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Bank of England: Housing market softening

Housing market activity and price growth continue to soften, according to the third quarter agents’ summary of business conditions from the Bank of England.

The market has been slowing over the summer particularly in higher price brackets, the report suggests.

It says agents in London reported the weakest sentiment. Meanwhile parts of the Midlands, Scotland, Wales and Northern Ireland are more buoyant.

The Bank says supply and demand appear to be broadly in balance across the market. Demand for new build properties has been resilient, too.

Intense competition

Competition in the mortgage market is ‘intense’, the bank says. New entrants and low funding costs are helping to drive competition, but lenders are focusing on customers with the cleanest credit history.

Meanwhile, customers are taking advantage of low rates to take out fixed-rate mortgage deals. More borrowers are opting for longer mortgage terms, with 30 year options becoming more popular.

RICS chairman Jeremy Leaf says: “The comments from the Bank of England bear out much of what we are finding on the ground. We are finding a softening in demand in London but business is being done where sellers are realistic. Buyers able to move quickly, with finance arrange, are becoming increasingly valued.”

Leaf says that Help to Buy has been a major contributor to demand. He says first-time buyers and developers could struggle as the scheme winds down.

“The Government should be thinking about either extending it, or its replacement, otherwise the effect on the market is going to be quite dramatic,” he adds.  

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