"When most of these mortgages were approved in August or September, we were looking at a very different scenario."
- Adam Oldfield, chief revenue officer at Phoebus Software
December showed the fourth consecutive month-on-month fall in residential transactions, with non-seasonally and seasonally adjusted transactions down by 2% and 1% respectively, the latest HMRC data shows.
Residential transactions remain signficantly below December 2022, with seasonally adjusted transactions down by 18% relative to 12 months prior.
On a non-seasonally adjusted basis, December transactions were 20% lower than December 2022 and 2% lower than November 2023.
Adam Oldfield, chief revenue officer at Phoebus Software, said: “In contrast to the more upbeat figures for mortgage approvals from the Bank of England yesterday, the latest residential transaction numbers are once again lower than the number of approvals would have us to believe. Of course, when it comes to transactions the timeline has to be considered. When most of these mortgages were approved in August or September, we were looking at a very different scenario. The base rate was still going up as were mortgage rates and inflation. If we look at the current number of approvals the outlook for the next few months is brighter than the picture painted by today’s figures.
“Of course, there is the question of what the Bank of England will do next. No-one expects rates to come down quite yet and, as we have seen, swap rates have started to climb again recently. Lenders have been bringing rates down with better fixed rate deals back on the table. How long that will be the case is a big question and brokers will need to work quickly to secure the best deals for their clients, especially those that have moved onto much higher variable rates.”
Tomer Aboody, director of MT Finance, commented: "Lower transaction volumes are further proof that some government intervention is needed in order to get the market moving.
“While interest rates are stabilising, leading to lower mortgage pricing, stamp duty is still the biggest outlay for any buyer and therefore, also the biggest obstacle.
"If there was to be some reduction in stamp duty, this would incentive sellers to finally move and increase the supply of properties coming to market.”
Anna Clare Harper, CEO of sustainable investment adviser GreenResi, said: “Past transactions data from HMRC is a useful indicator of the health of the market, since it illustrates the strength of demand.
"A seasonally-adjusted 18% reduction in transactions compared with the previous December reflects the impact of higher interest rates, making both buying and owning a home more expensive for the majority, mortgaged property owners.
"It is a testament to the resilience of residential real estate as an asset class that in this context, house prices have hardly moved on average."
Clare Beardmore, director of Legal & General Mortgage Club, added: “Despite a slower pace in December due to the holiday season, the market received an early gift in the form of a rates war, which has since captured the headlines. Falling swap rates – which determine mortgage pricing – have encouraged healthier competition among lenders, leading to a decline in average mortgage rates for the fourth consecutive month in December. The average mortgage rate now sits below 5%, helping to drive an increase in borrower enquiries.
“As we saw in Rightmove’s January data, there are green shoots in the housing market, with buyer demand up 12% against this time last year. We’re slowly edging towards spring – typically the busiest season for the housing market. The picture undoubtedly remains complex, but advisers are primed and ready to help buyers secure their dream home with the best product for their needs and circumstances.”
