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Mortgage transactions down by a third in first half of year – Octane Capital

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  • 17/08/2022
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Mortgage transactions for house purchases have fallen by a third since December, the month which marked the beginning of consecutive base rate rises.

According to research from Octane Capital, which examined the average monthly level of mortgage-backed transactions between December and March this year, an average of 37,019 homes were purchased each month with a mortgage.

This is down from an average of 55,070 in the four months prior to interest rate rises, which is between August and November.

The Bank of England raised interest rates in December to help combat inflation and has increased it every month since then so it now stands at 1.75 per cent. This is still historically low.

Another factor that could have impacted the slowdown could be the removal of the stamp duty holiday in September.

A comparison with the same period in other years was not available.

The North East experienced the largest reduction in mortgage market activity, with purchases with a mortgage down by 39 per cent to 1,414. This was followed by East Midlands with a 36 per cent reduction, with mortgage purchase sales standing at 2,766.

Jonathan Samuels (pictured), CEO of Octane Capital, said that after the BoE’s decision to first increase interest rates in December there was an “almost immediate retraction in market activity coming via the mortgage sector”.

“This was to be expected given the fact that it was the first base rate increase since November 2017 and particularly given the backdrop of wider economic uncertainty and the cost-of-living crisis,” he noted.

“We now know that this was just the tip of the iceberg with respect to increasing interest rates and this latest insight into declining mortgage sales volumes doesn’t yet account for the base rate hikes seen in May, June or August.

“So we expect the decline in market activity coming from mortgage-backed homebuyers to be significantly lower still when these figures are finally released,” Samuels added.

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