The last two months have thrown the UK housing market into confusion. The cautious optimism with which 2026 began has dissipated, and uncertainty once again prevails.
For first-time buyers the picture is especially complex. We cut through the noise, data and anecdote to ask whether now can still be a good time to buy your first property.
Has conflict in the Middle East hurt the mortgage market?
Yes. Lenders have been pulling mortgage deals since the onset of the conflict, such that, as of 20 April, the total number of available deals had declined 12 per cent to 6,700.
This includes deals aimed specifically at first time buyers, who often need to take on more debt to afford their purchase. Such products can either require a smaller deposit, known as high loan-to-value (LTV), or enable homebuyers to borrow a higher multiple of their salary, known as high loan-to-income (LTI).
This is unfortunate, as the government has recently made it easier for lenders to issue such products. Nationwide’s Helping Hand mortgage, for example, enables buyers to borrow up to 6 times their income with only a 5 per cent deposit.
Positively, the number available is “slowly improving” again after plummeting in March, according to Rachel Springall of Moneyfacts, a finance site. The number of 95 per cent loan-to-value products, the highest available level of leverage, is still down by more than 100 since February, though. And wider economic uncertainty may discourage some lenders from reintroducing these riskier products.
“I suspect that lenders are going to become more cautious about lending at higher loan-to-income and higher loan to value ratios,” says Lucian Cook, head of residential research at Savills, a property firm.
It is not just the number of deals that has suffered, but also the period of availability. The average mortgage deal in March was available for just 8 days, according to Moneyfacts, leaving would-be buyers with precious little time to lock anything in.
What about mortgage rates?
The news isn’t much better here. Mortgage rates have surged in response to the heightened inflationary risks associated with the conflict.
The average two-year mortgage has risen by over one percentage point to 5.87 per cent since the onset of the conflict, according to comparison site Moneyfacts, adding around £1,800 a year in repayments. The average five-year fix has not fared much better, up 0.81 per cent to 5.76 per cent.
The one shard of light for potential first-time buyers is that price increases have been smaller for high LTV products, according to Aneisha Beveridge, head of research at Hamptons, an estate agent. “When rates rise the gap between high LTV and low LTV [mortgages] closes,” she says.
How does this compare to history?
While the jump in mortgage rates has been alarming, it is not even the biggest increase of the past five years. Rates jumped more than 1.5 percentage points in October 2022 alone, in response to the ill-fated “mini-Budget”.
As that particular debacle demonstrated, what goes up does not necessarily come down. Rates had only just returned to where they were before the mini-Budget by the start of 2026. Even if the Iran war ceasefire holds and there is a limited impact on inflation, they will take their time to come back down.
“The future path of interest rates remains murky, and short-term respite can change quickly,” warns Springall.
Swap rates, which banks use to price mortgages, are about 0.5 to 0.7 percentage points higher than before the conflict, suggesting that lenders are pricing mortgages at higher margins because of the greater uncertainty.
How much should I borrow?
One thing that the economic uncertainty does make clear is the need to think very carefully before taking out a mortgage, and, if possible, seek financial advice.
“Buyers have to make sure that their finances are rock solid”, says Cook. “They need to get advice from an independent financial adviser.”
“Seeking advice before entering any arrangement is essential,” agrees Springall.
What if I am a cash buyer?
If you are fortunate enough to be a cash buyer, then mortgage availability and pricing is less relevant. If anything, rising costs could mean less competition from other would-be buyers.
Those planning to take on less mortgage debt are also better placed, relatively speaking. For example, the average rate on a 75 per cent LTV 5-year fixed rate mortgage in March was 4.43 per cent. versus below the 5.12 per cent rate for an equivalent mortgage with a 95 per cent LTV.
What about the impact on house prices?
So far, the picture is mixed. The average house price rose 0.9 per cent during the month of March to £277,000, according to Nationwide, a lender. Halifax, another lender, reported a 0.5 per cent monthly drop.
Most of the buyers in this data would have secured financing ahead of the recent rise in rates, however, and so been less affected by the subsequent disruption.
Rightmove, which tracks asking prices rather than completion prices, reported a 0.8 per cent monthly increase in average prices to £374,000 for April, suggesting that sellers are still optimistic.
In short, it’s too early to tell. “I don’t expect [house prices] to fall any time soon and think we will just see fairly modest growth from here,” says Beveridge.
But pessimism is rising. The number of estate agents expecting falls in house prices in the next three months rose sharply in March, according to the Rics survey.
Is there much action out there?
The same survey reported a fall in sales agreements, and expectations for these to fall further over the next few months, pointing to a slowing market.
This would on balance be unwelcome for first-time buyers, for whom a smooth-functioning market creates more opportunities.
The same is true when it comes to new homes. A rising cost of debt makes new development less financially viable, in all likelihood reducing the number of new homes that come to market, thus increasing competition for existing.
The good news is that there are still plenty of properties currently for sale with around 40 per cent more homes on the market than in 2019, according to property group Connells. But the number of fresh properties coming to market in March fell 7 per cent versus the prior year, suggesting that some prospective sellers are putting their plans on pause.
Is it much harder to buy in London?
Ignore the headlines about double-digit price falls in certain London boroughs. The capital remains intimidatingly expensive. Houses purchased by first time buyers cost on average 7.5 times their average earnings, according to Nationwide. While this is the lowest level for more than a decade, it is still 60 per cent higher than for the UK as a whole.
Mortgage payments, meanwhile, consume more than half of London-based first time buyers’ take home pay, versus just over 30 per cent for the wider UK.
As our recent analysis of the London housing market showed, price growth across the capital varies significantly by both locality and property type. While price growth for inner London flats has stalled, potentially creating opportunities for first-time buyers, acquirers may struggle to sell at a profit in a few years’ time if growth remains stagnant, especially once transaction costs like stamp duty are factored in.
Can renting be cheaper than buying?
As mortgage rates have soared, the gap between renting and buying has narrowed once again, data from Rightmove suggests. The average first-time buyer with a 90 per cent LTV mortgage would spend around £70 less per month mortgage payments than the average renter on rent, the narrowest difference since November 2023.
The rental market, which has slowed of late after a surge in growth during 2022-2023, may be about to pick up again, in spite of the additional protections afforded to tenants by the Renters’ Rights Act, which takes effect on 1 May.
Demand has ticked up in the last couple of months, while fewer new lettings have come to market, according to the Rics survey, potentially putting upward pressure on prices. This supply squeeze could be exacerbated if an increased administrative burden, higher mortgage costs, and higher taxes prompt more landlords to exit the market.
A cohort of such motivated sellers could create opportunities for prospective first-time buyers.
Are there any other options?
One possible solution to getting a toehold on the housing ladder is shared ownership. Here, the buyer purchases a stake in a property – usually between 25 and 75 per cent – from a council or housing association, which continues to own the rest. The buyer then pays rent on the unowned portion of the property, and can increase their shareholding, known as ‘staircasing’, usually in increments of 10 per cent.
The buyer gets on to the property ladder with a smaller mortgage and deposit, and can increase their shareholding at their convenience. So far, so good. But there are trade-offs. As the properties are usually purchased from councils and housing associations, choice is limited. Shared ownership homes are also deemed riskier by lenders, and so tend to incur higher mortgage rates.
In addition to mortgage repayments, the buyer will also be paying rent on the unowned portion, along with leasehold charges and all maintenance costs. Shared ownership properties account for just 1 per cent of the UK’s total housing stock, which makes for a less liquid market, and potential difficulties when it comes to selling if the home remains part-owned.
Could the government lend a hand?
Potentially, although it opted against doing so at November’s Budget. The government shied away from providing any fiscal support, such as through a stamp duty holiday or an equity loan scheme akin to the Tories’ Help to Buy, which ran from 2013-2023.
Under that scheme, the government would lend first-time buyers up to 20 per cent of a new-build property’s value (up to 40 per cent in London) for properties valued at £500,000 and under. The loan was interest free for the first five years and enabled buyers to purchase a property with a significantly smaller deposit or mortgage.
An electoral drubbing in May could prompt the government to act in an attempt to shore up support among younger voters.
“[The economic backdrop] will increase pressure on the government to do something,” reckons Savills’s Cook.
What to do?
The backdrop is, alas, decreasingly appealing for those without financing already in place. But there may still be opportunities out there, especially for those who can find a motivated seller.
