OnTheMarket warns of significantly fewer transactions as mortgage rates keep soaring.
As a result of the continued increase in mortgage rates, OnTheMarket predicts that there would be “significantly fewer transactions.”
However, it anticipates that profits will increase and be in line with forecasts this year.
Despite the ever-increasing concern regarding mortgage rates, the real estate website OnTheMarket predicts that its revenues will continue to increase even if “there will undoubtedly be significantly fewer transactions this year.”
The company reported a profit of £8 million for the year that ended on January 31, 2018, an increase of 38% from the previous year; nonetheless, all companies operating in the property sector face significant problems in the years to come. The average rate for a fixed mortgage for two years now exceeds 6.5%, and the average rate for a fixed mortgage for five years now exceeds 6%. These dramatic increases in mortgage rates have occurred over the previous six weeks.
The company reported that “the sales market is particularly challenging,” with reduced levels of new buyer activity as we come closer to the second half of the year. “In uncertain times, some active purchasers may decide to ‘wait and see’ rather than make a purchase right away. This has an effect on the volumes of new sales that have been agreed upon, lowering the value of the under-offer sales pipelines for the agents.
The unpredictability of the mortgage markets, in particular, is having a detrimental impact on the total number of transactions.
Although it is too soon to make any predictions, it is safe to say that there will be a considerable amount fewer transactions this year in comparison to the prior two years.
The company’s chief executive officer, Jason Tebb, told the Standard that in spite of this, it is still anticipated that the company would meet its profit guidance. He stated that the website’s valuation tools were becoming increasingly relevant as a result of the recent market turbulence.
“The second half of the year might be a bit more challenging than the first half of the year, but we’ve always been focused on these serious leads,” he stated. “Ever since its inception, the company has relied heavily on its valuations. The fact that we have been able to achieve higher valuations is something that we find to be extremely amazing.
He went on to say that individuals will continue to relocate since there are a variety of other considerations that go into the choice to do so.
“There is a wealth of speculation surrounding what may or may not happen,” he said. “The possibilities are endless.” “The reality is that in every market, there is a sizeable segment of the population that needs to move, wants to move, or may decide to move at some point in the future.
People relocate for a variety of reasons beyond financial considerations.
According to him, buyers and sellers in the London real estate market appear to be particularly resilient, as a poll conducted in May revealed that two thirds of sellers and three quarters of buyers planned to close a deal within the next three months.
In spite of everything that is going on, he stated that “what that demonstrates to me is that London buyers and London sellers are still getting on with the business of moving.”