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High Mortgage Rates Force First-time Buyers to Rent, According to Rightmove

Aria Thomas

Nov 25, 2022 14:27


The property website Rightmove (OTC:RTMVY) said on Friday that the demand for rental homes in the United Kingdom surged in October as prospective first-time buyers postponed their purchases owing to rising mortgage rates.

However, the total number of renters and purchasers on the market declined by 1% compared to the same period previous year.

In recent months, mortgage rates in the United Kingdom have risen beyond 6%, increasing after the "mini-budget" of former prime minister Liz Truss on September 23 rattled financial markets.

Since then, rates have fallen due to Jeremy Hunt's Autumn Statement, which guaranteed stamp duty reductions through March 31, 2025.

According to Britain's largest property marketplace, first-time buyers have been significantly impacted by the hike, prompting them to consider renting in the near future while they await the inevitable stability of mortgage rates.

Tim Bannister, a property expert at Rightmove, commented, "It is very understandable why some buyers, especially first-time buyers, are waiting for better financial stability."

Now that there are indicators that mortgage rates are stabilizing, it is probable that they will settle at a higher level than buyers in the past have experienced.

42% of prospective first-time buyers who intend to enter the property market over the next several years have already amassed their entire down payment while awaiting a reduction in interest rates. 43% more were engaged in savings.

Tenants are already facing a large increase in expenses owing to the rising costs of electricity, fuel, food, and council tax, which are reflected in the statistics.

As a result of the highest rate of inflation in 41 years, real wages are decreasing, placing incomes under the most severe pressure in decades.