Category: Market Commentary

Higher Rates, Lower Loan-to-Incomes

New Year Hangover

Regional Remortgage Stress

Mortgage rates have fallen from their recent highs but are still elevated compared to back in the spring. These higher rates have already limited how much buyers can borrow and, if rates stay high, loan-to-income ratios could fall further. As a result, it appears cash buyers have been supporting market activity, so far. Meanwhile, data on when fixed rate mortgages are due to end suggests remortgage pain for over 370,000 in the new year.

Continue reading “Market Commentary – August 2023”

Still Elevated

The Importance of Wealth

Interest rate expectations are falling as inflation eases but are still elevated compared to back in the spring. We’re yet to see what impact these higher rates have had on the housing market in recent months and much will depend on how high they still are in the autumn. However, even under low rates, access to wealth is key for those buying.

Continue reading “Market Commentary – July2023”

Everything But The Price

Buying Less While Paying More

Rising Arrears But Not Repossessions

Mortgage dependent buyers are stretching every variable they can to afford still high house prices. As a result, they are ending up getting less while paying more than even just one year ago. Meanwhile, as more existing borrowers roll off their fixed rates, mortgage arrears are likely to increase but don’t expect repossessions to follow. We also look at the number of first time buyers amidst claims they are at a twenty year high.

Continue reading “Market Commentary – June 2023”

Sticky Inflation

Sticky House Prices

Inflation is proving to be stickier than many anticipated. This has led to a surge in interest rates as expectations for how high Bank Rate will go and for how long have increased. We’re already seeing the fallout in the mortgage market and this will hit housing market activity and household finances in coming months. It also puts further pressure on real estate businesses and investors to adjust their business models and investment decisions to reflect the higher interest rate environment rather than hoping it all goes back to a low rate “normal”.

Continue reading “Market Commentary – May 2023”

Is This It

Barely Normal

Take It Or Leave It

The housing market has clearly weakened over the last six months but house prices have not yet fully corrected given the increase in mortgage rates and activity levels are better than expected. This note asks if this is it for the house price correction and looks at what the possible consequences for the housing market could be if so.

Continue reading “Market Commentary – April 2023”

Slowly Speeding Up

Blind Spots & Unknown Risks

High Density Development Sector

The latest data shows a mixed picture for the state of the UK housing market. The hangover from the Truss turmoil is slowly clearing and some leading indicators for activity are back near pre-pandemic levels. However, the housing market is highly seasonal so the next couple of months could be the best it will get this year. Meanwhile, the rapid exit from record low interest rates may be easing but we are only just beginning to find out what a decade of this has done to the UK’s economy, financial system, and housing market. It is far from over.

Continue reading “Market Commentary – March 2023”

Back To Before

Landlords Selling Up

Recent activity and house price data shows the housing market is still struggling with the fallout from the “mini-budget” and higher mortgage rates. There are some signs that activity is returning to levels recorded before the pandemic but this may just be a temporary catch up. We also investigate landlords selling up.

Continue reading “Market Commentary – February 2023”

Can’t Buy, Won’t Buy

How Big?

Still Not Special

Mortgage approvals have collapsed as high rates limit the ability of buyers to meet sellers’ still high price expectations. While mortgage rates have fallen from their peak, they are still firmly above 4% and a price correction is still very likely (and may be underway). However, rapidly rising wages could ease some of the pain during the correction. Meanwhile, we are still not special as house prices are falling from their post-pandemic highs in other countries.

Continue reading “Market Commentary – January 2023”

Back To Normal From Near Zero

Three Periods: Before Truss, During Truss, and After Truss

Renting Versus Buying

The UK’s housing market during 2022 can be split into three key periods: Before Truss, During Truss, and After Truss. The Before Truss period covered the first eight months of the year and saw the housing market continue to boom despite increasing interest rates and the cost of living crisis. The During Truss period was short and traumatic but with long-lasting consequences. The After Truss period is still ongoing but early signs suggest the housing market could be in real trouble during 2023 as higher interest rates and a recession hit activity and prices.

Continue reading “Market Commentary – 2022 Review”

Rising Waves

Quicker To Sink

New Build – New Lifeboats Needed?

There have been rising waves threatening to sink the UK housing market all year but they have stayed just below the surface – until now. House prices continued rising and transactions stayed above their pre-pandemic levels despite rising rates and the cost of living crisis. However, the mini-budget was the turning of the tide and the surface is starting to look a lot more turbulent. The waves are now threatening to sink the housing market – an outcome that will probably hit transactions hardest and suggests the new build sector will need support.

Continue reading “Market Commentary – November 2022”