Mortgage rates aren’t only factor deterring demand, research reveals
The cost of borrowing is just one decision deterring homebuyers from moving on or up the property ladder, says LRG’s Neil Louth.
Borrowing costs may be on the rise, but it is a lack of certainty that seems to be deterring homebuyers from the market, according to new research.
Estate agency brand LRG asked in a survey what would most encourage people to move, or to move sooner, with 28% of respondents citing lower mortgage rates.
But that ranked fourth behind a reduction in the overall cost of moving – at 75% -, more certainty that a sale will complete once agreed – at 34% – and a simpler, less stressful process, at 30%.
People do not want to commit time and money only to see the transaction fall apart.”
However, there are age differences. Among the under-45s, 70% named lower mortgage rates, against 13% of those aged 55 and over.
On certainty, the order flips, with 39% of the 55-and-overs naming it against 23% of under-45s. The older group is by far the larger in this survey, so its answer sets the overall result.
Borrowing costs are the reason younger movers give.
Buying concerns
Neil Louth (pictured), Group Executive Director of LRG and CEO of The Acorn Group, says: “Our autumn sales report shows that affordability remains a major concern, particularly for younger buyers, but it also demonstrates that mortgage rates are only one part of the decision.
“Buyers are looking at the overall cost and value of moving. Asking prices have adjusted, buyers have more choice and negotiating power and, in some areas, properties now represent better value than they have for many years.
“Although buyers may be paying more in mortgage interest, they can also be paying less for the property itself, which is why serious buyers remain active.
“The report also shows how priorities change with age. Many older movers have both the equity and a genuine reason to move, but they place much greater importance on certainty once a sale has been agreed.
“People do not want to commit time and money only to see the transaction fall apart. Improving that certainty could encourage more people to move without having to wait for another interest-rate decision.”
