” and I think he’s done the best work in this space so far - I’ll set the AI research beast to it at some point and publish my findings in the PropenomAIx newsletter as well.
The asking gap narrowed to 15.5%, from 17.5% last week. Chris's average new listing was £409k, against £354k for the homes going sale agreed - and this time the listings moved (down from £418k), while sale agreed slipped £2k from £356k. At 15.5% we're a touch under the long-term norm of 16% to 17%, which is about as unremarkable as this number gets. I wouldn't read anything into one week's mix - it's the direction over a month or two that tells you something, and the direction since September has been sideways - arguably, agents are pricing keenly. When we get to December that normally becomes increasingly keenly.
Sell-through was 13.4% in October, from 14.7% in both September and August and 13.8% in June, against a pre-Covid average of 15.5%. The odds sum from last week, updated - at 13.4% a month, the chance of not selling in any one month is 86.6%, and over three months it's 86.6% x 86.6% x 86.6%, or about 65%. So about 35% of sellers find a buyer within a three-month instruction on October's numbers, from 38% on September's, and against about 40% in a normal pre-Covid market. One in three, give or take. If you're a vendor signing a 12-week sole agency this month, those are your odds - and they're another reason Chris keeps banging the drum for shorter sole agency terms (eight weeks, in his book).
Fall-throughs were 23.99% this week, against a decade average of 24.5%, and on the monthly measure 5.2% of September's sales fell through, against 5.1% for 2026 so far, 5.3% in 2025 and a 10-year average of 5.7%. So the deals that do get agreed are sticking a little better than usual - which fits a market where the buyers who are left have done their sums (and with the Bank putting rates up on Thursday, they'll need to have done them properly).
No new price per square foot this week - September's £338.98 still stands, 0.2% up on a year earlier, and we'll get October's in the next pack or two (it's the one I'm most looking forward to, given what Lloyds had to say on Friday). My call from September was another couple of % off before Christmas, and I'll stick with that until Chris's October number says otherwise. This is just why normal month to month figures get seasonally adjusted to an extent, although the trend is also downward at the moment from a 2% increase according to the mid-year numbers.
Rents next, with the usual October health warning we give every year. The average new rental listing was £1,835 in Week 43 and £1,804 for October so far, against £1,880 last October - which, as I've said a couple of times, was inflated by student lets in a last hurrah before the Renters' Rights Act (Chris reckons the students add £50 to £60 a month to that figure). The 2026 average is £1,767 a month, and October 2021 was £1,432, so asking rents are about 26% up on five years ago.
Rental stock was 320k on 1st November, against 323k a year earlier - up from 299k on 1st October, as it usually is once the September student rush has cleared. 149.7k new rental listings came to market in October, against 153k a year earlier and 116k in October 2022. Back in September 2025 I said a normal pre-pandemic market looked like about 350k available, the new normal about 300k and a constricted market about 250k - so at 320k we're a bit looser than the new normal and a long way from constricted. That's no great surprise with the Renters' Rights Act bedding in and some landlords selling up, and it's a reason I wouldn't expect rents to sprint away this winter (the long-run picture, where the OBR thinks the Prudence Penalty pushes rents up, is a different story). But the “there’ll be no stock for people, you know” argument still isn’t landing just yet. Mostly because of the slow pace of property and inertia, overall - most people’s default position is to keep calm and carry on, whether I say it every week or not!
So what does Week 43 say? The buyers haven't been told the market's dead - they're still agreeing over 21,000 sales a week, at about 92% of normal. The vendors, on the other hand, seem to have been told it's 2021, and half of them are leaving the market without a sale. That's not a crash, and it's not a recovery either - it's a market where the price you list at decides whether you're in the 49% or the 51%. With Bank Rate now at 4.00% and the Bank's two-year fix at 75% LTV up to 5.39% in October (more in the macro), I'd expect the next few weeks of sales to soften a touch rather than pick up.
What would I do with this? If you're buying, the vendors who've already cut once are the ones most likely to talk, and Chris's 1.8% says they'll talk a bit further still. If you're selling, price it right on day one - the sum above says starting high is about the most expensive thing you can do in this market. And if you're an agent, maybe the question to ask yourself is Chris's one - what share of my instructions actually exchanged?
The Weybridge half of the show is worth a watch if you're in Surrey, or if you just like seeing how different the agents in one town can look once you lay their numbers side by side.
Chris - this is my weekly appreciation paragraph. Thanks for what you do! If you want some help positioning yourself as a local market expert - as an estate agent or any form of property professional - give Chris a shout! Either way give his channel www.youtube.com/@christopherwatkin a follow and some love, please!
OK. Time for the Macro Catherine wheel - it was Bonfire Night on Thursday, the Bank of England brought its own fireworks, and the numbers have been spinning in every direction since. Four things we've got this week - Lloyds' October house prices (with a minus sign, as promised), the final PMIs for October, Bank Rate and what the lenders have done with it, and then gilts and swaps, as ever. The Bank's decision itself, and the forecast that came with it, get the whole Deep Dive, so I'll keep my powder dry on that here (it is Bonfire Night week, after all).
Lloyds first - IFKAH, the Index Formerly Known As Halifax. Prices fell 0.6% in October, 0.5% over the last three months against the three before, and 1.2% on the year - the biggest annual fall since October 2023 (lettuce remember about the timing of that one, of course). Their average price is now £296,285. And September has been revised down, to minus 0.1% on the month and minus 0.1% on the year (from flat on both), at £298,167 - so the minus sign actually arrived a month early - we just didn't know it yet.
Last week I said I wouldn't be shocked to see a minus sign from Lloyds on Friday, which would land my "negative print before Christmas" call from 11th October with weeks to spare. Well - here we are, and it's not a small one. I'll book that, though I'd rather it had been a minus 0.2% than a minus 1.2% (being right about prices falling isn't much fun when you own more than a few houses yourself).
The regions tell the story we've been telling here for a while - the North-South one. Northern Ireland is up 4.4% on the year (from 6.9%), Scotland 2.8%, the North West 2.2%, the North East 2.0% and Wales 1.6%. The West Midlands is just about positive at 0.3%. Then the South - the South East and the South West both down 2.4%, and Greater London down 3.1%, to £524,892. I said last week Lloyds tends to have a Southern bias in its figures, and you can see why a national number from this index leans the way London and the Home Counties lean.
Andrew Asaam, Lloyds' Mortgages Director (he's taken over the commentary from Amanda Bryden), puts it down to a backdrop that's testing demand, with inflation from the Middle East keeping borrowing costs high. He makes the point that prices have barely moved for two years, so some adjustment isn't a surprise, and that wages rising faster than prices should help affordability - "we don't expect this to lead to a sustained period of falling house prices", as he put it. I'd agree with him on the direction, if not perhaps on the timing.
The volumes, for what they're worth, are holding up better than the prices. HMRC's count of residential transactions was 94,800 in September, only 0.4% down on a year earlier - so people are still moving at much the same pace as last year, which fits what Chris's numbers have been telling us all autumn. The leading indicator is the mortgage approvals, though (53,443 in September, about 19% down on the year), and today's completions are mostly deals agreed in the summer, before the swaps and the fixes went up. I'd expect the transaction count to soften into the new year rather than hold here.
In real terms, of course, it's a bigger fall than it looks. With CPI at 3.5%, a 1.2% nominal fall is about 4.7% off in real terms in a year. Nationwide had October up 0.5% on the year and the ONS had August up 0.9%, so we've got the three indices spread from plus 0.9% to minus 1.2%. If the Land Registry follows Lloyds down (remember it tends to follow Nationwide and Lloyds but with a 6 month lag), I'll be appraising my revised 2026 number of 0.5% - 1% for growth this year - and you'll hear it here first when I do.
What about next year? Savills published its new five-year forecasts on Wednesday, and it's gone for a fall of 1.5% in 2027, then 3.5%, 5%, 5% and 3% - about 16% over the five years - on the view that average mortgage rates don't get back under 5% until early 2028. Pre-war, they were at around 22.8% if memory serves for their 5y forecast. The OBR, a week earlier, had 2.5% for 2027 (they couldn’t forecast a cloudy British day when it comes to housing figures, though). My call, printed in September, is 0% to 0.5% - which, as it happens, sits pretty much halfway between the two. Savills thinks prices fall a little further over the last few months of this year, and on Lloyds' October numbers, it's hard to argue. Savs suffer from “London syndrome” in terms of where a lot of their logic comes from, and this is more clear evidence of that in my mind.
Who's right? I think Savills' minus 1.5% looks too gloomy - mortgage rates clips, if the markets have been right about oil this week, would come in faster than early 2028. If the President decides to "go further", it might even look optimistic. That's the thing about a war-driven housing market (and there's no other kind this year) - every forecast is really a forecast about Tehran and Washington. I'll stay at 0% to 0.5% for 2027.
Next up, the PMIs - the final readings for October, which landed either side of the Bank's decision. Manufacturing came in at 52.8, the same as the flash and up from 51.9 in September - a five-month high, with output growing at its fastest in 25 months. Services were revised down to 52.8 from the flash 53.1 (September was 52.1), still the highest since February, and the composite came in at 52.9 against a flash of 53.1 and 52.0 in September.
So we've a private sector growing at about its fastest pace this year - and the detail underneath it was hawkish all round. New business in services grew at its fastest since January. Employment across the private sector rose for the first time in 25 months. Input prices in services rose at the fastest pace since May, and in manufacturing at one of the sharpest rates in four years. Tim Moore at S&P Global said the numbers pointed to a near-certain rate rise in November - and so it proved, a day later. All this in a budget month which has been woeful for the past couple of years. The benefit of running a tight-lipped ship is obvious to me, even if no-one else seems to give it any credence. Honestly worth 0.1%-0.2% on the growth rate.
One footnote worth having. The manufacturing survey closed before the Budget, so none of this reflects Wednesday's red box - and Rob Dobson noted firms were worried about policy and the minimum wage rise, with factory employment flat after six months of hiring. Business confidence was at an eight-month high in manufacturing, but still below its long-run average in services. A busy economy, then - but not one that's feeling especially carefree about 2027. Some influencer-style commentators wasted time moaning about 3.9% on the minimum wage, but given that firms expect to raise prices by 3.8% and inflation is 3.5%, I’m not sure why (apart from the fact they have done for years, and are broken records on it by now - or they don’t seem to care about the truth as much as we would all like them to).
Then construction, which went the other way entirely - and this is the one I'd want every landlord to see. The construction PMI fell to 43.6 from 46.1, its 22nd month below 50 and the steepest fall since June. Housing was the worst of it, down to 35.1 from 40.7 - the lowest since December 2025 and the fastest fall of the year. Commercial work fell to 46.3 from 48.5, and civil engineering was at 45.9 (the data centres and the energy networks are keeping some of the bigger firms busy).
The costs are going the wrong way too. 48% of builders reported higher input costs in October, against 25% in September, blaming fuel surcharges and energy, and new work fell at its fastest since June. Tim Moore put the housebuilding weakness down to rising borrowing costs, and optimism among builders is the lowest since May. With Bank Rate up on Thursday, I can't see November's being any better.
Why should we care? Because a housing PMI at 35.1 is a country that isn't building the homes it says it wants (1.5 million of them, if you remember the laughable target). Fewer new homes means the shortage of two and three bed homes gets worse, not better - which is, of course, the long-run case for owning them. It's a grim number for the housebuilders and for anyone waiting for a starter home. For those of us who already own rented homes, it's another reason the rents won't fall far, even in a soft market. Every cloud, as they say!
Now for the Bank Rate itself - which I promised I'd keep brief here, so I will. The Monetary Policy Committee raised it by a quarter point to 4.00% on Thursday, the first rise since August 2023. My call, first printed on 11th October, was 7-2 for exactly that, with two votes to hold. The rise and the level were right. The split wasn't - all nine voted to raise, and Catherine Mann wanted a half point, so it went down as 8-1 in the other direction. I said last week a 9-0 was possible because the doves might concede, and they did, but I hadn't thought one of the hawks would want 50bp. Right on the result, wrong on the score, as the bookies would have it. More on the vote in the Deep Dive.
What matters more, for most of us, is what the lenders do with it - and, as we've seen all autumn, they got there first. The Bank's quoted rates for October have the average two-year fix at 75% LTV at 5.39%, up from 5.13% in September, and the five-year at 5.19%, from 4.98%. In June the two-year was 4.80% - so we've had 59 basis points on the two-year since the summer, without the Bank having done anything at all until Thursday. At 90% LTV the two-year is 5.60%, and at 95% it's 5.88%. The standard variable reversion rate hasn't moved from 6.58% since at least June (it will now).
Moneyfacts' numbers, published on Wednesday, are higher still because they're an average of everything on the shelves - the average two-year fix at 5.97%, the highest since December 2023, the average five-year at 6.00%, and the average standard variable rate at 7.13%. On a £250,000 mortgage over 25 years, Moneyfacts reckons repayments are £169 a month higher than they were at the start of the year. That's about £2,000 a year off a household's spending, before the Prudence Penalty or the energy bills have done anything. That dwarfs the energy bill changes.
And the lenders' moves around the decision tell you the fixed-rate market had already priced it in. Nationwide cut some of its fixes by up to 0.15% before Thursday, taking its lowest to 4.89%, and then, by the reports, put its standard mortgage rate up to 6.74% from 1st December. Santander's SVR goes up by the full quarter point from 3rd December. So if you're on a fix, Thursday changed nothing for you today. If you're on a tracker or an SVR, it's another 25bp from next month - UK Finance reportedly reckons about a million variable-rate borrowers will pay £15 to £30 a month more.
The bigger number in the medium term is the 2.3 million fixed rates that UK Finance's figures suggest expire next year. A lot of those were taken in 2022 and 2023 at the top of the last cycle, so for some it's a small rise or even a cut, but for anyone coming off a 2021 five-year deal at 2% or so, it's a big jump in the monthly bill. And that's the bit of the Bank's forecast I'd flag for landlords - it reckons the average mortgage payment will be about £1,500 a year higher by 2029 than it would have been before the war. Some of that is our tenants, and some of it is us.
Gilts and swaps, then, for the week - and a strange one, where the Bank put rates up and the bond market went down in yield. Friday's closes first, on my usual series. The 5-year closed at 4.675%, down 14.4 basis points on last week's 4.819%. The 30-year closed at 5.612%, down 10.5 basis points on last week's 5.717%. The 10-year finished at 5.155%, down 13.5 basis points on last week's 5.290% - and it dipped towards 5.1% on Friday, the lowest since late August.
How do we get rates going up and yields going down in the same week? Mostly oil. The falls came on Monday and Wednesday, as Brent fell on the peace talk and then the midterms, and gilts followed Treasuries down. On Thursday itself, yields actually rose a few basis points after the decision (the 2-year by about 4 to 4.79% and the 10-year by about 3 to 5.17%), because the vote and the guidance were more hawkish than the market had expected. Then Friday's American jobs numbers nudged them up again (the 5-year by 2.4 basis points on the day, the 30-year by 1.4). So the rate rise added a few basis points (or more accurately, the vote did because the consensus ended up being 6 to hike and 3 to hold, more dovish than my 7-2, and ended up being 8-1 with the 1 at 0.5% - that’s a lot more hawkish than expected), and the oil price took off a lot more. A good trade, if you'd offered it to me last Saturday!
Against a year ago we're still well up, of course - the 5-year about 75 basis points higher (it was about 3.93%), the 10-year about 69 higher (about 4.47%) and the 30-year about 35 higher (about 5.26%). The 52-week ranges haven't moved - 3.668% to 5.106% for the 5-year, and 5.033% to 6.073% for the 30-year. The gap between the 5-year and the 30-year widened a touch, to about 94 basis points from 90, because the short end fell further.
The shape of the curve is the interesting bit again, as we've said for a few weeks now. The 1-year is at 4.478%, the 2-year 4.768% and the 3-year 4.789%, then it dips to 4.675% at five years before stepping up to 4.914% at six (that step, I think, is more about which gilts sit at the 5-year and 6-year points on the curve than anything the market believes), and on to 5.612% at 30. With Bank Rate now at 4.00% and the 2-year at 4.77%, the market's still pricing more rises - about another 75 basis points by the end of 2027, on the reports I've seen, which would take us to about 4.75%.
My call, printed on 20th September, is that Bank Rate needn't go above 4.5% in the next 12 months. The market's at about 4.75%-5%, so I'm still on the optimistic side of it - but the Bank's own survey of City economists has the median at 4.25% by February, and on Thursday the Governor said the curve mostly reflects risk premia rather than the rises the market actually expects. I'll stick with 4.5% as my ceiling, and with oil under $100 I'm a bit more comfortable with it than I was a week ago.
The swaps, which is what your lender actually prices off - BlueGamma's series, Thursday to Thursday. The 5-year SONIA swap closed Thursday at 4.59%, down 16 basis points on the previous Thursday's 4.75%. The 3-year closed at 4.61%, also down 16 from 4.77%, and the 2-year at 4.53%, from 4.65%. A month ago the 5-year was at 4.72% and the 3-year at 4.67%, and against a year ago the 5-year is 96 basis points higher and the 3-year 106. The 3-year (4.61%) is still a whisker above the 5-year (4.59%), so the market still expects rates to come back down after a year or two - which I'd agree with (and which, if we're right, is good news for anyone fixing for five years rather than three).
The 5-year gilt (4.675% on Friday) still yields more than the 5-year swap, even on BlueGamma's mid-point numbers - the government paying more to borrow for five years than the banks charge each other. Long-time readers will know I put a fair bit of that down to QT and the sheer weight of supply, and I'll keep saying it until it goes away. Demand for mortgages is unlikely to explode based on this current pricing and what I think is a lukewarm, at best, “Your First Home” scheme.
So how about the sum for limited company money? My working margin over the 5-year mid-range BlueGamma swap is about 1.75%, and 4.59% plus 1.75% is 6.34% - so a 16bp fall in the swap has moved us a step away from my 6.5% call, not towards it. I'm keeping the call for now (6.5% within six months, 6.75% in the spreadsheets if you're feeling particularly bearish), because a week of oil-driven relief can unwind in a day, and because lenders' quoted rates have been going the other way. But if the 5-year swap sits around 4.6% into the new year, I'll have to think again - and I'd be delighted to. We “enjoy” volatility when it is going in our direction, but we have to remember that it is still volatility in markets that prefer a bit of calm.
If you've a refinance coming up, the message is much the same as we had last week. Fixed rates were priced for Thursday before Thursday happened, swaps have come in since, and lenders tend to follow swaps down a lot more slowly than they follow them up - so I'd expect the better deals to drift in over the next few weeks rather than arrive overnight. Get your broker to keep an eye on it for you, and don't be shy about switching to a better product if one appears before you complete. Make sure they check.
OK. Here endeth the lesson on current rates - here comes the Deep Dive.
One subject this week, and four takes on it - the Bank of England's decision on Thursday, and the Monetary Policy Report that came with it. It's the first time Bank Rate has gone up since August 2023, it's the first forecast the Bank has published since oil's autumn run, and it's the one that put "5% inflation" back on the front pages. So we'll take it in four goes - the vote, the inflation forecast, what the forecast says about the economy and our mortgages, and then what the Governor, his chief economist and the papers made of it all afterwards.
First up, the decision itself - the Monetary Policy Summary and the minutes of the meeting that ended on Wednesday 4th November, published at noon on Thursday. The minutes are where the nine members each set out their own view, and this time they're worth reading in full, because the vote looks a lot more united than the views behind it.
Theme 1: Eight Plus One
The Summary: The Committee raised the Bank Rate by 0.25 percentage points to 4%, by eight votes to one. Andrew Bailey, Sarah Breeden, Swati Dhingra, Megan Greene, Clare Lombardelli, Huw Pill, Dave Ramsden and Alan Taylor voted for 4%. Catherine Mann voted for 4.25%. The majority judged that energy-driven inflationary pressure in the pipeline now justified a rise, with activity stronger than expected and the risks to inflation shifted up. Mann described a half point as good policy on credibility grounds.
The Propenomix Perspective: I've scored my 7-2 in the macro (right on the rise, wrong on the split), so let's look at the vote that caught me off guard - Mann at 50bp. She's described her earlier votes for a rise as a down payment, and she clearly thinks the Bank's credibility is on the line, which brings us back to Pitt the Elder at the top of this week's Supplement. Confidence really is a plant of slow growth, and the Bank lost a fair bit of it in 2022. I think that's what Thursday was really about - the Bank being seen to move before it's forced to, this time round, with even the doves putting their hands up for insurance. Will we thank it for that in a year? I hope so - but if oil keeps falling, I suspect Mann's half point will end up looking like the one that got a little carried away.
Theme 2: No Pre-set Path
The Summary: The Summary states that monetary policy is "not on a pre-set path". In the minutes, Pill judged one rise unlikely to be sufficient, Greene that further rises were likely to be needed and Lombardelli that a further near-term rise was likely unless inflation news weakened. Bailey saw a case for one more absent softer news. Taylor called it a one-for-now insurance rise, with the next move up, down or sideways. Dhingra wanted clearer evidence before holding rates high for longer.
The Propenomix Perspective: So we've got a united vote from a committee that isn't united at all (which, to be fair, is how a committee's meant to work). Faisal Islam at the BBC counted three members pointing to several more rises, three (the Governor among them) to just one more, and Mann out on her own. Add Taylor and Dhingra, who both sound like they'd happily stop here, and you've got a committee spread across the whole range. Ramsden's line in the minutes is the one I'd underline for property people, mind - he said some of the adjustment may come through jobs and business failures rather than prices. That's a central banker telling you, politely, what a tighter policy is for. Where does that leave us for December? Finely balanced, I think - and I'd lean towards a hold, for reasons we'll come to below.
Next up, the November Monetary Policy Report itself, and the forecast that made the headlines. The Bank publishes four of these a year, and this is the first since July, when the war was already five months old but oil hadn't yet made its autumn run and had clipped back from its spring one thanks to the ceasefire. The inflation chart in this one has a very different shape from July's - timing is everything.
Theme 1: The 4.9%
The Summary: CPI was 3.5% in September, 0.4 points above the July Report's projection. The Bank now projects about 4.4% in the first quarter of 2027 and an average of 4.9% in the second quarter, against a July peak of 3.2%. Direct energy effects add about 1.4 points in early 2027, with Ofgem's cap rising to about £2,150 in the first quarter. Inflation is reported to return to 2% in the third quarter of 2028, ending the forecast slightly below target.
The Propenomix Perspective: Back in September I said I'd bet the unders on the Bank's inflation forecasts, when Clare Lombardelli had the first quarter at about 4.2%. The new forecast has it at 4.4% to 4.5%, so the unders have had a rough couple of months (with September at 3.5% against the Bank's 3.1%, I can't pretend otherwise). But I'm sticking with the unders on 4.9%, and here's why. The forecast's built on Brent at $108 (theme 2, below), and we're at $98. And when the last energy shock went into reverse in 2023, inflation fell faster than most forecasters expected - the Bank included, in my view. Where will we actually end up? I'd guess the peak comes in somewhere closer to 4 than 5 - but I wouldn't bet the house on it (I've got rather a lot of houses to lose!).
Theme 2: Built on $108
The Summary: The projections assume Brent at $108 a barrel and UK gas at 216p a therm, the averages for the 15 working days to 27th October, 38% and 81% above the July assumptions. Oil follows futures to a peak of $116 in late 2026 and $74 by late 2029. At the press conference the Governor noted Brent had since fallen about 15% to $95, which could leave the peak somewhat below 5%, while gas remained near the forecast's peak.
The Propenomix Perspective: This is the bit the headlines missed - and the Governor said it himself on Thursday. The Bank uses a 15-day average of market prices (presumably so the forecast isn't hostage to one day's trading, which is sensible enough), but it means the forecast was out of date before it was printed. Oil at $98 against $108 knocks something off the peak, perhaps a few tenths. The catch? Gas - UK gas was 218p a therm on Thursday, still right up near the forecast's peak, and gas drives most of the energy cap - and with it the big January jump in household bills (worth about 0.4 points of CPI on its own, on the Bank's numbers). So oil helps the forecourt and the haulier, but it won't help the cap unless gas follows it down. If we want to know where the peak really lands, I'd watch the gas price for the next few weeks rather more closely than Brent, to be honest.
Theme 3: Two Other Worlds
The Summary: The Report sets out two alternative scenarios. In the first, energy prices rise sharply again and stay high, with stronger second-round effects - oil about a third and gas about two-thirds above the central path - and CPI peaks at 6.2% and stays above target throughout. In the second, recent resilience fades and there are no second-round effects - CPI peaks at 4.8%, falls below target during 2028 and reaches 1.2% in 2029.
The Propenomix Perspective: I quite like this. Most forecasts give you one number and a fan chart nobody reads - this one says, more or less, it depends on the war, and here's what the two ends look like (which is about as honest as forecasting gets). The difference between them in 2029 is the difference between 1.2% inflation and something well above target - in money terms, I'd guess, between Bank Rate heading back to 3% or so and Bank Rate heading for 5% or more. You can't plan for both of those. What you can do is what I've said before - plan on the central case and prepare for the bad one, which for a geared landlord means running the numbers at 6.5% on the debt, 7.5% on the stress-tested debt and making sure they still work. The papers led on the 6.2%, of course. Hardly any of us read about the 1.2% outside of the Supplement. (This looks too low because of the legacy Covid inflation which will take at least a decade to work through the system, in my view - and because the overall behaviour of all indebted Governments will be to look to the central bank to be looser than normal, to grow to inflate the debt away - although they are “independent”, of course - they’d rather a bank rate at 2.5% and 2.8% inflation than 3.5% and 1.2% inflation, naturally - and when members of committees need to be appointed, they tend to be the people that fit the narrative of the prevailing Government - whilst I’ve made plenty of noise about Warsh, for example, I had my time of making plenty of noise about Hunt putting Lombardelli in place when he did as well, of course, back in the last administration.
Third up, the rest of the Report - what the Bank now thinks about growth, jobs and the household budget. This is the half of the forecast that got almost no coverage at all, and for anyone who owns property it's the more useful half.
Theme 1: Stronger Than They Thought
The Summary: GDP grew 0.5% in the second quarter, against 0.3% expected in July, and the Bank expects 0.7% in the third, against 0.1% in July, with four-quarter growth of about 2.2% in late 2026. Reports put the Bank's calendar-year growth at 1.6% for 2026 and 1.3% for 2027, both up from 1.1%. Unemployment is projected at 4.8% in late 2026, against 5.1% in July. The Governor said AI-related activity accounts for just under a fifth of growth this year.
The Propenomix Perspective: Now this I enjoyed. On 18th October I said growth this year was already running at about 1.8% on what we knew, and that the 1.2% consensus was wrong (in capitals, as I recall). The OBR stuck with 1.2% on 28th October (and we all know what I think of their forecasts) - a week later the Bank has 1.6%, and 2.2% on the year by the fourth quarter. That's two official forecasters, a week apart, 0.4 points apart on the same year (and the Bank, of course, has a lot more data on the third quarter than the OBR did). Unemployment at 4.8% rather than 5.1% is the other half of it. A stronger economy is one reason the Bank put rates up - but it's also why I've never bought the doom about house prices, because people in work tend to keep paying their rent and their mortgages, whatever Bank Rate is doing.
Theme 2: The Mortgage Bill
The Summary: Quoted two-year fixes at 75% and 90% LTV have risen about 60 basis points since July. The Bank projects average annual mortgage payments about £700 higher by the end of 2029 than in July, and about £1,500 higher than before the conflict. Approvals fell 8% in the three months to September. The market curve the forecast uses peaks at about 4.9% at the end of 2027, against a 3.5% median among surveyed market participants.
The Propenomix Perspective: That last gap is the one I'd want every mortgage broker to know about - and every one of us with a refinance coming up. The forecast is built on a market curve that takes Bank Rate to about 4.9%, and the City's own economists, asked by the Bank, think 3.5% a couple of years out. The Governor said on Thursday he thinks the curve is mostly risk premium - which is a central banker saying, as politely as he can, that the market's charging you for a war rather than for his decisions. I agree with him (because he is right - and this is one of the very hard things to get your head around - the market forward curve is NOT a prediction, and it takes into account all sorts of scenarios including the unlikely but very difficult ones), and it's why my call is that Bank Rate needn't go above 4.5%. The £1,500 a year is real, though, and it lands on our tenants and on us. For a landlord, we've got the Prudence Penalty and higher interest arriving in the same 18 months - not a combination anyone would choose!
Last up, what happened after the noon announcement - the Governor's press conference, his interview with Bloomberg, Huw Pill's comments on Friday and the newspapers. If the minutes tell you what the members think, this is where you find out how hard they wanted to push it.
Theme 1: Not a Long Sequence
The Summary: The Governor said the rise "shouldn't be seen as the first in an inevitable long sequence of hikes", but that unless the conflict is resolved it doesn't seem likely to be the last. He declined to commit to one more rise and stop, put little weight on two days of falling oil without a peace process, and hoped for more clarity by December. He told Bloomberg a second rise was probably more likely than not if high energy costs returned.
The Propenomix Perspective: Read it twice and it says - one more, probably, unless the war ends, and not necessarily in December. Clear as mud? Pretty much (and I suspect deliberately so). The economists are split down the middle - Deutsche's Sanjay Raja expects a 5-4 hold in December, Oxford Economics and EY both call it a coin toss, and Danske now has rises in February and April. My lean is a hold in December, more like a 6-3 vote - oil's fallen 15% since the forecast was put together, October's CPI on 18th November will be the first test of it, and a Governor who won't commit to anything is a Governor who wants to see more data. February is more of a 6-3 rise as we live and breathe today, I think, although I dislike forecasting votes this far in advance! And if we stop at 4.25%, my 4.5% ceiling has room to spare - which is where I'd like it.
Theme 2: Pill on Friday
The Summary: Huw Pill, the Bank's chief economist, said on Friday that the shock was smaller than the one in 2022, that clearer evidence on second-round effects would come in the spring, and that the risks run both ways. He was reported as saying there would be no repeat of the 2022 cycle of rises, and that rates could stay on hold, or even fall, next year if growth stalled. In the minutes he had judged one rise unlikely to be sufficient.
The Propenomix Perspective: Now that's a change of tone in 24 hours - or have we just caught him on a good day? In the minutes, published on Thursday, Pill was one of the members saying a single rise probably wouldn't be enough, and by Friday he was telling people not to expect a rerun of 2022 and floating cuts next year. Both can be true, of course - one more rise and then a long hold fits both - but it sounds to me like a chief economist keen to calm a market that had read Thursday as the start of a cycle. On 2022 he's right, in my view. That year we had an energy shock, a labour market with a vacancy for every jobseeker - and Bank Rate starting near zero. This time it started at 3.75%, and the labour market's a lot looser - a different animal, and most definitely a smaller one, I think.
Theme 3: The Headlines
The Summary: Reuters led on a first rise since 2023 with more possibly to come, inflation at "more than double" the target and a blow to Prime Minister Andy Burnham. Bloomberg called it unanimous, with 4.9% inflation. The Telegraph warned of more pain, and AFP led on the 6.2% adverse case. The Chancellor said the conflict was reaching into the pockets of families and businesses, and pointed to his Budget's support. TS Lombard called the decision a very hawkish surprise.
The Propenomix Perspective: "8-1" or "unanimous"? Both, as it happens - a nice reminder that we can spin the same vote two ways in the same afternoon (and the papers duly did). The headlines went with 5% and 6.2%, as headlines do, and almost nobody wrote that oil was $10 below the forecast's assumption on the day it was published. The politics is the bit I'd keep an eye on - the Chancellor blamed Iran, and he's not wrong - but Emmanuel Igwe of the Prosperity Institute, writing in City AM on Friday, told him to stop blaming Iran and pointed out that the OBR's inflation peak (3.8%, a week earlier) is a full point below the Bank's. Two official forecasts, a week apart and a point apart. You'd think somebody in Whitehall might ask why......
So that's the Deep Dive - one decision, four takes, and a Committee that agrees on what to do this month and on very little else.
The Week Ahead. A quieter start, then a busy Thursday. Monday brings the KPMG and REC jobs report and Tuesday the BRC's retail sales, but it's mostly a week for watching Brent, the Strait and the gilt market's second thoughts - and the Bank's speakers are out in force, with the Governor in Zurich on Monday and Lombardelli, Breeden and Pill all on Tuesday. Thursday 12th November is the big one - the ONS has the first estimate of third-quarter GDP and September's monthly figure at 7am (after 2.1% on the year in August, I'll be looking for anything that keeps 2026 nearer my 1.8% than the “big forecaster” consensus of 1.2%), with construction output alongside it. The same day brings the RICS residential survey for October (the price balance was minus 32 in September, and I'd expect the first survey taken with a rate rise priced in to be no better), UK Finance's arrears and possessions figures, and the Ministry of Justice's mortgage and landlord possession statistics, the latest quarterly read on how possessions are going now Section 21 has gone. Further out, the labour market is on 17th November and October's CPI on the 18th - the first test of the Bank's new forecast - with Ofgem's January cap on the 25th. Plenty to chew on before January's workshop!
As we get towards the end for this week - I can't wait for our next workshop in Birmingham on Thursday 7th January 2027, with Rod Turner. Strategic Planning, Productivity, Systems and Processes, and Financial Management and Reporting, all in one day - and with Bank Rate at 4% and the new tax rates landing in April, there's never been a better time to get the strategy and the numbers straight. Super Early Bird has 20%+ off, and the tickets are on sale at tinyurl.com/AdamRod27. The VIP dinner tickets are the most limited - grab one if you want some time with Rod and myself to talk through your own situation and whatever's stopping your business right now from doing what you want it to do!
Above all, always remember to Keep Calm, ALWAYS listen to or read the Supplement, and Carry On. Remember those fundamentals - the shortage of two and three bed homes, and the fact that investing in property is never a guaranteed win. This week we got a rate rise, a minus sign from Lloyds and a construction PMI telling us we're building even fewer homes than we were. And yet over 21,000 households a week are still agreeing to buy, and oil's just had its biggest weekly fall since the pandemic. Rates up, prices soft, demand steady and supply about to get tighter - that's the market we're in, and I don't think it's a bad one to be buying in, if you're buying well.
Does Thursday change the plan for those of us who invest? Less than the headlines suggest, I think. A Bank Rate starting with a 4 has been on the cards since the summer, and the fixed-rate market had priced it in well before noon on Thursday. My calls stand - Bank Rate no higher than 4.5% in the next 12 months, 2027 house prices at 0% to 0.5%, and limited company five-year money at 6.5% within six months (a step further away this week, which I won't complain about). If the war winds down this winter, I think we'll look back on the fifth of November as the top of a short cycle rather than the start of a long one, and on the Bank's 4.9% inflation as the forecast that never arrived. If it doesn't wind down - well, that's what the stress numbers are for. Remember, remember... and I'll see you next Sunday.
KCCO!