According to new figures, one out of every five tenants is currently postponing their plans to buy a property due to the ongoing housing crisis. A survey conducted by specialist mortgage provider The Mortgage Lender found that 19% of tenants cited high mortgage rates as the reason they cannot afford to purchase a property. This comes as the average two-year fixed mortgage rate has surpassed 6%. This means that on a £150,000 home loan, tenants would be paying around £1,000 per month, which many find too costly.
In addition, the survey revealed that 12% of tenants expressed their intention to continue renting until house prices decrease. This seems to be a viable option as there has been a decrease in house price growth, falling from 3.2% to 1.9% between April and May, according to official figures. The average house price in the UK currently stands at £286,000, £6,000 higher than it was a year ago but still £7,000 below its recent peak in September 2022.
Furthermore, the survey indicated that 10% of tenants are waiting for mortgage rates to fall, while 9% stated that there is no point in looking to buy until rates decrease. Another 6% are waiting for the Bank of England’s decision on interest rates on August 3rd before making a decision. However, despite the challenges, 6% of tenants remain committed to their home buying plans, although they are making significant compromises in order to do so. For instance, 25% of them are purchasing properties that are further away from traditional commuter towns, and 32% have had to move further from the city centre. Additionally, 16% are buying in areas with lower living costs to offset the higher mortgage expenses.
Some tenants are also reconsidering the properties they are buying. About 21% of tenants are purchasing cheaper properties that require more renovation work, and 12% are opting for smaller properties instead.
The survey conducted by The Mortgage Lender involved 2,005 adults, with a focus on 905 tenants. Steve Griffiths, representing TML, commented on the survey results, acknowledging the complexities of the housing market and the frustrations felt by many tenants. He advised those who intend to buy a property in the future to work towards becoming “mortgage ready” so that they can make a smooth transition when the time is right.
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