"Despite more positive news for the economy in recent months, in terms of inflation and GDP, the property market has remained uncertain"
- Danny Luke - Quick Move Now
Data from Quick Move Now suggests that 27.3% of property sales in England and Wales collapsed between July and September.
Of the sales that fell through, 58.4% were attributed to a change in the buyer's circumstances or the buyer changing their mind and withdrawing their offer. 25% of failed sales were caused by chain-break, and a further 8.3% collapsed due to difficulty securing a mortgage. The remaining failed sales were attributed to the seller pulling out of the sale to accept a higher offer from a different buyer.
Danny Luke, Quick Move Now's managing director, said: “When you look at what's happened to mortgage interest rates over the last few months, it's little surprise that the biggest cause of failed property sales is the buyer experiencing a change in circumstances or getting cold feet. At the start of the second quarter, it seemed mortgage interest rates were beginning to settle.
"However, stubborn inflation caused several further jumps in mortgage interest rates in June and July. Many of those who made offers on properties in the second quarter, basing their budget on mortgage interest rates of below 5%, will have found that rates were more than 1.5% higher by the time their mortgage application was submitted.
Interest rates
"That rise in interest rates added hundreds of pounds to monthly mortgage repayments and meant that, unfortunately, some buyers had to pull out of the sale due to concerns about affordability.
“Mortgage interest rate fluctuation was also reflected in the 8.3% of failed sales that were caused by difficulty in securing a mortgage. Once again, in July, we saw mortgage products being withdrawn from the market and replaced with more expensive alternatives.
“These fall throughs have a knock-on effect on related sales and purchases, meaning chain-break also remains a challenge for the property market. It accounts for 25% of failed sales between July and September of this year. In a slower property market, when one sale falls through, there is less hope of a new sale being tied up in time to keep a property chain together.
Danny concludes: “Despite more positive news for the economy in recent months, in terms of inflation and GDP, the property market has remained uncertain.
“Those without a strong need to move are still generally holding on and waiting to see whether interest rates and property prices will continue to fall. That being said, those buyers who are viewing and making offers on properties are motivated. They've done their homework and got their finances lined up, waiting for the right property at the right price.”
