Residential completions dip annually as rising mortgage rates and affordability pressures continue to weigh on the market
The UK housing market continued to lose momentum in September, with the latest data from HM Revenue & Customs (HMRC) showing residential transactions down 4% compared to the same month last year, as rising mortgage rates, affordability constraints and pre-Budget uncertainty combined to dampen activity.
The provisional seasonally adjusted estimate of UK residential transactions in September stood at 94,800, decreasing from 95,300 in August. On a non-seasonally adjusted basis, transactions came in at 97,940, which was 5% lower than a year earlier, but 1% higher than the previous month.
The figures offer a sobering snapshot of a market still wrestling with the hangover from rate volatility earlier in the year. As HMRC notes, these statistics represent completions that are, on average, two to four months after an initial offer is made, and do not necessarily reflect the current strength of the market.
This marks a reversal from the trend reported in the previous month’s release, when UK residential property transactions rose by 17% year-on-year in May, boosted partly by the low base created by stamp duty changes in early 2025.
Stay ahead of the UK mortgage market. Subscribe to the Mortgage Introducer daily newsletter for broker news, rate updates, and the industry latest delivered to your inbox every morning.
A tough comparison — and tougher conditions ahead
Melanie Spencer, growth director at Target Group, struck a cautious but slightly encouraged tone on the non-seasonally adjusted picture. “While transactions are inherently backward-looking, the non-seasonally adjusted data offers some encouragement with activity edging up in September compared with August,” she said. “However, no matter which way you look at it, transactions remained lower than a year earlier, highlighting the mood of the market in the face of continued volatility and uncertainty.”
Ryan McGrath, director of second-charge mortgages at Pepper Money, was less optimistic about the near-term outlook. He noted that conditions have deteriorated sharply since the summer deals now completing were agreed. “Since those deals were agreed, inflation has risen to 3.5%, sub-5% fixed rates have all but disappeared, and average fixed rates are close to 6%, a level last seen three years ago,” he said.
McGrath added that further annual falls in transaction volumes look likely for the remainder of the year, pointing to Bank of England data showing mortgage approvals falling for a third consecutive month as further evidence of a market under stress.
Budget offers limited relief, brokers urge clients to act
Spencer pointed to the recently released Autumn Budget as a factor that, while not transformative, may at least avoid adding further pressure. “Despite yet another attack on landlords, the rest of the Budget felt like pecking around the edges, along with some welcome support for first-time buyers. We’ve already seen swap rates respond positively to the Chancellor’s plans, which has pushed some lenders to take a look at their pricing and could encourage further competition."
McGrath also welcomed Budget support for energy bills but said more was needed for homeowners investing in their properties, arguing that cutting VAT on renovation and improvement work “should stay on the table.”
Brokers, meanwhile, are urging clients not to sit on their hands. Mark Harris, chief executive of SPF Private Clients, called on those due to take out a mortgage in the coming months to act promptly. “Borrowers due to take out a mortgage in the next few months should speak to a whole-of-market broker as to what is available and secure a rate now, particularly if they need to protect themselves from fluctuating rates.”
Homeowners stay put as second charge lending surges
For many existing homeowners, the calculus of moving simply does not add up at today’s rates, particularly those still benefiting from fixed deals agreed when borrowing was far cheaper.
McGrath highlighted a resulting shift towards second-charge lending as homeowners look for financial flexibility without surrendering their existing mortgage rate.
According to figures from the Finance and Leasing Association (FLA), second-charge lending reached £2.4bn in the 12 months to August, up 24% on the previous year — a clear signal that many are choosing to stay put and adapt, rather than trade up or move on.
A potential base rate rise from the Bank of England’s Monetary Policy Committee, meeting next week, could intensify that pressure further and push more borrowers towards alternative financing routes.
With further turbulence expected before the year is out, the pressure is on lenders, brokers and policymakers alike to find ways to stabilise a market in clear need of renewed confidence.
Spencer flagged the growing importance of the ability to adjust lending strategies at short notice and to keep pace with changing market expectations. She added: “Investment in technology will therefore remain high on the agenda, with lenders looking to the right partners and more streamlined, scalable solutions to improve efficiency and keep pace with changing market and customer expectations.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
