Property searches on the UK's Rightmove portal experienced a notable increase in the first week of September, surpassing typical seasonal trends. Demand from prospective buyers rose by five percent during this period, a substantial jump compared to the average increase of 0.4 percent seen over the past five years for the same week. This uptick occurred amidst a challenging year for the housing market, characterized by the pressures of higher mortgage rates and broader economic uncertainty.
While overall buyer demand remains lower than a year ago, the September surge has narrowed that gap. Estate agents have observed a pickup in viewing requests, with more buyers actively pursuing their next homes now that children have returned to school. Daily online property views have also increased, signaling renewed engagement with the market.
London and the South West of England saw the most significant rises in buyer demand, with increases of nine percent and eight percent, respectively. The West Midlands and North East regions reported a seven percent increase, while the East Midlands and South East of England saw a six percent rise. Demand also grew by five percent in the East of England and four percent in the North West, with Wales and Scotland experiencing increases of three percent and one percent, respectively.
Rightmove attributes these shifts to seasonal influences and consumer behavior, noting that the start of September often marks a busy period for the housing market as families refocus on moving plans after summer breaks. This year's 'back-to-school bounce' is seen as a welcome development after a summer influenced by holiday distractions and unseasonably hot weather.
However, caution persists among buyers and sellers regarding the potential impact of geopolitical events, such as the war in the Middle East, on living costs and mortgage rates. Speculation about possible tax increases in the upcoming October budget also adds to market uncertainty.
Adding to these pressures, several major mortgage lenders, including Barclays, Santander, Skipton, TSB, and The Nottingham Building Society, have recently increased their interest rates on fixed mortgages, with adjustments often around 0.15 percentage points. Coventry Building Society had previously raised rates across its entire fixed-rate mortgage range. Earlier in the month, NatWest and HSBC also increased their rates, with further rises anticipated.
The uptick in mortgage rates is partly influenced by global bond market volatility, which has been exacerbated by fears of inflation stemming from the conflict between the US and Iran. This has led to increased yields on government bonds, such as gilts, prompting expectations that the Bank of England might raise interest rates. Higher gilt yields increase borrowing costs for banks, which are then passed on to consumers through higher mortgage rates. For borrowers, even a small increase in mortgage rates can lead to a significant rise in monthly payments. For example, a move from 5.50 percent to 5.65 percent on a £200,000 repayment mortgage over 25 years would increase monthly payments by approximately £18.