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House sales drop by almost a third as market braces for slowdown in mortgage approvals

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Current allocations to illiquid assets for those investors surveyed were typically between 11 per cent and 25 per cent, with 60 per cent of respondents falling into this range.
Current allocations to illiquid assets for those investors surveyed were typically between 11 per cent and 25 per cent, with 60 per cent of respondents falling into this range.

The number of houses sold in the UK has fallen by almost a third as the market struggles to upkeep the momentum from a surge in sales at the start of spring. 

UK residential transactions fell 32 per cent in April with 67,220 homes sold, figures from HMRC show, 32 per cent  lower than April 2022 and 29 per cent lower than the previous month. 

The government body said the drop in sales could be linked to fewer working days due to Easter bank holidays and also the end of the government’s Help To Buy Equity Loan Scheme at the end of March – which offered equity loans to first time buyers. 

“It’s no surprise that transaction levels are down significantly compared to a year ago following the mini-Budget,” Andrew Montlake, managing director of the UK-wide mortgage broker, Coreco, said. 

Montlake said in recent months, the market has begun to awaken from its prolonged slumber, with buyers “returning and getting used to the new mortgage rate environment.”

He continued: “That, of course, was before the latest inflation figures caused SWAP rates and therefore mortgage rates to start to increase again. 

“This will undoubtedly have an effect on buyer affordability, mortgage choice, and therefore transaction levels going forward. With many hoping the second quarter would be the start of a new normal market, this now looks like it will be pushed back to the third quarter.”

Over the past few months, confidence amongst prospective buyers was slowly beginning to improve, as mortgage approvals began to increase. 

However Bank of England’s decision to consecutively hike interest rates has rattled buyer confidence – especially as it has led lenders such as Natwest to raise rates on its fixed rates mortgages. 

The decision is already hurting the market with new figures from MoneyFacts showing that since the start of last week some lenders have withdrew fixed rate products – with the number of mortgages on the market fallen from 5,385 deals to 5,012.

“Borrowers searching for a new deal may well be concerned about the latest developments in the mortgage market,” Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said. 

She said: “Over the past few days, we have seen a few lenders withdraw selected fixed products, with some pulling out of the market, at least temporarily. Product choice has started to fall, and as may be expected, average fixed mortgage rates are on the rise.” 

“This volatility is down to the concerns surrounding future interest rate hikes, and lenders are reassessing their propositions. Consumers looking to refinance will find rates around 5 per cent  on average for a fixed deal, compared to around 3 per cent a year ago. It is vital borrowers seek advice to assess the situation and to find a mortgage that suits their circumstances,” she added.