The number of homes bought and sold dropped by 9 per cent in June compared to the same month last year, according to the latest Government data.
However, despite ongoing mortgage rate volatility transactions were up by almost a third (28 per cent) compared to last month.
Part of the month-on-month increase can be explained by the higher number of working days in June than in May, and analysis of the figures by HMRC suggests property market activity will be sustained in future months.
Subdued: Property transactions fell year-on-year in June, according to the ONS
Riz Malik, director of broker R3 Mortgages said: ‘There is probably more life on Mars than there is in the UK housing market at the moment.
‘But if interest rates have almost hit their highest point, things could start to improve. This week, some lenders have started to lower their mortgage rates marginally due to favourable market conditions.
‘So, even if the base rate goes up next week, if the expectation is that interest rates won’t go much higher, we could start to see an increase in property transactions if the cost of borrowing improves. We could then see the slight uptick in activity levels in June or May potentially form a trend.’
Despite the more encouraging fall in inflation seen this month, financial markets expect the Bank of England to hike its base rate again next week by as much as 0.5 per cent, as it works to get price growth down to its target of 2 per cent.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘Transaction numbers are holding up in the face of higher interest rates and the cost of living.
‘A number of lenders, including HSBC and Barclays, have reduced their fixed rates so borrowers will be hoping that other lenders follow suit in coming days and weeks, and that the worst of the rate rises are behind us.’
The news has offered a glimmer of hope for homeowners, who have been struggling with rapidly rising mortgage rates.
Activity in the housing market remains subdued as buyers are hit with higher mortgage rates
Despite lenders reducing rates the average fixed rates in the market have increased
Swap rates – the bank borrowing rates which reveal where the financial markets think fixed-rate mortgage prices will be in two and five years’ time – have fallen since better-than-expected inflation data from June put some confidence back in the market.
Around 1.3 million homeowners need to remortgage over the next twelve months, many from rates below 2 per cent, putting them at risk of a significant mortgage shock as they take on higher costs.
However, averages remain high. The average rate for a two-year fixed product is now 6.81 per cent, according to financial data firm Moneyfacts, while the five-year average is 6.34 per cent.
At the same time the number of residential mortgage products available on the market has increased to 5,054 from 5,016 on July 27.
