The property market is experiencing a shift, according to Colin Townsend, a representative of John Goodwin Estate Agents in the West Midlands. With mortgage rates reaching a 15-year high, the average two-year rate now sits above 6.70%, as reported by Moneyfacts.
First-time buyers are particularly affected by this trend, as mortgages for those with smaller deposits are subject to the biggest rate increases. Nationwide’s most expensive two-year deal for buyers with a 5% deposit is now at 7.14%. Coventry Building Society, one of the UK’s largest mortgage lenders, has also made changes by discontinuing two-year fixed-rate deals for buyers with deposits less than 15% of a home’s value as of Friday.
The Bank of England predicts that nearly a million homeowners set to remortgage by the end of 2026 will face a mortgage shock of at least £500 per month or £6,000 per year. Since 2021, when interest rates started to rise from their historic low of 0.1%, around 4.4 million mortgage holders have experienced significant increases in their mortgage repayments.
While these conditions may not discourage buyers of smaller, more affordable homes, surveyors predict that owners of higher value properties should expect a more restricted market with potential price declines. James Watts, a representative of Robert Watts Estate Agents in Yorkshire, suggests that sale prices may drop in the next six months, especially for higher-end properties.
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