New data from Rightmove has revealed the number of buyers enquiring to estate agents about properties for sale over the last two weeks was 6% higher than the same period in 2019 before the pandemic.
This comes despite “significant increases” in mortgage rate rises during recent weeks. Indeed, the portal said on Friday that the average rate for a five-year fixed 85% Loan-to-Value mortgage was 5.20%, up from 4.56% four weeks ago.
The number of sales agreed has suffered as a result of this, though only marginally, said Rightmove. They also said that it remains to be seen whether the expected further increase in interest rates will impact new buyer demand in the coming weeks.
Rightmove also said that the upwards trend in mortgage rates is leading more prospective buyers to check their current affordability, with daily visits to Rightmove’s Mortgage in Principle service up by 53% compared with before the unexpectedly high inflation figures.
“We expected some more twists and turns this year and we’ve had several in the last month, including stubbornly high inflation figures, surprisingly large average wage increases, and their eventual impact on mortgage interest rates and availability,” said Tim Bannister Rightmove’s Director of Property Science. He continued:
“We expect that there may be more change to come depending on this week’s inflation figures and the Bank of England Base Rate decision. It is likely to feel very frenetic for those taking out a mortgage right now, as they try to quickly lock in the best rate that they can find.
Although the impact of higher mortgage rates on activity levels has been limited so far, with prospective buyers who can still afford to move appearing determined to go ahead, it remains to be seen how movers will respond to the expected further rate rises.”
With regards to asking prices, Rightmove reported an £82 drop this month to £372.812. While this is the first monthly drop in new asking rpices this year and the first at this time of the year since 2017, it’s a very small (0.0%) drop.
“On average over the previous ten years we have seen an increase of 0.6% in asking prices at this time of year, indicating that buyer affordability constraints and more pricing realism from new sellers have brought forward the usual summer slowdown,” said Rightmove, whose Tim Bannister added:
“Average new seller asking prices, the first and leading indicator of new trends in the market, have dropped slightly this month, signalling that the belated spring price bounce has quickly turned into an earlier than usual summer slowdown.
We expect asking prices to edge down during the second half of the year which is the normal seasonal pattern, and while we sometimes re-forecast our expectations for annual price changes at this time, current trends suggest that our original forecast of a 2% annual drop in asking prices at the end of 2023 is still valid.
Agents report that new sellers are sitting in two camps – those who still have overoptimistic price expectations following the buoyant pandemic market, and those who have adapted to the new conditions and are coming to market with a competitive price. Sellers who price competitively are much more likely to find a suitable buyer quickly before their home appears stale, and they can often then negotiate on price on any onward purchase.”
