The property market and the mortgage market have always had a love-hate relationship with each other. But right now they agree on one thing – they’ve both lost their mojo.
Over summer the number of homes changing hands slowed, as did the number of mortgages being approved.
There’s no shortage of homes for sale, quite the opposite in fact. Yet many estate agents say buyer enquiries are slow, and well down on where they should be at this time of year.
However, if you’re itching to move, or buy your first home, you shouldn’t let this gloom obscure the market’s silver lining. If you choose carefully, the benefits of buying now could outweigh the negatives.
Why the market has slowed
Let’s start with the bad news. Mortgages have become more expensive over the past few months.
This is especially true for the most popular type of mortgages, fixed-rate loans. The number of fixed-rate deals with an interest rate under 5 per cent plummeted from almost 1,500 at the start of September to – believe it or not – fewer than 10 in early October.
The average interest rate offered on five-year fixes is now 6 per cent. For homeowners who enjoyed a decade of rates of 2 per cent or less, this feels high. And it may explain why Bank of England data shows the number of mortgages approved for home purchases in August was 16 per cent lower than it was in the same month last year.
The rising cost of borrowing comes against an uncertain economic backdrop, with energy bills rising and diesel at £2 a litre. The cost of living squeeze has led many would-be buyers to sit on their hands.
Amid all this, though, there is an upside: thousands of homes have become better value.
Where your money stretches further
Property prices have been flat, or falling, in many parts of the country in 2026.
Data from Lloyds, Britain’s biggest mortgage lender, shows the average UK home cost the same in September as it did a year before. Average prices fell 0.2 per cent on a quarterly basis.
While prices in London have been falling for some time, research by Nationwide, the second-biggest mortgage lender, found that prices fell across southern England during the third quarter of 2026. Compared to the same period last year, prices were down 0.7 per cent in East Anglia, 0.5 per cent in the East Midlands and 0.3 per cent in the South West.
These percentages might sound small, but they mean anyone buying now could pay thousands of pounds less than they would have done for the same home a year ago.
A buyers’ market
Bear in mind that the figures above are just averages. Canny buyers who play their cards right, and bargain hard, may be able to secure a much larger discount on the property they want.
Figures from the estate agents’ body Propertymark show that 83 per cent of sales agreed in July were at a figure below the initial asking price.
Buyers are often able to call the shots on pricing because, in many areas, the number of homes for sale far outstrips the number of serious buyers. Rightmove data shows that stock levels are at a 12-year high, while demand from buyers is 9 per cent down compared to this time last year.
The mismatch between supply and demand is especially striking with flats. Many flat sellers are pre-emptively cutting prices, or accepting low offers, in preference to seeing them sit unsold. As a result, flats have become much more affordable for first-time buyers.
Two caveats
If you already own your home, things aren’t quite as straightforward, because you’ll be both a seller and a buyer. Unless you live in northern England, Scotland or Northern Ireland – where prices are rising steadily – you may have to accept that your current home isn’t worth quite as much as you’d hoped. But the place you buy should be cheaper too.
Anyone needing a mortgage should also remember that because of the rise in interest rates, mortgage lenders may not let you borrow as much as they might have a year ago. But even if this means your budget isn’t as big as it might have been, the fall in property prices means your money will stretch further.
Owning a home is for life, not just a two-year mortgage deal
A mortgage is a vital tool for buying a home, but it’s not the only number that matters. Homes in many parts of England now cost thousands, sometimes tens of thousands, less than they did a year ago. And while you will pay more to borrow the money you need, the savings you make on the purchase price could be much greater.
My advice is don’t let the current mortgage gloom blind you to the big picture and the buying opportunities that are out there. A good home is for life, not just a two-year mortgage deal.
If you do decide to take the plunge, make sure you do so with your eyes open and think long term. Speak to a mortgage broker about how much you can borrow safely. Don’t expect to make a quick profit, don’t overstretch yourself financially, and choose a home that fits your lifestyle and makes you happy.
Above all, make sure you understand the market conditions in your area and use the power you have as a buyer to only pay a price you’re comfortable with. You can find all the information you need to decide if the home you like is right for you in a Move iQ Property Report.
Phil Spencer is a property expert and co-presenter of Channel 4 show Location, Location, Location. He is also the founder of Move iQ