Slowly but surely, the clouds do appear to be breaking up when it comes to the UK housing and mortgage markets, with the anticipation of course that a decisive shift on interest rates at some point in the next couple of months, might actually take us into a much ‘warmer’ summer.
That was certainly the picture painted by the most recent RICS residential housing market survey, with the flow of new property listings coming up for sale improving for the fourth month in a row, more surveyors predicting rising sale volumes, and many now anticipating that house prices will be rising towards the end of the year.
Clearly, that is positive news, particularly in the purchase space which was undoubtedly subdued last year – especially during the second half – and which appeared to be struggling. In such a context, it has been left to remortgaging and product transfer (PT) business to keep things moving along for advisers, so again we should welcome any signs that demand for purchasing is on the up.
Certainly, there does appear to be a more concerted effort from lenders to target purchase business, not least first-time buyers, who were probably left disappointed by a lack of measures in March’s Budget, but do appear to be in the hearts and minds of some lenders in terms of greater levels of support.
It won’t need me to point out the influence that greater product activity and product innovation can have for this borrower demographic, and it’s been good to see products such as Accord’s 99% LTV mortgage coming to market.
It’s far too early to say just how big an influence this will have – or indeed if other lenders will follow suit – but anything that pricks up the ears of would-be first-timers and sends them into the arms (and offices) of advisers to discuss their potential options, is good news for both them and our sector.
Getting more people onto the first rung of the housing ladder should be a priority for all, as this undoubtedly frees others up to move further up that ladder, whether they are second or third steppers. That beginning to the chain can be the catalyst for a number of other purchases/sales to take place and clearly it gives a boost to all market stakeholders.
Our own data seems to back up the view that purchasing if not exactly ‘flavour of the month’ is rising once more, and that has an instant impact, not just in terms of procuration fee income, but clearly in terms of ancillary sale opportunity.
Our purchase application figures for the first three months of 2024 were the highest we have seen since quarter three in 2022, and hopefully show evidence of rising demand from purchasers but also an increasing willingness to sell and move.
That view would appear to be backed by recent data out of HMRC which – provisionally at least – showed this February’s housing transactions up to their highest level, 82,940, since September last year.
However, as always, this has to be put into context and this figure is still down on February 2023’s 87,850, and is some way off the 100k-plus transactions that occurred in every single month of 2022 except December.
That said, the trend does appear to going in the right direction which would clearly be welcome for every single market stakeholder, but particularly advisers who I know would like to get greater parity in terms of their purchase/remo/PT business split, after a year in which the latter has dominated, which can leave income issues given the lesser proc fee paid for the vast majority of PT business.
Overall, therefore, there does seem to be enough positive trend data, coupled with lender appetite and innovation, to suggest we are going to see more purchase business throughout the rest of 2024 and into next year.
Making the most of that potential shift and being the first point of contact for borrowers either thinking about buying or selling, could make all the difference and generate plenty of additional income opportunities that were conspicuous by their absence during much of last year.
Anita White is head of provider and lender relations at The Right Mortgage and Protection Network