Mortgage price war boosts property sales

THE housing market is bouncing back as a mortgage price war boosts sales, new data show.

Newly agreed sales reached the highest level since March 2022 in December, according to the Royal Institution of Chartered Surveyors (Rics).

Inquiries also recovered for the fourth month in a row with demand now at its peak since April 2022 when higher interest rates and the cost of living crisis first started to impact buyers.

The uptick came after lenders began cutting mortgage rates more aggressively at the end of last year, as markets bet on imminent interest rate cuts from the Bank of England.

By the end of December, the average rate on a two-year fixed-rate mortgage was 5.94pc, down nearly a whole percentage point from the summer peak. Now deals are available below 4pc.

Tarrant Parsons, Rics senior economist, said: “Supported by an easing in mortgage interest rates of late, buyer demand has now stabilised, and this is expected to translate into a slight recovery in residential sales volumes.”

The survey was in stark contrast to the data from the Office for National Statistics showing that average UK house prices fell by 2.1pc in November, marking the fastest drop in 12 years. The average home sold for £285,000 in November 2023, which was £6,000 lower than 12 months earlier.

London recorded the steepest drop of any region in the country with house prices falling by 6pc year-on-year.

The ONS data reflect completed transactions. Because deals are typically agreed three to five months before they are finalised, it presents a snapshot of sales struck over the summer when mortgage rates were peaking.

By contrast, the Rics survey reflects activity in the market in December, which gives a clear indicator that the housing market is bottoming out.