The future of the housing market - How to make sense of the data
Emma Hollingworth , Distribution Director at MPowered Mortgages comments on the market and the latest HM Revenue & Customs Property Transactions Data.
Over the last 12 months, everything has increased. ?
Amongst this economic and political turmoil, there has been pervasive anxiety across the buying chain. From banks increasing affordability thresholds to protect their capital, to consumer uncertainty over whether they will remortgage or purchase a home, it is ultimately the brokers who have been caught in the middle. They are struggling to meet lender's tight deadlines, unable to keep up with the changing rates and powerless to give their customers the service they desperately want.?
The state of the market?
The average house price is steadily increasing, with Rightmove recording an average UK house price of ￡369,968 for July. With house prices rising for six consecutive months, first-time buyers are bearing the brunt of this trend. Mortgage payments are 20% higher than they were at the start of this year, so it isn’t surprising that this consumer is continually being squeezed out. The inability to buy is pushing the demand for rental properties, causing some landlords to take advantage of the situation and increase rents at a time when millions are in financial difficulty. ?
After the market hit a boiling point in June 2021 due to the stamp duty holiday, we were waiting for the market to cool down. And it hasn’t. Demand far outweighs supply, and this is the critical driver for house prices, even amidst a severe cost of living crisis. ?
Levelling out??
Looking at the latest data from HM Revenue & Customs ’s Property Transactions, transactions are slowly declining. But what does this mean against the backdrop of rising house prices? Fortunately, the market is still buoyant, but this time, rather than a frenzy over stamp duty, it’s all on the broker to frantically lock in the best rates for the consumer. ?
Working against the clock isn’t sustainable, and the latest data from HM Revenue & Customs supports this. Residential transactions are down 7.9%, a symptom of the current economic climate. ?
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While demand is still high, it is clear the prospective homebuyer is not getting what they need. As we wait for house prices to cool down along with inflation, we need to support the battling broker scrambling to keep up with last-minute changes without any reprieve in sight. ?
Supporting transactions ?
By supporting the linchpin, the mortgage industry can ease the strain on the market and potentially create more momentum. An application siege is being predicted, with homebuyers and brokers rushing to lock in rates. And lenders, unable to cope with the demand, have been reportedly pulling products. Rather than adding fuel to the fire of an already hot market, lenders and banks need to galvanize and support applicants to attain their goals. ?
A greater understanding of the broker journey pain points with specific intervention alleviates workload and the anguish of working with flippant lenders. Digital transformation: creating streamlined processes that remove paperwork opens up the possibility of completing applications in minutes, not hours. Data-driven modelling and predictions are proven to establish certainty in this uncertain time. ?
The need for speed?
With soaring house prices and mortgage rates steadily climbing, speed is essential for those looking to buy a home. Amongst political and economic uncertainty, homebuyers should quickly and efficiently look to lock in mortgages before rates move again. The window of availability on mortgage deals is now shorter than it has ever been before, averaging just 21 days. At MPowered Mortgages , we are using data-driven innovation and targeted AI to help increase automation, reduce complexity, and speed up the process of receiving a legally binding decision allowing brokers to help to secure the best outcome for homebuyers and those hoping to refinance during this uncertain and volatile period for the mortgage market.?
Emma Hollingworth is the Distribution Director at MPowered Mortgages , a new fintech mortgage lender that provides a fully digital and trackable application process that gives mortgage brokers and their customers a certain decision within hours rather than weeks. . She has been in the mortgage industry for over 25 years, starting as a mortgage adviser and working her way up to Business Development roles.?