Buyer activity has slowed following the recent jump in mortgage rates but the cooling is being driven more by sentiment than fundamentals and could reverse quickly if market conditions stabilise, according to a leading conveyancing lawyer.
The latest volatility in the housing market came after global tensions pushed swap rates higher, forcing lenders to reprice products and driving average fixed mortgage rates back above 5% for the first time since last year.
The sudden shift has led to a noticeable pause among some buyers, particularly those not under pressure to move, with agents reporting a more cautious tone across parts of the market despite supply remaining tight in many areas.
Industry figures say the slowdown reflects uncertainty rather than a collapse in demand, with affordability still stretched and expectations for interest rate cuts pushed further back following renewed inflation concerns.
WAIT AND SEE MARKET
Sally Peake (main picture, inset), Conveyancing Partner at Knights, says: “Reports have shown a cooling of pace from buyers since the Iran war and what I’m seeing on the ground echoes that. Not a collapse in demand by any means, but a noticeable pause.
“Buyers who don’t need to rush aren’t rushing. Now that lenders are adjusting products more frequently, it naturally creates a sense of ‘wait and see,’ even at the higher end.
“And while mortgage rates don’t directly constrain many prime buyers, they do watch these macro signals closely because they shape broader market confidence and that impacts them in different ways. It’s a natural response in an economy where spending is so closely tied to the housing market.”
MEASURED APPROACH
She adds: “What’s interesting is that this doesn’t feel like a fundamentals issue. It is sentiment, and sentiment can shift quickly.
“The supply of great properties remains tight and competitively priced, and high-quality homes continue to attract serious interest. But in a climate where geopolitics is nudging up inflation expectations and making lenders more reactive, even seasoned buyers are taking a more measured approach.
“Property has always been a long-term asset, and those who buy with a steady hand rather than trying to time short-term volatility tend to come out ahead.
“I sense that once markets stabilise, and they will, we’ll see confidence return at pace. The long-term outlook, even in recent reporting, remains surprisingly resilient, with many professionals expecting a rebound over the next 12 months – which could mean now is the right time for certain buyers to lean in.”
