Housing market sentiment was already low prior to the interest rate hike announced today (22nd June), according to the Building Societies Association’s (BSA) latest quarterly Property Tracker survey.
The tracker survey ran from the 1st to the 2nd of June 2023, before the latest moves in market interest rate expectations.
Mortgage payment affordability was reported as the biggest obstacle to buying a home.
Just 14% said now was a good time to buy a property, the same as it was in December 2022, and the lowest level since the research began 15 years ago.
The proportion who said it was not a good time to buy a new home was three times higher (42%), rising to 61% of would-be first-time homebuyers.
Since the first BSA Property Tracker in 2008, raising a deposit has almost always been the biggest barrier to buying a home, dropping to second place during the Covid-19 pandemic, when lack of job security was cited as the biggest obstacle.
However, with 13 bank rate hikes since December 2021, being able to afford the monthly mortgage payments has become the biggest blocker to buying a home.
Almost two-thirds (65%) of people cited this, compared with 39% who mentioned it in December 2021.
In the three weeks since the survey was run, mortgage rates rose as new economic data on inflation and wages has pushed up the market rates on which they are based.
Raising a deposit continued to be a significant obstacle to buying a property for a large proportion of people (58%).
However, just one in five think a lack of job security (19%) and concern about house prices falling (20%) would prevent them from buying a new home.
When asked at the beginning of June about the affordability of monthly mortgage or rent payments over the next six months, the majority of both mortgage borrowers and those in rented properties did not express concern about keeping up with their monthly housing costs.
Almost nine in 10 (89%) mortgage borrowers were not concerned about keeping up with their mortgage payments.
The remaining 11% were not confident about maintaining their mortgage payments over the next six months, of which 3% were not at all confident.
Renters were less assured, with one in five (20%) expressing concern about meeting their housing costs, 6% of whom were not at all confident.
Although price expectations for the year ahead remained low, they recovered a little since the end of last year.
In December 2022, almost half (49%) thought a price fall in 2023 was likely.
However, this dropped significantly to 34% in the most recent research, with almost one in four (23%) thinking house prices will rise over the next year.
Andrew Gall, head of savings and economics at the BSA, said: “With inflation remaining persistently high, and the Bank of England raising the Bank Rate 13 consecutive times, it’s not surprising that, overall, the sentiment in the housing market remains low.
“The cost-of-living crisis, which is leading to increases in most areas of household expenditure, means family finances continue to be under pressure.
“Whilst the vast majority of people say they have been confident that they can maintain their mortgage and rental repayments, wider economic indicators suggest payment difficulties may start to tick up.
“Lenders are conscious that each mortgage in arrears is a real worry for the individual or family affected, and have experienced teams, with a wide range of options, ready to offer practical, tailored support to anyone who may be struggling.”
