Homebuyers are expected to show caution in the months ahead, despite the Bank of England base rate being left unchanged on Thursday.
The base rate was held at 3.75%, but experts pointed to rises in fixed mortgage rates in recent weeks and a “price sensitive” housing market where buyers are being mindful of their costs.
House-hunters also have a wide choice of homes for sale, meaning sellers need to price realistically, experts said.
The average five-year fixed-rate homeowner mortgage on the market was at its highest level since November 2023 on Thursday, according to financial information website Moneyfacts.
It said the average five-year fixed homeowner mortgage rate on Thursday was 5.87%, jumping from 5.81% on Wednesday.
Several lenders have hiked fixed mortgage rates in recent weeks amid rises in swap rates, which are used to price mortgages.
Stephen Gomez, a mortgage adviser at Wesleyan, said: “A (Bank of England base rate) hold is not a pause button for mortgage costs.
“Fixed mortgage rates are influenced by what financial markets expect to happen next, so lenders can increase their prices even when the Bank of England makes no change.”
Susannah Streeter, chief investment strategist, Wealth Club said: “Fixed mortgage rates are guided by swap rates, which reflect expectations for where interest rates are heading, rather than simply where (the Bank of England base rate) stands today.
“With markets still pricing in further rate hikes, swap rates have been pushed higher, and lenders have already been raising some fixed mortgage rates.”
Simon Gammon, managing partner, Knight Frank Finance, said the base rate hold “won’t provide much comfort to mortgage borrowers”.
He added: “The rise in fixed rates has made trackers, which still sit close to 4%, much more attractive.
“We are seeing more borrowers – particularly those with larger loans – accept some exposure to potential future increases in the base rate in exchange for lower outgoings.
“The combination of elevated mortgage rates and uncertainty over the upcoming Budget is likely to make this another subdued autumn selling season.”
Emily Williams, director of research at property firm Savills, said: “Despite today’s MPC (Bank of England monetary policy committee) decision to hold rates, we do expect to see more caution from buyers in the coming months given the increases to fixed-rate mortgages over the last fortnight.
“However, buyers can take confidence from the housing market’s resilience so far this year.”
Nicky Stevenson, managing director of Fine & Country, said the housing market is “firmly price sensitive”.
She said: “Mortgage costs are still weighing on affordability, while buyers have a high level of choice and can afford to be selective.”
Mark Manning, managing director of Northern Estate Agencies Group, which owns Manning Stainton, Ryder & Dutton and Mortimers, said that in terms of the stock of homes available on the housing market to buy “buyers have significantly more choice than they have been used to, and that has shifted the balance of power to them.
“This, combined with slightly higher mortgage rates, means that sellers need to price their properties realistically in order to attract potential buyers and sell quickly.”
Alice Haine, head of personal finance, Hargreaves Lansdown said: “Several major lenders have already nudged mortgage rates up this month, which will test affordability for both homeowners approaching the end of a fixed-rate deal and first-time buyers trying to get onto the property ladder.”
But she added: “For savers, the outlook is brighter.
“Competitive savings rates are back, giving cash a greater opportunity to outpace inflation and work harder.
“Those with money festering in an account paying a meagre rate risk missing out unless they shop around for a better deal.
“Few things are more frustrating for savers than watching inflation steadily erode the spending power of cash.”
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