With the first quarter of 2023 coming to an end, brokers reported that the market has largely been more positive than expected, with interest from buyers and remortgagers alike.
However, caution was urged around the prospects for the rest of the year, with some concerned that the state of the economy is denting confidence.
Return to normal is welcome
This year has felt more “normal”, according to Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, compared with the “chaos” of the pandemic and post-pandemic market.
He noted that every part of the system had been tested by the spike in activity and then the infamous mini Budget, and said he was enjoying the “relative calm” and return to more normal volume and pace.
Jamie Alexander, mortgage director at Alexander Southwell Mortgage Services, said that his firm had seen one of its slowest ever months in December, but “the situation has been quite the opposite” since the turn of the year, with all three months up on 2022.
Gary Boakes, director at Verve Financial suggested that 2023 was “always going to seem slower in comparison” with recent years, and argued that with rates starting to settle down the borrowers who “disappeared” from the market back in October are now reappearing.
He continued: “As inflation falls, we will start to see moves to lower the base rate which will have a positive impact on rates and should see sub 3% next year.”
Interest in purchase and remortgages rising
Imran Hussain, director at Harmony Financial Services, agreed that with rates stablising, enquiries from would-be buyers are on the rise.
He added: “Some are looking to move for the summer, others looking to move right away, but I have said 2023 will be a challenging year for the market with the amount of volatility in the markets with interest rates.”
The year has started on a high note, emphasised Riz Malik, director of R3 Mortgages, with purchase enquiries exceeding his initial expectation.
It’s not just purchases but remortgages which are also in demand, he noted.
“When clients see the current rates, they are taken aback, and we have to remind them that the current economic climate is vastly different. However, I believe that interest rates may have reached a plateau, which could stimulate the market and lead to an increase in purchasing activity in the coming months,” Malik added.
Turning to trackers
However, not all brokers would describe the year to date as calm. Lewis Shaw, owner of Riverside Mortgages, said that 2023 so far has been “extremely volatile”, with many clients struggling to come to terms with the interest rates being charged currently.
He added: “As such, there’s been a massive surge in clients opting for tracker mortgages because they expect rates to fall over the next 12-18 months.”
An outbreak of caution
According to Luke Thompson, director of PAB Wealth Management, buyers have been more cautious since the start of the year, with vendors not achieving the sorts of prices they might previously have hoped for.
Alexander echoed this, stating: “A notable observation since the start of the year is that clients seem to exercise more caution when making property offers, and lenders are now asking more questions, causing minor delays in processes, which are not significant in the grand scheme of things.”
Shaw argued there had been a “noticeable tightening” of affordability from mortgage lenders this year, as they try to get on top of the cost of living crisis.
He continued: “This has led to a significant variation in how much people can borrow from lender to lender, meaning it’s not just about the interest rate; it’s about who will do the deal and get the mortgage over the line.”
Aaron Strutt, product and communications director at Trinity Financial, noted that rates now are significantly cheaper than they were, which has helped activity pick up, though it is still “not at levels we have been used to in recent years”.
However, Strutt cautioned that there was plenty going on in the economy currently which was denting confidence, and with it the property market.
“Bank of England base rate hikes, possible house price reductions, higher mortgage rates, failing banks and takeovers, plus talk of a recession, all certainly do not help,” he concluded.
What about landlords?
While the residential market is on healthier footing than expected, Malik noted that things are still tough within buy to let, as landlords face rising rates and high arrangement fees.
However, he added: “I remain optimistic that the market will improve in the coming months as the inflation numbers fall.”
