Fall-throughs are rising but it isn’t all down to mortgage rates - research

Increasing numbers of sales have fallen through during the third quarter but it isn’t all down to rising mortgage rates.

Analysis by fast-buy firm Quick Move Now has revealed that 40% of property sales fell through before completion in the third quarter of this year.

That is up from 31% during the previous quarter.

It comes as mortgage lenders have been withdrawing and increasing the rates on their products amid economic uncertainty.

This has prompted fears of a housing market crash and concerns that first-time buyers won’t be able to afford mortgages and those remortgaging will struggle with higher rates.
But not all the fall-throughs, so far, have been down to a lack of access to finance.

Of the sales that collapsed, 41% failed due to buyers changing their mind about the purchase, while 24% folded when the buyer was unable to get a mortgage. 

Another 18% was due to the buyer or seller pulling out because the process was taking too long an 12% attributed a collapse to survey issues.

Danny Luke, Quick Move Now’s managing director, said: “It’s concerning to see that the number of property sales falling through before completion seems to be on the rise again. It is, however, not a huge surprise given the current turmoil in our economy.

“It’s been well documented that measures to boost the property market after Covid, alongside a shortage of stock, led to an overheated market and steep rises in property prices. It would be naïve to think that the economic climate we now find ourselves in would not heavily impact the confidence of both buyers and mortgage lenders.

“Rising inflation and interest rates will have a huge impact on affordability, and anxiety is rising rapidly. Just last week we witnessed the removal of 40% of mortgage products from the market and saw a growing number of predictions of a crash. 

“It’s little surprise that the biggest causes of failed property sales in the last three months have been buyers changing their minds and difficulty securing mortgage finance. 

“Sadly, I would expect this pattern to continue throughout the final quarter of this year and well into 2023.

"The Government recently announced another Stamp Duty reduction in a bid to keep the market going, but in reality any saving will be wiped out by the rise in interest rates for those requiring a mortgage.”