Earlier this year, Lauren Smith and her boyfriend started to look for their first home.
They had saved enough together for roughly a 20 per cent deposit – with 27-year-old Lauren living at home for several years after university to save cash – and began to view semi-detached homes in north Leeds for around £320,000 to £400,000 at the start of the year.
Then, Lauren, who works in PR, said “everything changed”.
At the end of February, after the start of the war in Iran, mortgage rates began to hike.
Sub-4 per cent rates, available widely in the first three months of 2026, vanished, and Lauren says she has put her plan to move out of her and her partners rented home on hold.
“We’re in a position to buy, but we don’t want to commit to high rates,” she says. “We were actively looking, but committing to those high interest payments feels like paying dead money.”
Lauren says she wants to see rates drop to around 3.5 per cent, or at least below 4 per cent, before she starts looking again, and says realistically, her plan to purchase is on hold until 2027.
Her story forms part of a wider slowdown in the property market.
Mortgage approvals for house purchases dropped 14.9 per cent to 56,205 in May compared with the month before, according to Bank of England data revealed in June.
Those who work in the industry say it’s something they’re seeing too.
“We’ve seen fewer first-time buyers in the market recently. House prices aren’t falling enough to absorb mortgage rate rises and so people are waiting instead,” says Richard Donnell, executive director at Zoopla.
A Savills report said the prime housing market is becoming “increasingly cautious”.
Frances McDonald, director of residential research at Savills, said: “When surveyed, Savills agents agreed that confidence among both prospective buyers and sellers is continuing to soften.
“Taken before the Makerfield by-election and the Prime Minister’s resignation but against a backdrop of ongoing uncertainty in the Middle East, this decline in market sentiment has been reflected in further price falls as buyers have tightened their budgets.”
Meanwhile, Alex Goldstein, a property consultant based in Harrogate, north Yorkshire, said: “I am finding that some first time buyers are holding back, in the hope that base rate falls and mortgage rates are eased.”
Lauren says some intervention from the government to help buyers would be excellent, but she thinks it is very unlikely.
“The stamp duty holidays we’ve seen previously were great, but I can’t see those being done again,” she says.
Should you wait for rates to come down if you’re a first-time buyer?
Average five and two-year mortgage fixes are now at 5.51 per cent according to Moneyfacts, which is far above the low levels seen in January, but lower than the peaks seen in March and April this year.
As the graph above shows, the trend for rates is downwards, but experts say waiting on the premise this will continue could be a risky strategy.
David Hollingworth, associate director at L&C Mortgages, explained: “Holding off carries its own risks. There’s very little certainty that mortgage rates will continue to fall back and although the recent cuts are welcome, they have been gradual.
“We can’t be sure that something else won’t come along to inject another bout of volatility so working on the basis of rates continuing to fall could be hopeful at best.”
Lauren says she is happy in her rental property, but Hollingworth says some prospective buyers may find the alternatives to buying less appealing.
“If that’s a case of paying high rents without the security that owning a home can give there may be greater incentive for first time buyers to press on.”
Goldstein says that instead of waiting, many prospective buyers would be better using higher rates – and their position as chain-free buyers – to get leverage in a market when many sellers are struggling to shift their homes.
“As a first-time buyer you are in a strong position to proceed. Use that to negotiate hard and secure your home on the best basis from the outset. This would balance out any fall in mortgage rates,” he says.
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