Broker reveals why falling rates, not price data, are bringing buyers back to the market
UK house prices rose in June for the first time in four months, according to the latest Lloyds House Price Index – but it's falling mortgage rates, not the price data itself, that brokers say are pulling buyers back into the market after a prolonged period of hesitation.
The index, which tracks average UK property values using Lloyds' own mortgage lending data, showed values up 0.2% month-on-month in June to £299,330, with annual growth strengthening to 0.6%. That modest recovery reflects the direction of rates more than it reflects renewed confidence in prices.
Why are rates driving buyers back more than prices?
Rhys Edwards (pictured top), mortgage consultant at Brooks Financial, told Mortgage Introducer the pattern is playing out clearly with his own clients. "Positive news on interest rates is obviously making more interest in the market," he said. "Small sellers and buyers are entering into the marketplace as it starts to kind of plateau out and calm down, which means property values should increase."
That shift has been visible in his own client base over recent weeks. "I've noticed getting contact back with clients, who months ago had been looking, and they're suddenly making offers and things," he said. "It's certainly the last couple of weeks that I’ve really started to see it pick up." Rate reductions have kept coming through in the background, he added: "There are reductions still coming into the market even today, so that's all good in all parts of this."
That pattern is consistent with the Bank of England's monthly money and credit data, which tracks mortgage lending and approval volumes across the UK.
Even so, Edwards was careful not to overstate the recovery. "For me personally, it's certainly quieter than it has been," he said, comparing current activity against the same period last year.
Why rates cut through a divided market better than price data does
Edwards said national price averages mask a regional divide that rate movements don't fully erase but do help offset. "Individual data needs to be looked at rather than general statistics," he said. "It very much geographically can be skewed across the whole of the UK. Certain areas can be shooting up in value where others can still be reducing down."
London and the South East illustrate the point, he said, describing a market that responds to rate changes on a delay. "London will respond for speed a little bit slower depending on when there's a recovery," he said. "It will probably start to react quicker as the market picks up and reflect better figures later in the year."
First-time buyers are responding to rates fastest
Edwards said first-time buyers – typically those purchasing their first property, often with smaller deposits and greater sensitivity to borrowing costs – have been the quickest to act as rates ease.
Their annual price growth of 0.8% outpaced the wider market, helped by landlords exiting buy-to-let, where investors rent out a property rather than live in it. "We've also had a lot of buy-to-let landlords making changes, selling properties off," he said. "That's helped the first-time buyer market. Certainly, my client base has been picking up properties from ex buy-to-lets."
Political uncertainty is the one factor rate cuts can't fully offset, and its weight depends on the client. Investment-minded buyers are the most likely to wait, Edwards said, pointing to the wider debate over what a change in prime minister could mean for the property sector. "Those types of clients will generally wait to see what is happening," he said. "Other areas where they're just moving on with their lives and don't follow that kind of stuff as much will just continue to buy it and keep the market ticking over." He tied his outlook for the rest of the year to that same political backdrop: "I'm just hopeful the market continues to follow suit, and the political and geopolitical environment stay a bit more stable. Let's get the government sorted, and then hopefully the second half
of the year can pick up."
Two decades of downturns inform a cautious read on rates
Despite mortgage approvals hitting their lowest level since late 2023 in May, Edwards said 20 years in the industry – spanning the credit crunch and the pandemic – shape how he reads rate-driven recoveries. "The market has remained fairly resilient to what's been thrown at it," he said. "The market does seem to be able to withstand those changes and adapt and move forward."
Asked whether he was optimistic, he was direct. "You have to be, don't you? I always try and be optimistic. There's always angles and ways of finding clients that need certain services or certain help. It's just reading the market and reacting to what the market needs are."
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