One in five renters put their home-purchase aspirations on hold due to high mortgage rates
- A full 19% of renters said high mortgage rates mean they can’t afford to buy
- The average mortgage rate in a two-year solution has risen above 6%
- A full 12% of renters say they will keep renting until housing prices come down.
One in five renters are putting plans to buy a property on hold amid the ongoing housing crisis, new figures reveal.
A full 19 percent of renters surveyed by specialist mortgage provider The Mortgage Lender said high mortgage rates mean they can’t afford to buy a property.
It follows two-year average fixed rates reaching 6.66 percent this month, according to Moneyfacts.
That’s the equivalent of a mortgage payment of around £1,000 a month on a £150,000 home loan.
Too Expensive: A full 19% of renters said high mortgage rates mean they can’t afford to buy, so they are delaying purchase plans.
The TML survey also suggested that 12 percent of renters would continue to rent until house prices fell.
House price growth has already begun to slow, from 3.2 percent in the year to April to 1.9 percent in the year to May, according to the latest official figures.
The median UK house price is £286,000, £6,000 more than 12 months ago, but still £7,000 below the recent peak of September 2022, according to the Office for National Statistics.
A further slowdown is expected as the full extent of the recent mortgage rate increases is conveyed.
Future plans: A full 12% of renters won’t buy their own place until house prices drop, according to TML survey
For some renters, keeping an eye on the numbers is key to determining their next move.
A full 10 percent said they are waiting for mortgage rates to drop. At the same time, nine percent agreed there is no point looking to buy until rates drop, and six percent are waiting to see the next Bank of England interest rate decision on August 3 before making a decision.
Despite this, 6 percent said they were still making progress with their home purchase plans, even though they had to make significant commitments to do so.
A quarter of those who still plan to buy say they are now buying outside of traditional commuter cities, and 32 percent have had to move further from the city center.
Similarly, 16 percent are buying in an area with cheaper costs of living to offset the more expensive mortgage.
A full 9% agreed that there is no point in looking to buy until rates come down
Others have to reconsider the properties themselves. One in five, 21 percent, say they are buying a cheaper property that needs more renovation work, and 12 percent are looking to buy smaller properties instead.
TML surveyed 2,005 adults, of whom 905 were renters, and these results only focus on this portion of renters.
TML’s Steve Griffiths said: ‘The journey to buying a property can be a long one, and can easily be complicated by the ebbs and flows of the property market, especially given the current landscape.
“While adaptability and regular base rate monitoring will benefit tenants in the long run, many are understandably frustrated with their options.
“If the time is not right to buy now but you plan to do so in the future, make sure you are still working to be ‘mortgage ready.’ This will ensure that when the time is right, you are ready to take the next step.”