Zoopla has reported the number of sales agreed in May was the highest in four years.
Most sellers are also buyers who are seizing the opportunity to agree purchases, encouraged by some attractive mortgage deals and the ability to borrow up to 20 per cent more. This is due to affordability rules and stress testing being relaxed.
When someone applies for a mortgage, the bank uses the stress rate to test whether the borrower could keep paying if their interest rate went up. Commonly, lenders will check that a borrower could pay a mortgage rate up to three percentage points higher than their current one, so if they had a rate of 4 per cent their finances might be tested against a 6 or 7 per cent rate. This rate is being reduced.
Having more lenders offer extended affordability offers welcome support to first-time buyers and others looking to buy in the current market. This affordability change will mean more people can get the property they want and they may also not need to raise such a large deposit initially.
In the short to immediate term lenders have relaxed their tests allowing borrowers to borrow more. The FCA is continuing to review how lenders perform interest-rate stress tests—viewing some current practices as excessively restrictive. The FCA is clear that it wants consumers to have more choice in how they deal with their mortgage.
Nikhil Rathi, chief executive of the FCA, said: “We are taking swift action to support people in getting the keys to their own home. Firms have the flexibility to help more people become homeowners and we want them to use it. There is more to be done, and we will be delivering further proposals quickly to support home ownership and the wider UK economy.”
In January–March 2025, FCA consultations began to simplify rules—especially for remortgaging, term reduction, and eligibility. Key dates are in place for continued change through 2025 including launching a public discussion on the future of the mortgage market in June 2025. The aim of which is to consider what the market needs to deliver for different consumers at different stages in their lives and for the wider UK economy.
House prices
According to Zoopla, homes are currently selling for an average of £16,000 below asking price.
Sales agreed six per cent higher than in May last year
Growth in sales and mortgage approvals have slowed to more sustainable levels in recent months, impacted by the ending of stamp duty reliefs in April and the Easter holidays. However, sales agreed have started to increase once again and are six per cent higher than in May last year.
More homes for sale across Southern England
The increased number of homes for sale in southern England is significantly boosting buyer choice and, in turn, keeping price growth in check. Areas with faster growth in sales see the number of homes for sale being eroded more quickly, limiting what is available and supporting faster house price growth. Nationally, there are an increased number of homes for sale, with 13 per cent more homes on the market than in May 2024.
Richard Donnell, Executive Director at Zoopla, provides an outlook on the market: “More homes for sale means more buyers looking to move home. This, coupled with more attractive mortgage deals and changes to how lenders assess affordability, is supporting an increase in the number of sales being agreed.”
Henry Knight, Managing Director at Springtide Capital comments: “The FCA has said it wants consumers to have more choice in how they deal with their mortgage. The changes that are being put in place are leading to this. Greater innovation and improved affordability, means to some extent it is a buyers market, and increased options can only be a good thing.”
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Sources:
UK housing market springs back: Busiest May for home sales since the 2021 pandemic boom – Zoopla
FCA reveals timeline for mortgage affordability changes | Financial Reporter