Homes harder to sell as high mortgage rates frustrate buyers

The UK housing market is experiencing a slowdown, with a substantial number of properties remaining unsold as high mortgage rates deter potential buyers. Property portal Zoopla reports that three in five homes listed since January are still on the market, indicating a significant lack of demand.

Agreed sales have fallen by 7% compared to the previous year, with regional variations showing steeper declines in Wales (down 12%) and the East Midlands (down 11%). First-time buyers are particularly vulnerable to the impact of elevated mortgage rates. The average two-year fixed rate surged from 4.83% in early March to a peak of 5.90% in mid-April, adding an average of £125 per month to typical mortgage costs, and £232 in London.

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The national picture can only tell you so much. For sellers still waiting for an offer, the conversation to have is about price. Correctly priced homes are selling, while overpriced homes are sitting.

These increased borrowing costs have contributed to a 15% drop in buyer demand nationwide compared to a year ago. However, recent cuts in mortgage rates are providing some positive signals. Lenders are showing increased competition, leading to falling rates. Zoopla's executive director, Richard Donnell, noted that while the national picture is important, local market conditions vary significantly.

Donnell advised sellers to adjust their pricing expectations, stating, "Correctly priced homes are selling, while overpriced homes are sitting." He also pointed out that falling rates, increased property choice, and motivated sellers create more favorable conditions for buyers ready to move compared to three months prior. Despite these glimmers of hope, mortgage approvals for house purchases fell to a two-and-a-half-year low in May, according to the Bank of England, as deals were withdrawn and rates climbed.

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For buyers, rates are falling, there is more choice of homes for sale than a year ago and motivated sellers are willing to negotiate. If you are ready to move, conditions are more favourable than they were three months ago.