Mortgage lenders face a potentially weaker final quarter after property sales agreed fell by more than 5% year-on-year for four consecutive months, according to TwentyCi.

Its latest Market Update showed sales agreed volumes were around 8% lower year-on-year in both May and June, followed by declines of 5% in July and 6% in August.

Across the first eight months of 2026, sales agreed were down 5.4% compared with the same period last year.

The figures contrast with completed transaction data, with HMRC recording 5% year-on-year growth in residential transactions in July. Transactions nevertheless remained 2.5% lower year-to-date.

WEAKER Q4 PIPELINE

TwentyCi said the divergence was significant because completed transactions reflect deals agreed several months earlier, while sales agreed provide a more immediate indication of buyer demand.

The latest figures therefore point towards a weaker pipeline of mortgage and housing transactions feeding through during the final quarter.

TwentyCi is forecasting 1.16 million residential transactions during 2026, a 3.9% decline on the 1.21 million recorded in 2025, although volumes would remain 5.6% above 2024 levels.

The weaker demand comes as volatility in financial markets has put renewed pressure on mortgage pricing.

Rising swap rates, driven by the global bond market sell-off, higher oil prices and inflation concerns, have prompted some lenders to increase fixed mortgage rates despite Bank Rate remaining unchanged.

AFFORDABILITY PRESSURE

With fixed mortgage pricing more closely influenced by swap rates than Bank Rate, TwentyCi warned that higher wholesale funding costs could create an additional affordability headwind for prospective buyers.

Colin Bradshaw (main picture, inset), chief executive of TwentyCi, said: “The housing market is presenting something of a mixed picture. On the surface, the latest transaction figures suggest that activity remains relatively resilient, but when we look at the more timely sales agreed data, a different story is emerging.

“Buyer demand has fallen by more than 5% year-on-year in every month since May, and that sustained weakness will inevitably feed through into completed transactions with a lag.”

“This should not be taken as an indication that the market is strengthening.”

And he adds: “For mortgage lenders, this is an important signal that the apparent resilience in headline transaction volumes should not be taken as an indication that the market is strengthening.

“The renewed rise in swap rates adds another layer of uncertainty. If fixed mortgage pricing continues to move upwards, it could put further pressure on affordability and make buyers even more cautious at a time when demand is already subdued.

“The direction of the market over the next few months will therefore be particularly important for lenders to watch.”

SUPPLY HITS 10-YEAR HIGH

At the same time, the number of homes coming onto the market is continuing to rise.

TwentyCi said new property listings were 2.1% higher year-on-year and have reached their highest level in 10 years.

The combination of increasing supply and weaker demand is shifting negotiating power towards buyers.

TwentyCi’s demand-to-supply ratio has deteriorated across every major property type, with flats recording the largest year-on-year decline at 13.2%.