The month of August is the traditional holiday period when less business activity generally takes place. The good news from our perspective is sales are up this month compared to July, despite the good weather and the difficult economy.
Over the past couple of weeks mortgage rates have reduced slightly from last month’s increase but there is still a need for further reductions to restore confidence and increase affordability. The higher cost of oil, a result of the conflict in the Middle East, is keeping mortgage rates higher compared to the start of the year. First time buyers are now becoming accustomed to the rates; it is borrowers who are ending five-year fixed rate deals of sub 2% that are finding the contrasting cost of borrowing a shock.
We are certainty registering more buyers this month than last, which is very positive. However, buyers are cautious and will negotiate hard to secure a property at the right price. Many sellers are struggling to generate viewings which is normally due to the vast choice of properties available and incorrect pricing. When you look at property websites the number of price reductions stand out, which is a sign of initial overpricing. Is this estate agents over pricing or seller’s settings their expectations too high in a difficult market?
Normality usually resumes in September as the holiday season ends and the schools return, creating an uplift in activity. The main hope is that world events settle down and mortgage lenders reduce rates to help affordability, confidence and soften the shock to borrowers ending their current fixed rate lower deals.
As always, we look forward with optimism whilst adapting to the conditions but hoping the late summer and early autumn market offers stability and assurance to potential home movers.