UK Housing Market Poised for Active Spring with Lower Mortgage Rates and Increased Buyer Confidence

UK Housing Market Set for Active Spring with Lower Mortgage Rates and Increased Buyer Confidence

The UK housing market is gearing up for a busy spring season, as lower mortgage interest rates and a boost in buyer confidence drive increased property transactions. According to the latest report from HMRC, there has been a promising recovery in the housing market, with a 1% increase in property transactions to 82,940 between January and February.

Leading UK mortgage providers such as Santander, HSBC, and Barclays attribute this rise to growing buyer self-assurance, as inflation and interest rates appear to be stabilising. Kevin Roberts from Legal and General Mortgage Services remarked, “While challenges remain, it is encouraging to see far more competition on pricing and product innovation than tighter economic conditions allowed last year.”

The Bank of England has kept the base interest rate steady at 5.25% since last August, and KPMG predicts the possibility of four interest rate rises by 2022. Additionally, the inflation rate dropped to a two-year low of 3.4% in February, further contributing to the positive outlook for the housing market.

Mortgage Rates Cut: A Game Changer

To attract hesitant homebuyers, Santander, HSBC, and Barclays have reduced their mortgage rates and introduced new deals. The average two-year fixed rate deal now stands at 5.8%, with a five-year deal at 5.38%. Experts anticipate these rates could fall below 4% in the upcoming weeks, given the improving economic conditions.

Property brokers have also played a pivotal role in the changing market dynamics. Nick Leeming of estate agent Jackson-Stops noted, “the recent fall in inflation and the expectation of a base rate cut in May by the Bank of England are paving the way for an upturn in the spring.” Yorkshire Building Society’s 99% mortgage offer with a low deposit requirement could attract more first-time buyers to the market.

Despite the positive trends, HMRC data still shows a 6% decrease in property transactions compared to the same period last year. However, with progressively cheaper fixed-rate deals on the horizon, experts are optimistic about a potential turnaround in the market.

The Dynamics of the Housing Market

Mortgage broker Stuart Cheetham highlighted the appeal of more affordable mortgage deals, which have attracted a growing number of prospective buyers to the market. Cheetham emphasized the importance of caution and informed decision-making for buyers, as demand is yet to outstrip supply.

Nicky Stevenson of Fine & Country estate agents suggested that with demand on the rise, spring could be an opportune time for sellers to list their properties. Pricing properties sensibly is crucial, especially for those seeking a quick sale.

Overall, the UK housing market is poised for an active and potentially lucrative spring season, driven by lower mortgage rates, increased buyer confidence, and a stabilizing economic landscape.