Following the HMRC property transactions data for February published this morning, Newspage have shared the thoughts of industry experts with IFA Magazine.
Gary Bush of the Potters Bar-based MortgageShop.com: “Residential property transaction levels slowed sharply as a result of the mini-Budget debacle. The extent of the slowdown is very evident in this data. The mini-Budget piled even more fear onto consumers who were already being hit hard by the cost of living crisis, so it’s no surprise demand dropped off a cliff. To add to the problems the mini-Budget caused, sadly lenders overreacted on the whole by either ceasing to lend or creating rate chaos by drastically overpricing future rates. UK banks shouldn’t be seen by the general public making such knee-jerk and panicked measures and it ruined what little consumer confidence was left. Despite all the current news surrounding global bank failures, I feel that the Bank of England should still increase the base rate and not take its eye off the ball, namely containing inflation.”
Paul Currie, partner at Northampton-based DFA Law: “Though these figures show transaction levels are down nearly a fifth compared to a year ago, as a firm of solicitors offering residential conveyancing to clients, we have seen a steady return to 2022 levels of activity following a decline after the mini-Budget through to December, our lowest level of new instructions for some time. Last year’s mini-Budget undoubtedly spooked the city and lenders alike but with the big banks releasing much more favourable products in the first quarter of 2023 so far, there appears to be some demand stimulus again. On the flip side, commercial property transactions do appear to have stalled, which is likely down to issues with labour, cost of materials and delays with planning applications. In addition, funding for commercial projects is not as available as it was in the recent past.”
Graham Cox, founder of the Bristol-based broker, SelfEmployedMortgageHub.com: “The mini-Budget caused a catastrophic fall in consumer confidence, which the mortgage market is only slowly recovering from. However, mortgage rates are no higher now than they would have been without the Truss fiasco. Ten consecutive base rate rises are the primary driver of the market slowdown, though it’s possible we’ve seen the last hike after the events with Credit Suisse and Silicon Valley Bank. So-called affordability, or more accurately, buyers’ ability to borrow enough to pay the overinflated prices properties are on the market for, has been severely hit. Lower house prices are what’s required to make property truly affordable again. If mortgage rates remain at current levels, that’s virtually guaranteed. The only question is how far they fall.”
Rhys Schofield, managing director at Derbyshire-based mortgage advisers, Peak Mortgages and Protection: “Don’t read too much into this data as things have improved dramatically over the past two months or so. There are currently good levels of activity that will feed through into the data in the months ahead.”
Luke Thompson of King’s Lynn-based PAB Wealth Management: “The increases in interest rates have affected the property market massively in recent months. Since January, rates have eased slightly and this has made things slightly more competitive but I think buyers are having to get used to the fact that the age of ultra-low interest rates is almost certainly behind us. The biggest reason for the fall in transactions is increased costs. In October and November, we had purchasers pulling out of deals on a daily basis. This has abated somewhat as buyers have become used to higher interest rates but it has meant that sellers aren’t achieving the higher sale prices they would have been hoping for in mid-2022.”
Amit Patel, adviser at Welling-based mortgage broker, Trinity Finance: “After successive years of cheap borrowing, 2022 saw an upward trajectory of base rate rises with a steep jump in inflation due to the energy crisis. The mini-Budget added more fuel to the fire, the markets reacted and all hell broke loose as lenders increased their rates and tightened affordability. People tend to be more cautious when there is uncertainty about job security and the wider economy, the only way to reverse the trend would be to keep base rates on hold or even a reduction by 0.25%. The housing market cooled somewhat but transaction levels will return to normal levels very shortly.”
