"It’s been a really difficult time for homebuyers, especially those who are working within strict budgets that were effectively blown out of the water by the rapid rise in interest rates starting at the end of 2021"
- Grant Nichols - Scout Financial Services
Since interest rates started climbing at the end of 2021, homebuyers have significantly restricted their ambitions, with a quarter abandoning their dreams altogether. But now that rates are finally falling, these buyers are ready to return to the market.
New analysis of a recent survey of 1,320 current UK homebuyers commissioned by Yopa explored how the past few years of high interest rates have impacted their buying ambitions, and how things might change now that rates have finally started to fall.
According to the data, 42% of current homebuyers say high interest rates have made it more difficult for them to find a suitable property due to mortgage affordability.
As such, 46% of all buyers say they have had to adjust their expectations regarding the sort of property they can and cannot afford. Furthermore, 43% say they have had to adjust expectations around which areas of the market they can realistically afford to buy in.
But for some, high interest rates have had even more drastic consequences, forcing 24% of all prospective homebuyers to suspend their buying ambitions altogether because of high mortgage costs.
However, there is light on the horizon. Now that interest rates have finally been cut for the first time since 2021, and the prospect of further cuts before the end of the year, 96% of those forced to abandon their plans to purchase say they are going to re-enter the housing market and ramp up their efforts towards purchasing a new home.
Scout Financial Services is Yopa’s in-house subsidiary brand for mortgages, protection and financial services.
Grant Nichols, Scout’s Financial Service Director, commented: “It’s been a really difficult time for homebuyers, especially those who are working within strict budgets that were effectively blown out of the water by the rapid rise in interest rates starting at the end of 2021.
"But now we’ve finally reached a point where rates are falling. This means that affordability is increasing and buyers can set their sights on the home of their dreams instead of a compromised property that they might have been limited to while the cost of mortgages was so high.
"We fully expect market activity to pick up as we move towards the end of the summer and into autumn which is always a busy period for the market.
"And it’s not just buyers who are celebrating falling interest rates. It’s great news for sellers, too, because buyer demand will now surely rise which means property prices will strengthen and they will also see a reduction in mortgage costs when they do come to renegotiate their terms.”
