In June, the Bank of England raised the baseline interest rate to 5%, and signalled that it could be raised further before the end of the year. This widely anticipated moved sparked a scramble among mortgage providers in the lead up to the announcement, and products were withdrawn often at short notice.
At the start of July, the average two-year fixed rate mortgage is about 6.5%, according to USwitch. The concern is not so much the size of the interest rate – this is still historically low – but the fact many homeowners made the most of low interest rates over the last decade to take out larger loans.
These fixed terms are now coming to an end, and the jump in interest rates for such large mortgages is causing monthly repayments to jump significantly for many households. And this is at a time when inflation remains stubbornly high at 8.7%, putting further pressure on household finances.
On the other hand, energy and fuel prices continue to drop, and Ofgem lowered the Energy Price Cap, making the annual dual energy bill £2,074 for a typical household. But will this be enough to improve confidence among homeowners, which will ultimately drive sales in home improvements?
The headline figure from this month’s Business Pilot data is that sales are up to 45.8, which is not only up 19.3% on May, but is also 33.9% higher than this time in 2022, when inflation first started to hit our industry.
It is worth looking at this statistic in relation to the average order value. At £4,489.83, this is still 27.4% down on the same period as last year, and down 14.6% on May 2023, but up on April 2023 by 7.5%.
This suggests that those extra sales are coming from households not looking at whole-house refurbishments, but where they are replacing either the windows, or the doors, or just the entrance door. In other words, where people have delayed projects because of uncertainty, confidence has now returned.
At 93.7, average leads are 3.9% lower than the three-month average, but 19.8% higher than June 2022, again suggesting that where people have the means, they are looking to spend money.
Looking forward, the Business Pilot data suggests we should be less concerned with the overall market conditions, and more focused on those opportunities that cross our door. With the average conversion rate up to 42.5% – one of the highest figures we’ve ever posted – it looks like homeowners are doing more research before contacting fewer companies for quotes.
This is where branding, marketing and product knowledge will pay real dividends, as will awareness of wider issues such as energy efficiency and sustainability. If homeowners come to you, the lead is yours to lose.
Business Pilot is a powerful CRM, which mobilises the power of cloud-based technologies, to give installers complete visibility of each and every element of their operation from leads and conversions to job scheduling, cost of installation, service calls, and financial reporting.
Accessible across all devices, from desktop to phone, it supports installers in running their businesses more profitably.