The UK mortgage market experienced a notable downturn in May, with mortgage searches dropping by 15% year on year, according to data from Twenty7tec. This decline signals a shift towards a more cautious approach among potential borrowers and investors, as overall search activity fell to approximately 1.59 million.
TL;DR: Mortgage searches fell 15% year on year in May, affecting first-time buyers and landlords; residential remortgage searches dropped by 21% compared to last year.
What caused the decline in mortgage searches?
The drop in mortgage searches can be attributed to a combination of factors, including rising interest rates and economic uncertainty. Residential searches specifically saw a 16% decrease year on year, with a month-on-month decline of 7%, indicating that potential buyers may be hesitating to enter the market amidst these challenges.
How are different segments of the mortgage market affected?
Within the residential sector, remortgage searches fell significantly, down 21% year on year to 563,124. Searches for purchasing residential properties also decreased by 11%, with first-time buyers particularly impacted, as their searches fell by 14% to 152,355. The buy-to-let segment faced similar challenges, with searches down 13% year on year and 9% month on month, reflecting a cautious sentiment among landlords.
What this means for first-time buyers and landlords
First-time buyers may find the current market conditions challenging, as reduced search activity suggests a lack of confidence in making new purchases. For landlords, the decline in buy-to-let searches, especially for purchase mortgages, indicates a potential slowdown in investment activity. However, it’s worth noting that despite the drop in searches, mortgage product availability increased in May, providing options for those still considering entering the market.
Frequently asked questions
Why are mortgage searches declining?
The decline in mortgage searches is largely due to rising interest rates and economic uncertainty, leading potential buyers and investors to adopt a more cautious approach.
What should I watch for in the mortgage market?
Keep an eye on mortgage product availability and interest rate trends, as these factors will influence borrower confidence and market activity moving forward.