Home sellers cut asking prices as mortgage rates soar

Home sellers are being forced to cut prices as buyers face mounting mortgage rates.

House prices across Britain rose by more than £3,500 month-on-month in October, according to Rightmove. But data from the real estate platform shows homes are taking months to sell.

Figures show the typical asking price of a newly listed property increased by 1 per cent, or £3,575, compared to September — this pushed the national average asking price up to £371,015.

The average two-year fixed mortgage rate has risen to 5.55 per cent, from 5.29 per cent last month and 4.25 per cent before the war in Iran started.

That means a typical new mortgage is around £250 a month more than it was in February, adding significant pressure to many buyers’ budgets.

Property platforms say buyers are being forced to be more picky, as many have a tighter budget as mortgage rates have risen to a three-year high.

Sellers in four of the five lowest-priced parts of Britain have set lower asking prices this month, including falls of 2 per cent in the North East and 1.9 per cent in Scotland.

But in London asking prices have risen 2.5 per cent clawing back some of the 6.0 per cent fall over the summer. However, prices remain 1.7 per cent below last year.

Colleen Babcock, head of partner marketing, at Rightmove said: “The rapid rise in mortgage rates is really beginning to hit buyers’ budgets. We’re now seeing mortgage rate rises feed through to seller pricing in many of the cheaper parts of Great Britain, where prices had been more resilient this year.

“It’s an early sign that higher mortgage costs are putting pressure on affordability even in markets with lower property prices, affecting the areas and types of property that buyers can afford.”

According to Rightmove sellers have cut prices on more than 3,000 properties a day on average in September, the highest of any month for 15 years.

But many properties are also sitting on the market for more than 60 days. In October, properties did not sell for an average of 78 days in London in comparison to properties in Scotland which sat on the market for an average of 34 days.

London is also the most expensive area to buy with asking prices at an average of £673,942, meanwhile Scotland has an average asking price of £203,415 and the North East an average of £195,977.

Rightmove said the number of new potential buyers contacting agents about properties is 9 per cent lower than a year ago, and the number of new listings coming to market is 3 per cent higher.

The total number of homes available for sale remains at its highest level for this time of year since 2014, with the high volume of homes for sale contributing to muted new seller asking price growth, the website said.