The events of the last month have certainly disturbed the flow of the recovering housing market. Confidence, activity and sales have been higher in the first half of this year compared to 2023 but July has seen a general election, speculation of an interest rate reduction and rare summer warm weather.
Activity has dipped through July; we always predicted the end of June and the lead up to the general election would calm activity. Since the election the main topic of conversation has been interest rates. Many believe when the Bank of England meet on Thursday 1st August rates will be reduced by 0.25%; this has caused some buyers to stall their moving plans until they know either way. First time buyers in particular have been sceptical about committing whilst the prospect of a cheaper mortgage deal is potentially days away. This means there are pent up buyers waiting to enter the market in the coming weeks so we are expecting activity to soon return. There are few reasons to now hold back as the dust of the general election has also settled.
Traditionally August is not always the busiest month due to summer holidays and this year it feels like many people are taking advantage of the sunny days rather than house hunting as the good weather has been rare. However, the draw of competitively priced mortgages may entice buyers to take advantage of some of the deals currently on offer. We have seen in recent days a five-year fixed rate at 3.99%, with a £1,499 application fee, this is something not offered for months previously.
We remain positive that the second half of the year will be as strong as the first half as we predict a good late summer and autumn period. The housing market feels like it is a far better place today than a year ago despite a turbulent 12 months. When you consider the radical increase of interest rates over the past two years, cost of living and inflation, the housing has been incredibly resilient.