The latest transactions figures show that the provisional, non-seasonally adjusted estimate of residential transactions for February came to 96,250. While this is up by 15.3 per cent from the previous month, it is nonetheless down by 20.6 per cent on the same point last year.
HMRC warned that this drop should be “treated with caution” given the activity levels seen last year, as buyers looked to take advantage of the stamp duty holiday. Looking at figures for February over the last decade, the estimate for 2022 remains notably higher than typical activity levels for residential purchases.
On the non-residential front, the non-seasonally adjusted estimate for February is 9,860, up by 17.4 per cent on January and 10.2 per cent on February 2021. HMRC noted this was the busiest February for non-residential deals since 2017.
Buyers faced with fewer options
Clare Beardmore, head of broker and propositions at Legal & General Mortgage Club, noted that the “scarcity of supply” has unsurprisingly dented transaction levels compared to last year, but argued there are still plenty of buyers determined to press ahead with purchases.
She added: “As the market settles into a new rhythm and we head towards another busy spring, the next few months could prove more complicated for borrowers. Household budgets are under significant strain, and the cost of living crisis is primed to deepen in April, with energy costs and national insurance contributions set to mount.
“Against that backdrop, the value of advice remains paramount. Advisers are well-placed to help prospective borrowers navigate a knock to their finances, and source a deal that is well aligned with their individual circumstances.”
Soaring costs will put buyers off
Karen Noye, mortgage expert at Quilter, noted that while transactions were slowing, they remained “very high” compared to pre-pandemic levels, though warned this is likely to fall in the months ahead.
She explained: “The current fiscal position will mean many people feel the squeeze financially due to soaring inflation, Bank of England interest rate hikes and the rising cost of living. Prospective buyers will likely be put off and buying a new home will be pushed out of reach for many, so the number of property transactions could well be driven down as a result.”
Rise in paying exit fees
Ross Boyd, founder of mortgage comparison platform Dashly.com, said that comparing this year’s figures with last February’s was “like comparing apples with pears” given the impact the stamp duty holiday had on the market.
However, he emphasised there was life in the market, suggesting that many borrowers were using the increased equity they now have in their properties in order to secure more competitive mortgage deals.
He added: “In a growing number of cases, they are even paying early redemption charges to lock in now while rates are low as it can save them money.”
