As we edge closer to Spring and, historically speaking, the busiest time of year in terms of people looking to follow through on any potential selling or buying activity after a winter hiatus, it will be interesting to see how potential buyers and sellers approach this season in 2023.
Of course, we have seen some anomalies in seasonal activity levels in recent years. 2020 started with a bang but Spring gave rise to the first national lockdown and a temporary closure to the property market. Upon ‘reopening’ there were almost no seasonal variations in activity over the rest of the year and into 2021, as pent-up demand and the stamp duty holiday galvanised the entire property market into unparalleled levels of business for much of the lending community.
Evidence suggests that the stamp duty holiday continued to make a positive impact on the property market throughout 2021. The initial holiday (which ended in June 2021 for the first 500,000 of a property, tapering to £250,000 until 30 September 2021) saw a reported 1.3 million buyers in England pay no stamp duty on the first £500,000, with estate agents reporting a boom in enquiries and house prices rising at their fastest rate since 2004.
2022 was also somewhat of a non-traditional year for the housing market with pandemic related issues still apparent for some borrowers, the war in Ukraine having an increasing effect on living costs over the course of the year, a string of interest rate increases and then came ‘those’ events towards the back end of Q3.
So, here we are now in Q1 2023 after navigating a highly turbulent economic and political period with many homeowners and potential buyers still reeling from the aftermath of these events. However, with greater market stability and confidence permeating across the lending community, mortgage rates falling and product availability rising, could we see a more ‘traditional’ housing market bump as we approach Spring?
I do expect some increased activity to emerge across the purchase arena in this period but to what extent remains to be seen. Obstacles and challenges do remain as mortgage rates are still sitting at levels not experienced in quite some time, although they are trending in the right direction for borrowers as more products are emerging to generate additional competition across many sectors of the mortgage market.
As outlined in recent data from Moneyfacts, we have seen some notable stability in recent weeks from a product perspective. Mid-February saw the total number of mortgage options breach 4,000 for the first time since August 2022. The shelf life of mortgage deals has also stabilised to 28 days compared to 15 days seen a month ago. The data added that lenders have gradually cut their mortgage rate pricing, leading to the third consecutive month of falls in the average two and five-year fixed rates.
While these are hugely positive signs, with additional complexity evident across the lending arena and affordability issues being faced by homeowners looking to remortgage, second steppers looking to trade up and FTBs still struggling to save for a deposit, it’s prudent to remain somewhat cautious and not get too ahead of ourselves. Although the back end of Q1 and start of Q2 could just provide the lending springboard that the housing and mortgage markets have been waiting for.
David Lownds, head of sales, marketing & business development at Hanley Economic Building Society
