Despite experiencing some of the lowest ‘attrition rates’ in the industry, the Convey Group has seen the number of house purchase transactions being cancelled before completion rise sharply through 2008 and the availability of mortgage finance has been the key driver.
Chief executive Lloyd Davies, commented: “Of course there are always other reasons for not completing on deals - a search might highlight an unknown problem on a property or a customer might simply be changing their mind about moving - but we’ve never seen the rate as high as this.”
The Convey Group, which can complete up to 1,000 residential property transactions in a month, reported ‘normal’ attrition rates of around 25% prior to the sub-prime issues in the US and the onset of the credit crunch. At times in 2008 the rate has hit a peak of 40%, which has not only spelt misery for buyers and sellers, but had a drastic knock-on effect on the entire housing sector.
The attrition figures coincide with a Bank of England report showing the lowest rates for mortgage approvals since records began in 1993, with just 32,000 deals done in October this year, down from an average of 114,000 a month in mid-2007.
Davies continued: “The Government has already committed to underwriting defaulted payments and recently announced a package to help to first time buyers, but more needs to do be done to encourage new mortgage deals that buyers can afford.
“Northern Rock was the UK’s largest mortgage lender, but we have seen the bank offloading its mortgages in an attempt to strengthen its balance sheet. The effect of this is to use up funds from other lenders that would otherwise be going to new borrowers and provide the credit life line that’s needed to kick-start the housing market.”
