8th October 2026
New buyer enquiries remain weak, with the net balance slipping from -18% to -22% in September.
While this is still some way above the -41% recorded six months ago, it shows prospective buyers remain cautious about making a large financial commitment.
Higher mortgage rates and the rising cost of living are creating a painful affordability squeeze for new buyers. However, there is no denying that those who can afford to buy have more bargaining power when demand remains weak and house prices are under pressure.
First-time buyers with a sizeable deposit might be able to find a more affordable home due to flatlining house prices, but higher mortgage rates risk undermining that affordability boost.
“The punishing rise in fixed mortgage rates has meant a typical mortgage repayment is almost £2,000 more per year, compared to the start of 2026. A borrower taking out a £250,000 mortgage over 25 years would face repayments of £1,611 a month based on the Moneyfacts average five-year fixed rate of 6.00%, its highest point in three years*. That is around £163 per month more in repayments, or £1,956 more per year, compared to the average rate of 4.91% at the start of 2026.
“The supply of homes coming onto the market saw a modest uplift in September, with new instructions recording a net balance of +6% according to RICS, moving into positive territory for the first time since mid-2025. While this is a welcome shift, the uplift remains weak and the UK housing market remains fragile and is struggling to gain momentum. Some homeowners may be putting their plans to sell on hold amid falling house prices, the rising cost of borrowing and the cost of living, opting to stay put until their financial situation improves.
“Tenant demand is gathering pace, with the +23% net balance marking a third consecutive month of acceleration, while landlord instructions remain scarce, piling further pressure on an already squeezed rental market.
Those who plan to buy their own home in the future may put their plans on hold and remain in the private rental sector for longer as mortgage rates remain high, adding further pressure to tenant demand. With a net balance of +37% expecting rents to rise over the next three months, tenants looking for an affordable rental property could face fierce competition if the supply of private rental homes become available.
“House prices are under renewed pressure, with the RICS house price balance slipping from -28% to -32% in September. The near-term outlook remains weak, with further downward pressure expected over the next three months. However, expectations over the next 12 months point towards a broadly flat market. This follows the latest Nationwide House Price Index showing annual house price growth halved from 1.6% in August to 0.8% in September, underlining just how weak the housing market has become. However, conditions vary considerably across the UK, and softer house prices could present an opportunity for some prospective buyers if they can overcome the affordability hurdle of higher mortgage rates.
“Attention will now turn to the October Budget and the Government’s new Your First Home scheme, which could provide some welcome support for prospective first-time buyers. However, it comes at a challenging time for a fragile housing market, with weak buyer demand, higher mortgage rates and stretched affordability weighing on activity. One scheme alone will not turn the market around, and improving affordability and housing supply will be vital if market conditions are to improve.”
*Moneyfacts data on 5th October, five-year fixed reaching 6%: https://www.moneyfactsgroup.co.uk/media-centre/consumer/mortgage-rate-hikes-see-sub-5-fixes-vanish-as-average-five-year-fixed-hits-6/