Listing volumes are encouraging, data suggests
Confidence appears to be returning to the market, suggests an industry expert, with a good supply of properties bringing renewed dynamism to the sector.
While challenges persist over an average 18-week transaction time for sales, house prices have held their own, according to Mike Holden (pictured left), divisional director with Landmark Information Group.
Landmark is a source of land and property data in the UK, and its most recent cross-market data shows listing volumes continued to be healthy in Q4 of 2023, on par with volumes produced in Q4 of 2019, and SSTC (sold subject to contract) volumes up by 8%, compared to Q3.
“The data is beginning to show confidence in the property marketplace appears to be improving right now,” Holden told Mortgage Introducer. “Despite challenges stemming from an 18-week average transaction time and general shared frustrations among those in the industry, there are positive indicators suggesting a shift.”
Holden believes market trends, over more than a year, show how resilient the market is.
“For transaction volumes to have dropped so quickly, but for house prices not to have followed the same trajectory really demonstrates this,” he suggested. “The industry’s adaptability, coupled with the easing of affordability constraints and increased competition among lenders, has created the most positivity in the market since early 2022.
“It’s early on in the year, but our latest data from our quarterly trends report shines an interesting light on the situation - with lenders reducing mortgage rates over recent weeks and a good level of property supply, a more dynamic market looks poised to return.”
He added: “There are many factors that make up buyers’ confidence and it’s not always an exact science, but in this instance the trend data certainly seems to align to the cost of borrowing.”
What is the impact of higher mortgage rates?
People wanting to move over the past year have found it harder because of higher mortgage rates, considers Holden, but he believes there is cause for optimism.
“The high number of property listings, some semblance of market stability and the resurgence of competitive mortgage deals create a favourable environment for homebuyers,” he observes.
“The competitiveness amongst lenders to offer attractive deals, coupled with the anticipation of easing affordability constraints throughout the year, likely plays a pivotal role in restoring confidence.”
Holden urges collaboration between lenders, brokers and estate agents to promote responsible and sustainable lending practices.
“Competitive mortgage deals will contribute to a more positive outlook, instilling confidence among buyers and stabilising the marketplace,” he noted.
“Addressing the frustration around lengthy transaction times and the number of transactions failing to complete, property professionals are shifting focus on streamlining processes through increased digitisation and technology to improve speed and certainty in the home moving process.
“Adapting to regulatory changes is also hugely important, providing timely and clear guidance to clients to mitigate confusion. Our research revealed that over 60% of professionals across all sectors said recent legislative changes had impacted their roles over the past 12 months. Conveyancers have been most , with some 89% citing this.”
Read more: Open Banking – why has it failed to take off in the mortgage industry
How many households are at risk of mortgage defaults?
There is, though, a more cautionary market appraisal from Tom Chaplin (pictured right), head of mortgage product EMEA at nCino, which describes itself as a leader in cloud banking. He warns that tens of thousands of households risk defaulting on their mortgage payments.
“Even though inflation is dropping, it hasn’t translated into lower day-to-day costs, partly because of the increase in mortgage costs,” declared Chaplin. “While rates are predicted to drop, some lenders are responding less quickly.
“More than three-quarters of a million UK households are at risk of defaulting on their mortgage payments in the next two years. That’s not surprising given the sheer number of households facing higher interest payments this year as their fixed-rate mortgages expire, from historical lows two years ago.”
He elaborated: “It’s hard to predict how it will affect customers. Homeowners will need to balance everyday costs with keeping up with the mortgage repayments on their home and how they do this will be subjective to individuals and their circumstances. Those most at risk are the ones at the upper limit of their affordability.
“We’ve already seen some of the biggest lenders respond by offering special forbearance measures to help customers avoid repossessions and penalty charges. And we should commend the work we’ve seen so far from lenders to support customers during a volatile time, such as the Mortgage Charter from last year.”
