The number of property transactions fuelled by the mortgage sector has fallen by 42 per cent so far this year.

Britain’s more expensive regions have been bearing the brunt as higher interest rates dent the purchasing power of British homebuyers. 

Octane Capital analysed the volume of mortgage backed property transactions seen since the start of the year (January to March 2023 – latest available) comparing this level of mortgage market activity to the three months prior (October to December 2022). 

The research shows that, so far this year, 87,686 property sales have completed across Britain with the help of the mortgage sector. This marks a 42 per cent drop versus the backend of 2022, equating to 62,270 fewer homes sold. 

The nation’s least affordable regions of the property market have been hit hardest by this decline in mortgage market activity.

In both the South East and London, the level of mortgage sales has fallen by 46 per cent in 2023 versus the final three months of 2022. The East of England has seen a decline of 45 per cent, while the South West and East Midlands are down 43 per cent. 

In fact, every region of Britain has seen mortgage market activity dip by 40 per cent or more since the start of the year, except one. 

Scotland has seen the smallest dip in mortgage sales this year, although the region has still seen a reduction of 29 per cent. 

Jonathan Samuels, chief executive of Octane Capital, says: “We’ve seen a heightened level of mortgage market turmoil develop over the last year, as interest rates have climbed consistently since the first increase was implemented in December 2021. 

“This has spilled over into 2023, with interest rates continuing to climb as the Bank of England has struggled to get a grip on inflation. As a result, the level of market activity coming via the mortgage sector has reduced quite significantly and while this retraction is strongest across the more inflated regions of the market, every region has endured a notable hit. 

“The good news is that inflation is starting to fall and we’ve also seen swap rates start to come down in recent weeks. This suggests that while there is still some way to go, the worst may now be behind us and there’s hope that mortgage rates may start to reduce over the coming months.”