The work of conveyancers is inextricably linked to the housing market. There can be little doubt, then, that the current troubled mortgage market will have an impact on their work and their incomes.
What is the status of the current mortgage market?
On December 15, the Bank of England increased interest rates from 3.0% to 3.5%, the ninth rise since December 2021, in a bid to tackle spiralling inflation. That increase puts interest rates at the highest they have been since 2008, when Britain was in the midst of its last financial crisis. As a result, the cost of mortgages has increased quite drastically. As of December 2022, the average cost of two and five year rate deals was 5.35% and 4.85%
How does the current mortgage situation affect the housing market?
Interest rates have a direct impact on the housing market because they affect the affordability of property. In its simplest terms, the lower the cost of the debt you will take on (i.e., the mortgage), the higher the demand for properties. The more expensive mortgages become, the less demand for property there will be.
Predicting the future of the housing market is notoriously difficult, however. Forecasters have long been predicting a crash following something of a boom following the Covid 19 pandemic, when the stamp duty holiday saw record house prices and an increase in people moving home. At the end of 2022, the market remained fairly buoyant, with just a small slowdown in the last few weeks of the year.
What does this mean for conveyancers?
Conveyancers have had a remarkably busy few years thanks to the sheer volume of work in a busy market. The stamp duty holiday saw an increase in the number of people moving home and, therefore, a rise in the number of cases conveyancers such as Sam Conveyancing were dealing with.
The mortgage market is now making moving less attractive. Many people who had a mortgage agreed in principle but failed to complete before the interest rate rises found themselves facing higher mortgage rates, prompting many chains to break and conveyancers to lose work. This also put pressure on conveyancers to act quickly before rate rises, rumoured a short while in advance, came into force.
Experts also predict interest rates are likely to rise again in 2023 to as high as 4%, which will again impact mortgages. It would be fair to assume conveyancers might see a slow down in their caseload. However, rising mortgage rates coupled with the cost-of-living crisis, could prompt the long-awaited housing market crash and send prices falling.
This could impact conveyancers in two ways. It may reduce the number of properties coming onto the market, hence a reduction in that side of work, but it may also prompt some – especially first-time buyers – to get on to the property ladder, meaning there is still business to be done. Many may still be requiring the services of a conveyancer as they search for the best conveyancing solicitors Rugby or other locations.
Overall, the mortgage market will have a major impact on the fortunes of conveyancers. There will certainly still be business to be done, but levels may not quite be at the dizzying heights of the past few years.