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Interest rates: UK house sales tumble as mortgage costs surge

mortgage A row of houses in Elgin Crescent, in Notting Hill, London, where a terraced house is currently for sale for over �12 million. The borough of Kensington and Chelsea is one of the most polarised in Great Britain, with some of the most expensive real estate in the UK just a short walk from several of the most deprived wards in the country - including the area around the Grenfell Tower. Picture date: Wednesday July 12th, 2017. Photo credit should read: Matt Crossick/ EMPICS Entertainment.
The latest figures from the HMRC show a marked fall in housing transactions amid rising mortgage costs. Photo: Matt Crossick/ EMPICS Entertainment. (Empics Entertainment)

The number of UK residential transactions in April tumbled by 25% as rising mortgage rates deterred wouldbe buyers.

The provisional seasonally-adjusted estimate of the number of UK residential transactions in April 2023 is 82,120, the latest figures from HMRC show, 25% lower than April 2022 and 8% lower than March 2023.

Residential transactions are now at their lowest level since October 2021.

“The spring and summer months typically bring more demand to the housing market but while inflation has finally started its descent, high mortgage rates could continue to put a dampener on transactions as moving home or taking the first step onto the property ladder becomes increasingly unaffordable,” Karen Noye mortgage expert at Quilter, said.

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Read more: UK mortgage costs set to jump amid further interest rate hikes

“The Bank of England hiked its base rate to 4.5% in May and it is not expected to stop there. Lenders have continued to up their mortgage rates in response, and they are likely to increase further should the Bank hike rates again. However, with a decrease in demand, competition between lenders may keep any rises at a more reasonable pace than the highs witnessed at the end of last year,” she added.

The provisional non-seasonally adjusted estimate of the number of UK residential transactions in April 2023 is 67,220, some 32% lower than April 2022 and 29% lower than March this year.

HMRC said that the month-on-month fall in non-seasonally adjusted and seasonally adjusted transactions from March to April was partly due to the relative strength of sales in March.

The number of transactions in March was high due to a combination of factors including a larger number of working days relative to April and the final month for purchases to be completed under the government’s Help To Buy Equity Loan Scheme.

Read more: HMRC issues scam warning to 1.5 million tax credits customers as deadline looms

Tomer Aboody, director of MT Finance, said: "With rates still rising, this is adding further uncertainty as buyers are unsure as to whether to wait or make a move.

"With transactions on a downwards trend, some stimulus is needed to encourage sellers to come to market, and downsizers in particular.

"With a general election in 18 months’ time, it would be a good way for the government to boost the economy and get the property market thriving once more."

Watch: How much money do I need to buy a house?

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