Number of homes sold sees year-on-year drop as mortgage rates remain high
- Transactions fell 9% year-on-year in June, according to ONS figures
- But there was an uptick compared to May, partly due to more business days.
- Mortgage rates remain high despite falling swap rates in recent weeks
The number of homes bought and sold fell 9% in June compared to the same month last year, according to the latest government data.
However, despite the ongoing volatility in mortgage rates, transactions are up nearly a third (28 percent) compared to last month.
Part of the month-on-month increase can be explained by the higher number of working days in June than in May, and HMRC’s analysis of the figures suggests property market activity will continue in the coming months.
Moderate: Real estate transactions fell year-on-year in June, according to the ONS
Riz Malik, director of broker R3 Mortgages, said: “There is probably more life on Mars than there is in the UK property market at the moment.”
‘But if interest rates have almost reached their all-time high, things could start to look up. This week, some lenders have begun to marginally lower their mortgage rates due to favorable market conditions.
“So even if the base rate goes up next week, if the expectation is that interest rates don’t go up much, we could start to see real estate transactions pick up if the cost of borrowing improves. So we could see the slight pick up in activity levels in June or May potentially forming a trend.’
Despite the more encouraging drop in inflation seen this month, financial markets expect the Bank of England to raise its base rate again next week by as much as 0.5 percent as it works to bring price growth back up. get down to your 2 percent target.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘Transaction numbers hold up against higher interest rates and cost of living.
“Several lenders, including HSBC and Barclays, have lowered their fixed rates, so borrowers expect other lenders to follow suit in the days and weeks ahead, with the worst of the rate hikes behind us.”
The news has offered a glimmer of hope for homeowners, who have been struggling with rapidly rising mortgage rates.
Activity in the housing market remains subdued as buyers are affected by higher mortgage rates
Even as lenders cut rates, average fixed rates on the market have gone up
Swap rates, the lending rates from banks that reveal where financial markets think fixed-rate mortgage prices will be two to five years from now, have fallen since better-than-expected inflation data for June returned some confidence in the market.
About 1.3 million homeowners must re-mortgage in the next 12 months, many with rates below 2 percent, putting them at risk of a significant mortgage shock as they take on higher costs.
However, the averages are still high. The average rate for a two-year fixed product is now 6.81 percent, according to financial data firm Moneyfacts, while the five-year average is 6.34 percent.
At the same time, the number of residential mortgage products available on the market increased to 5,054 from 5,016 on July 27.
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