The provisional non-seasonally adjusted estimate of the number of UK residential transactions in September 2023 is 92,600, 19% lower than September 2022 and 2% lower than August 2023. This is according to the latest figures from HMRC.
SPF Private Clients chief executive Mark Harris comments: “Transaction numbers have slipped again in the face of higher interest rates and the cost of living, as borrowers reassess what they can afford to pay.
“Swap rates, which underpin the pricing of fixed-rate mortgages, are trending down again after a recent blip. While the direction of travel for new mortgage rates is generally downwards, we have seen a few lenders pull rates in the past few days, although this has been primarily in order to slow business”.
He adds: “All eyes are on the Bank of England to see whether they hold rates again at the coming meeting and allow the dust to settle.”
Saffron for Intermediaries head of business development Tony Hall says falling mortgage rates and stable swap rates are helping to spark activity amidst the darkened economic backdrop. And although enquiries from new buyers are slightly down on last month, the market continues to be buoyed by a high volume of refinance activity. He references UK Finance reporting that £17.5bn was spent on remortgaging in the UK in Q1 alone.
“The outlook for November and December therefore remains firmly positive (although of course subject to any nasty surprises).
“There is also great opportunity to boost this activity further by dispelling the myth of an imminent return to the 1-2% rates that we saw at the outset of the pandemic, and flash sale on house prices (as a response to the broader economic decline).
He adds: “Demand remains robust and while lenders are starting to compete on pricing, any significant changes are unlikely. We are firmly in a new, post-COVID era, and borrowers must understand that the market conditions and pricing models are very distinct from those seen in the past three years.”
Search Acumen director Andy Sommerville comments:““It appears to be fright night for estate agents in the UK today, with latest HMRC transaction figures showing limited growth in the residential sector as interest rates continue to spook investors.
“As house prices waver, demand is being curbed by mortgage affordability. Banks are now predicting house prices might continue to fall through to next year before recovering. It’s the same overriding issue that’s subduing the commercial property markets as investors are having to devote more of their time to debt refinancing, while the question in most boardrooms is whether it makes more sense to press go on investment opportunities now or postpone decisions in the hope that rates will fall in short to medium term.
MT Finance director Joshua Elash says: “Transactional activity in the residential sector is down and this is consistent with what we are seeing on the ground. Would-be homeowners continue to be put off by uncertain market conditions and a higher interest rate environment.
“Investment is challenging with the availability of buy-to-let mortgages significantly down and the costs of these mortgages significantly up”.
He adds: “The smart investment money seems to be sat in the non-residential space where transactional activity is up and where opportunities to acquire assets at a good yield create an offset against the higher interest rates borrowers are now having to get accustomed to paying.”
