Cautious optimism in mortgage market

Advisors report buyer hesitation

Cautious optimism in mortgage market

The latest survey by independent economist Tony Alexander (pictured above) and, with responses from 46 mortgage advisers, revealed declining buyer numbers amid job security concerns and a preference for short-term, fixed mortgage rates.

First-home buyer enthusiasm wanes

This month saw only a net 9% of advisors reporting an increase in first-home buyers seeking mortgage advice, a decrease from 16% in April and a significant drop from 46% in February.

“The latest result is the weakest since January 2023 and aligns with other indicators that show young buyers are still active but less enthusiastic, often due to new employment uncertainty,” Alexander said.

Investor activity cooling

Investor activity in the market has also cooled, with a net 0% of advisors noting an increase in investors seeking mortgages, down from 10% in April and 42% in December. The decline reflects rising costs and tempered expectations for quick property value increases.

Lending environment adjustment

There has been a slight increase in lenders’ willingness to advance funds, with 28% of mortgage brokers feeling more optimistic compared to 20% last month. Despite this, the overall lending criteria remain stringent, though some easing is noted, the survey found.

Short-term rate fixing preferred

For the fourth consecutive month, 90% of advisors report that most buyers prefer fixing their interest rates for one year or less. This trend is driven by the widespread expectation that interest rates will decline over the next year, prompting both potential buyers and those renewing existing fixed rates to capitalise on the anticipated lower rates.

High demand for refinancing continues

The proportion of brokers observing increased refinancing inquiries remains high, with a net 33% noting more activity in this area. This trend indicates that many property owners are actively managing their finances amid still-high mortgage rates.

Download and read the & Tony Alexander Mortgage Advisers Survey.

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