Year-over-year year-over-year home buying activity in third quarter, despite “steep” drop after June stamp duty deadline, is mostly driven by borrowers moving, according to UK Finance .
In its Quarterly Review of Household Finances, the trade body describes the drop that occurred in the third quarter of this year as “a predictable and familiar drop, with homebuyers pushing ahead with their purchases in order to save a sum of money. big money in what is usually the single most important financial commitment they will make in their lifetime.
He said, however, that the decline in activity was much less pronounced than after the previous changes in stamp duties, “because the third and final phase of the exemption remained in place until the end of September”.
And the annual growth is important, adds UK Finance, as last year’s figures have already been helped by factors outside of the stamp duty holiday.
He notes that although the stamp duty holiday was less generous for higher value real estate purchases, “the continued strength of the movers’ activity as a [stamp duty] the exemption has been phased out, after nearly a decade of stagnation, suggests there may be a more persistent attitude change to emerge from the nation’s experience during the pandemic. “
UK Finance believes that although it is not clear whether changes in the work culture – namely the growth of remote working – will persist, “the activity of people in the home is likely to be supported by these drivers. social in a way that was not possible before Covid-19 happened. this change in mentality, on the part of both employers and workers.
The report also highlights regional differences in this year’s record lending figures (housing transactions will likely reach the highest level since 2006): “The strongest growth has been seen in the northern regions of England , as well as in the other decentralized nations.
“Meanwhile, the comparatively higher prices in the south, especially in the capital, meant that the exemption benefited fewer buyers, and those regions experienced proportionately lower growth. “
Like many industry watchers, UK Finance expects rising inflation to reduce mortgage demand in the last quarter of this year and beyond.
UK Finance is also looking at household refinancing. Here, he notes that an increasing amount of capital withdrawn peaked in June 2021 at the same time as home buying activity was at its highest.
The maximum amount withdrawn – £ 106,000 – “with the timing of this peak strongly suggests that a large part of this amount was indeed used to finance or partly finance additional property purchases”.
And product transfers, says the body, “dominate,” primarily because of their simple, digital nature.
The total number of arrears cases fell from 2,380 in the third quarter of this year to 79,880, adds UK Finance. This good news is offset by the fact that borrowers with larger arrears (more than 10% of the mortgage balance) have become more entrenched, “because the possession and subsequent sale that would otherwise have ended the accumulation of arrears. have not been able to take place.
Phoebus Software Sales and Marketing Director Richard Pike says, “The potential for increased mortgage arrears in the coming months is an issue lenders will need to manage well.
“As the Bank of England seeks to relax mortgage stress testing rules, more borrowers may be able to access the real estate ladder, but after seven years under the current rules, rates interest increase on the horizon and the cost of living will increase, will lenders continue to relax loan criteria? ”
Meanwhile, Wayhome chief executive Nigel Purves comments: “The evidence speaks for itself – the movers have benefited disproportionately from government support during the pandemic, while would-be buyers were hung to dry.
“The first rung of the real estate ladder is getting farther and farther away – wages have fallen behind inflation, which means even those who work full time have to save for more than fifteen years for a deposit. Once they have that deposit, restrictive lending criteria mean that getting a mortgage is still no easy task.
“The current landscape is unsustainable; homeownership shouldn’t be an impossible dream – we need a radical change in the real estate market to make it a reality for more people.