The housing market appears to be showing signs of recovery following the change to Stamp Duty in April.
After Bank of England data showed the first rise in mortgage approvals in five months in May to 63k as well as a rebound in remortgage approvals, the latest RICS Residential Market Survey reported a stabilisation in current prices and price expectations in June, while buyer demand moved into positive territory for the first time since December.
Early signs of a recovery in buyer demand will be aided by swap rates continuing to trend down as the Bank of England maintains its gradual and careful approach to reducing Bank Rate.
This has prompted a number of lenders – including Santander – to lower their fixed mortgage rates in recent weeks as market competition intensifies.
Looking ahead, while further Bank Rate cuts are expected to continue, the combination of elevated inflation, geopolitical uncertainty and complex trade dynamics mean that pricing is likely to continue to hover around the top end of the threes or lower end of the fours in the months ahead.
Moreover, given the volume of maturities due in the second half of the year, high levels of remortgaging is likely set to continue.
Frances Haque is chief economist at Santander UK
