A host of property businesses have reported that January was busier than expected after the difficulties of the end of 2022, and the expectations of a slower market this year. For example, Twenty7tec this week said that January had set a new record for mortgage and remortgage searches.
And a host of mortgage brokers have told Mortgage Solutions that the month saw much higher activity levels than expected, in some cases leading to new highs for their business.
Setting new records
Richard Dana, co-founder and CEO of Tembo Money, said that January had been the young business’s best month of trading to date. Dana said that buyers were being more cautious around valuations and what they were willing to pay, while he was seeing a “good proportion” of properties where the lender was valuing it below the offer price.
He continued: “Sellers need to be realistic about the price they are willing to accept, but for our core market of first-time buyers, downward valuations are a positive thing. With the consensus of a 10-15 per cent reduction in prices from the peak last summer, it feels like that is what buyers have in mind when making offers.”
Scarred by the past
Many brokers are scarred by the events of the financial crash, according to Sebastian Riemann, director at Virtus Private Finance, who argued it was “unlikely to be anywhere near as bad this time around”.
He suggested that this year would be better than many feared, adding: “It does look like there is business to be done, lenders are liquid and want to lend and the market appears buoyant.”
James McGregor, director of Mesa Financial, said his business enjoyed an unexpectedly busy month, and that hopefully this was a sign of things to come.
“Purchase enquiries have not quite come back yet, but I think we will see a return in the next few weeks,” McGregor continued.
Why move now?
Greg Stanworth, managing director of Greenacre Financial Services, was another broker to report the month had been “extremely busy”, and suggested that buyers had put their purchasing plans on hold after the mini Budget but that “people can’t keep waiting”.
He continued: “People have accepted the reality that rates are higher than they used to be, and if not now then when? Rates may never drop to where we have seen previously. Rates have been coming down, lenders are being competitive and service levels are good. It’s just a new reality that rates are in a different space to previously.”
Rob Gill, managing director of Altura Mortgage Finance, said that activity had picked up “strongly” from the middle of the month, and pointed to the combination of “softening property prices” and falling mortgage rates.
He continued: “Home buyers, and in particular next-time buyers upgrading their family home, are taking advantage of the current slowdown to buy the kind of home they may have spent months or even years trying to secure. With inflation and base rate both looking like they’ve peaked, the outlook for the housing market is a lot rosier than many of the dire forecasts of a few weeks ago.”
There was some caution from Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, who said that while he had enjoyed a “much busier and more productive” start to the year than expected, he was wary about getting carried away.
He said: “There is a little voice in the back of my mind, asking: ‘Are we just seeing a release of pent-up demand?’ Is this busy period just people who would have done something at the end of last year, but held off as rates were so high? Will it still fall away to reveal a quieter year? I hope the little voice is wrong.”
Holding off still
However, not all brokers were recording a busy January. Jane King, mortgage adviser at Ash Ridge Private Finance, said that her month was quieter than usual, noting that she had a “huge bottleneck” of clients who were holding off remortgaging as they waited for rates to fall.
She added: “I’ve had lots of enquiries from first-time buyers who are taking their time before dipping their toe in the market.”
King suggested that HSBC’s launch of a five-year fixed rate below four per cent would do a lot for buyer confidence, and “might just be the catalyst to kickstart some hesitant buyers”.
McGregor also pointed to the HSBC deal as a sign of where the market is heading.
Meanwhile Nicola Schutrups, managing director of The Mortgage Hut, said that January had simply been “seasonally normal”, noting that it started quietly but “as is the same with every January in our 13 years of trading, come the third week of the month we saw enquiries coming in and activity return to the market”.
