Mortgage searches drop as bank holidays slow spring market

Purchase mortgage searches fell by almost a fifth last month as the Easter period dampened property market activity and there are warnings that May could be equally quiet.

Analysis by lending software and data company Twenty7tec shows purchase mortgage searches were down 18.3% between March and April 2023.

Remortgage searches were even harder hit – down 25.4%, while buy-to-let mortgage searches fell 23.4% in April 2023 on a monthly basis.

Searches by first-time buyers were down 16.4% nationwide in April 2023 compared with March 2023, while purchase mortgages and first-time buyers both represented a larger proportion of the market than in the prior month.

Searches for fixed mortgage products took a particular hit during April with 130,000 fewer two-year fixed mortgage searches, 128,000 fewer five-year fixed mortgage searches and 105,000 fewer 10-year fixed mortgage searches than in March 2023

Twenty7tec warned that the usual May bank holidays this month as well as the dedicated day for Coronation celebrations could also dampen activity.

Nathan Reilly, director at Twenty7tec, said: “Easter 2023 had a major impact on mortgage search volumes. It’s quite likely that May will see similar downward pressures given the three bank holidays.“Fixed product searches in particular have taken a hit. April 2023 saw total fixed product searches at only 79.06% of their all-time monthly high. In April 2023, fixed product searches represented 44.9% of all mortgage searches, well ahead of the long-term average of 40.5%, but considerably lower than large periods of last year when fixed products often represented over 50% of all mortgage searches.”

It comes as research found 28% of adults with non-typical income streams, including those who are self-employed, freelance, or work on zero-hours contracts, have had a mortgage application rejected by a lender.

The analysis by The Mortgage Lender (TML) found those on zero hours contracts have the biggest rejection rates, with 46% having had a mortgage application denied. Freelancers come second, with 29% having been rejected by a lender, followed by 10% of self-employed people.

Looking at reasons why those with complex incomes were rejected for a mortgage, 13% said it was because of no proof of deposit. A further 12% said a lack of mortgage guarantor was the reason, while the same number said they were denied a mortgage as a result of them making too many credit applications.

Other reasons include not having bank statements for the last three to six months or not having recent payslips or P60 forms as well as poor credit scores.

Steve Griffiths, chief commercial Officer at TML, said: “Getting a mortgage has traditionally been trickier for those who have a more complex income, such as being self-employed, owing to the fact they are viewed to have a less predictable income stream. But this doesn’t make them unmortgageable. 

“The reality is, as we recuperate from the impacts of the pandemic, and now with the rising cost of living, high inflation and interest rates, affordability continues to be a top concern for those trying to reach their homeownership goals.

“Encouragingly, our research has found those with complex incomes have not been deterred from getting a mortgage, with many reapplying at a later stage. This does however highlight the importance of seeking advice from a mortgage broker and considering specialist lenders who can be instrumental in supporting those who thought it might not be possible to get a mortgage and give them the same access to opportunities to get on the property ladder as those on PAYE.”