One in five tenants put their buying aspirations on hold

One in five tenants put their property purchase aspirations on hold due to high mortgage rates

  • A total of 19% of tenants said high mortgage rates means they can’t afford to buy
  • Average mortgage rate on a two-year fix has risen above 6% 
  • A total of 12% of tenants say they will keep renting until house prices decline

One in five tenants are putting plans to buy a property on hold amid the current housing crisis, new figures have revealed.

A total of 19 per cent of tenants surveyed by specialist mortgage provider The Mortgage Lender said that high mortgage rates means they can’t afford to buy a property.

It follows average two-year fixed rates reaching 6.66 per cent this month, according to Moneyfacts.

It is the equivalent of a mortgage payment of around £1,000 a month on a £150,000 home loan.

Too costly: A total of 19% of tenants said high mortgage rates mean they can’t afford to buy, and so they are delaying plans to purchase

The TML survey also suggested that 12 per cent of tenants would stay renting until house prices fell.

House price growth has already begun to slow, dropping from 3.2 per cent in the year to April to 1.9 per cent in the year to May according to the latest official figures. 

The UK’s average house price is £286,000, £6,000 higher than 12 months ago – but still £7,000 below the recent peak in September 2022, according to the Office for National Statistics.

A further slowdown is expected as the full extent of recent mortgage rate rises feeds through. 

For some tenants, keeping an eye on the numbers is key to figuring out their next step.

A total of 10 per cent said they are waiting for mortgage rates to fall. At the same time, nine per cent agreed that there is no point in looking to buy until rates come down, and six per cent are waiting to see the Bank of England’s next decision on interest rates on 3 August before making a decision.

Despite this, 6 per cent said they were still progressing with their home buying plans – although they are having to make significant compromises to do so.

A quarter of those still planning to buy say that they’re now buying away from traditional commuter towns, and 32 per cent have had to move further from the city centre.

Similarly, 16 per cent are buying in an area with cheaper living costs to offset the more expensive mortgage.

A total of 9% agreed that there is no point in looking to buy until rates come down

Others are having to reconsider the properties themselves. One in five – at 21 per cent – say that they’re buying a cheaper property that needs more renovation work, and 12 per cent are looking to buy smaller properties instead.

TML surveyed 2,005 adults, of which 905 were tenants – and these results are only focused on this slice of tenants.

Steve Griffiths, of TML, said: ‘The journey to buying a property can be a long one, and it can easily be complicated by the ebbs and flows of the housing market, particularly when we consider the current landscape.

‘Although being adaptable and regularly checking in on the base rate will serve renters well in the long term, it’s understandable that so many are feeling frustrated by their options.

‘If it’s not the right time to buy now but you plan to in the future, make sure you are still working towards becoming ‘mortgage ready’. This will ensure when the time is right you are prepared to take that next step.’

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