The housing market is set to strengthen and demand in mortgage lending will also bring about a greater supply of mortgage products and perhaps more competitive rates according to recent survey data released by UK Finance. The poll was conducted between 26 February and 15 March, during a time in which the meeting of the Bank of England’s Monetary Policy Committee (MPC) had yet to meet on the 21st and the latest inflation report had not yet been released which occurred on the 20th of March. The survey revealed 19% of lenders expected the supply of mortgages to increase in the next quarter which is the highest data response since early 2021.

Becoming a homeowner is hard. At least this is the case for more than one third of first-time home buyers. According to information released by the Office for National Statistics (ONS), between April 2022 and March 2023, 36% of first-time buyers had used financial gifts to purchase their first home. Twenty years ago, only 20% relied on financial gifts to purchase their first property. Another 9% reported relying on inheritance to climb onto the property ladder, while only 3% reported twenty years ago depending on their inheritance to become a homeowner.

Borrowers, whether homeowners seeking a remortgage or hopeful home buyers shopping for a mortgage, are being warned the best deals could soon disappear. The low interest rate deals available are due to the competitive environment that emerged from lenders hoping to grab the attention of new customers. Stronger demand and a possible delay of a quick cut to the standard base rate of the Bank of England might bring about higher rates despite the Monetary Policy Committee (MPC) holding the base rate steady in the March meeting. 

In another report revealing house prices declined in March, Halifax reported a fall of 1.0%. Nationwide also reported a decline days earlier. The Halifax average house price declined close to £2,900 to £288,430. Despite the lower house price, it is still higher than the same period last year by 0.3%. The March decline follows a boost in February brought about by lender cuts in mortgage offers, with some rates below the Bank of England’s standard base interest rate.

The Bank of England has released the latest information on the housing market and the data reveals a 17-month high in mortgage approvals. Net mortgage approvals for house purchases increased in February to 60,400 from 56,100 recorded in January. The increase exceeded the expectation for growth to 56,500, which was the highest forecast since September 2022 when the Bank of England’s standard base interest rate was at 2.25%. 

The housing market slowed in March, and many factors came together to convince homeowners to sit on the sideline and wait. Of course, there were likely many hopeful home buyers shut out of the market due to affordability. According to Nationwide, the average house price declined by 0.2% from February into March. It is the first time a decline has been recorded in three months. The previous two months experienced a 0.7% increase, and with the recent 0.2% decline, the average house price is £261,142.