Surging mortgage rates ‘biting harder’ on fragile housing market
Rising mortgage rates are starting to “bite harder” on the UK’s fragile housing market by forcing sellers to push down asking prices. The average two-year fixed mortgage rate has risen to 5.55 per cent, up from 5.29 per cent last month and 4.25 per cent since before the war in Iran, according to homes portal [...]
British home prices climbed in October, but rising mortgage rates may be beginning to impact affordability, according to property website Rightmove. Home prices for homes on sale in October increased by 1.0% compared to September, marking a slight slowdown from the 0.7% rise in the previous month. This modest growth is below the October average of 1.3%. Property expert Colleen Babcock noted that higher borrowing costs are starting to squeeze affordability, even in markets with lower prices, limiting buyers' options.
Compared to a year ago, asking prices fell by 0.1%, following a 0.8% drop in September. The average two-year fixed mortgage rate climbed to 5.55% from 5.29% in October, a sharp increase from 4.25% in February before the Iran war erupted. Buyer uncertainty loomed as finance minister John Healey prepared his upcoming budget, and some first-time buyers delayed purchases to await details on the First Home Scheme.
Sellers in more affordable regions, already resilient, adjusted their asking prices downward to address affordability pressures. Compared to a year earlier, agreed sales dropped by 8.0%, while the number of homes for sale remained the highest since 2014 at this time of year.
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