"The base rate rise to 5% will deter some buyers from pushing ahead with a home purchase, and the slight dip in property transactions today certainly reflects this."
The number of UK residential transactions totalled 74,360 in May, 25% lower than May 2022 but 10% higher than in April, according to the latest figures from HMRC.
However, on a seasonally adjusted basis, sales were 3% lower between April and May, with transactions 27% lower than in May 2022.
Ben Waugh, managing director at more2life, commented: “Market turbulence and swap rate volatility is no doubt having an impact on consumer confidence and capacity to buy, as shown by today’s dip in seasonally adjusted transaction levels. Challenging as the current climate may be, we should remember the stability the market has demonstrated in the last six months – defying earlier predictions of a recession – and the increasing amount of support that is available for consumers.
“That said, for most homeowners in the UK, the recent interest rate increase to 5% will be very much front of mind as will inflation which continues to be stubbornly high at 8.7%. While those who need to sell or buy property will no doubt find a way, others may be tempted to wait until they are more confident about what to expect next.
“Unfortunately, there is no easy solution nor crystal ball so each buyer ultimately needs to consider what works for them and their individual circumstances over what time frame. Waiting is not always the right answer and people need to consider all their options. Raising a larger deposit will make this choice easier and we expect more people to look for support from the equity currently tied up in the Bank of Mum and Dad.”
Conor Murphy, CEO and founder of Smartr365, said: “There’s no question that the base rate rise to 5% will deter some buyers from pushing ahead with a home purchase, and the slight dip in property transactions today certainly reflects this. But these figures must be put into perspective. The housing market has remained resilient during a challenging few months and, while driven by remortgaging, business activity in the mortgage sector remains strong.
“In fact, with hundreds of thousands of borrowers needing to remortgage during the remainder of 2023, it will be a busy time for brokers and lenders. They will need to be well equipped with the right technology to minimise friction in the mortgage journey. For instance, integrating Open Banking into their processes can help brokers to streamline mortgage applications, freeing up their time to focus on advising their clients and helping consumers navigate the market.”
Kevin Roberts, managing director at Legal & General Mortgage Services, added: “Overall property transactions have dipped in recent months. Partly this reflects a bit of a return to pre-pandemic norms, but it also shows that some buyers may be sitting tight, perhaps because they feel more uncertain about their finances and the future of the property market. The UK housing market is incredibly resilient, but it’s natural that some borrowers will have concerns when they are faced with an ongoing cost of living crisis and news of rising interest rates.
“Uncertainty can be paralysing and this is why advisers have such an important role to play in the market right now. More than ever, borrowers need to understand that they don’t have to go it alone and that there is help available. I would urge anyone who is considering purchasing a home or remortgaging their current property to see a professional mortgage adviser to discuss all the financing options available to them. Of course advisers don’t have access to a crystal ball, but they can provide expert guidance that is tailored to each individual’s circumstances and they can often provide access to exclusive products which are not available directly from lenders.”
