OnTheMarket warns mortgage repricing will hit homebuyer and seller confidence

Homebuyers should prepare for short-term volatility as mortgage rates are currently being repriced, OnTheMarket chief executive Jason Tebb has warned.

Tebb warned higher swap rates on the financial markets are now pushing mortgage pricing up again, which he said may impact buyer and seller confidence in the housing market over the short-term.

It comes as OnTheMarket’s latest sentiment index for February found the overall number of vendors confident about selling within six and nine months declined by one percentage point to 28%, while those confident about selling within 12 months remains unchanged month-on-month at 6%.

Meanwhile, 62% of sellers were confident they’d sell their property within the next three months in February, an increase from January’s 60%.

The data also shows that despite rising interest rates and the cost of living crisis, buyer sentiment remained steady, with 69% confident they’d buy within three months, the same percentage as in January. 

A fifth were also confident about selling over the next 12 months, the same figure as in January.

Tebb said: “There are still challenges ahead, particularly in regard to inflation, but concerns seem to be short-term rather than medium to long-term.

“The Prime Minister has pledged decisive action to halve inflation by the end of the year, and while it’s some way off its 2% target, it’s moving in the right direction. Interest rates may have a little higher to go but there are growing expectations that they’re close to their peak.

“Borrowers may need to brace themselves for further short-term volatility in pricing as fixed-rate mortgages, which soared in the autumn before edging downwards earlier this year on the back of falling swap rates, are now being repriced upwards again. 

“Such volatility is bound to impact buyer and seller confidence, creating short-term pressures for borrowers with high loan-to-value mortgages in particular. 

“Despite ongoing concerns about the cost of living and rising rates, many people still need to move, but as buying power is reduced, sellers must be more realistic.”

Tebb said the current environment makes it more important to speak to an experienced agent who understands local market conditions to get an accurate market appraisal.

He added: “Although we split our data into buyers and sellers, many sellers are also buyers, so even if they have to sell slightly off the top of the market, assuming they’re moving up the ladder they’ll also spend relatively less on their next property as the trading gap narrows. If ever there was a strong argument for moving, that surely is it.”