UK home buyers cautious amid mortgage rate hikes - property experts

The number of homes sold in the UK in August dipped by 2% compared with the same month a year earlier, according to HM Revenue & Customs, HMRC, figures.

Across the UK, an estimated 95,220 sales took place in August, which was 2% lower than August 2025 and a 1% fall compared with July 2026.

Some average fixed mortgage rates have edged up in recent weeks amid rises in swap rates, which lenders use to price mortgages.

The government has recently unveiled a scheme to give first-time buyers in England a helping hand onto the property ladder, with further details set to be outlined in the budget.

The Your First Home initiative was unveiled at the weekend and will give first-time buyers the chance to buy a new-build property with a 2.5% deposit, with the government stepping in to lend them an extra 20% towards the cost.

People will be able to access equity loans with an initial interest-free period.

Developers will also be expected to make a contribution when signing up to the scheme, to help cover costs.

Jason Tebb, president of OnTheMarket, said: "Raising a deposit continues to be an issue for first-time buyers, particularly those who can't call upon the 'bank of mum and dad' for assistance, and supporting more first-time buyers should boost activity in the wider market."

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "With transaction numbers slipping in August, affordability and wider concerns about the housing market and what the Budget might have in store appear to be dampening activity.

"Volatility in swap rates and ultimately mortgage pricing isn't helping, but could well continue to be a feature of the autumn.

"We welcome the government's scheme to help first-time buyers as this should promote activity across the market."

Nathan Emerson, chief executive officer at property professionals body Propertymark, said: "Many prospective buyers and sellers have been carefully assessing the wider economic outlook and, against a backdrop of continued financial pressures, have understandably adopted a more cautious approach to making significant property decisions."

Richard Donnell, executive director at Zoopla, said: "Housing sales are slowing in the face of higher mortgage rates adding to the cost of buying a home.

"The sales reported in this data were first agreed five to six months ago."

Tom Bill, head of UK residential research at Knight Frank, said: "Given that mortgage offers can last for six months, activity will be squeezed in the final three months of the year as the impact of higher mortgage rates from the Middle East conflict takes its toll.

"The medium-term outlook depends on how the unpredictable conflict unfolds, whether UK inflation signals get louder and what property-related measures Chancellor John Healey announces in next month's Budget."

Bank of England figures released on Tuesday showed 54,900 mortgages were approved for a house purchase in August, decreasing from 55,900 in July.

Nick Leeming, chair of Jackson-Stops, said: "For sellers, the price at which a home comes to market matters.

"An asking price grounded in recent local sales data can attract serious buyers and create competition, giving owners the best chance of realising the full value of their property."

Iain McKenzie, chief executive officer of The Guild of Property Professionals, said: "As we move further into autumn, there are signs of renewed buyer engagement, but this is likely to be a more measured market than in previous years.

"Buyers have plenty of choice and sellers need to recognise that competition is not simply between buyers, it is also between properties.

"Getting the asking price and positioning right from day one will be crucial to converting renewed interest into transactions."

By Vicky Shaw, Press Association Personal Finance Correspondent

Press Association: Finance

source: PA

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