Housing Market Remains Steady Despite Higher Mortgage Rates
The housing market has so far remained steady in 2026, despite mortgage rates rising fast in recent weeks due to the uncertainty caused by the war in Iran.
The average price tag on a home increased by nearly £3,000 month-on-month in April, according to property website Rightmove.
But the 0.8% monthly rise in the typical asking price was lower than the long-term average increase of 1.2% seen in the month of April, Rightmove said.
Across Britain, the average asking price in April is £373,971, which is £2,929 higher than the previous month.
Increased mortgage rates and strong competition among sellers to find a buyer are limiting new seller asking price growth this spring, with the number of homes for sale at an 11-year high for the time of year, Rightmove said.
Buyer demand has held up relatively stronger among first-time buyers, it said, suggesting that higher mortgage rates are not putting off new potential first-time buyers from making inquiries.
But it said price growth in April has been mainly driven by higher-priced, “top of the ladder” homes with four bedrooms or more, where some buyers are cash purchasers and are less sensitive to increased borrowing costs.
Colleen Babcock, a property expert at Rightmove, said: “With mortgage rates remaining elevated due to the war in Iran, it’s not a surprise that price growth is proving strongest in parts of the market less exposed to higher borrowing costs, such as top of the ladder homes, while sectors more exposed to interest rates are seeing slower momentum.
“Across Great Britain, Scotland stands out as an example of resilience, with average prices rising by over 4%. Lower average asking prices and a faster home-buying process continue to support price growth in the Scottish market.
“However, for most of the market, the combination of rising mortgage rates and the number of homes for sale being at its highest level for the time of year over a decade, means that competitive pricing is crucial for sellers looking to attract buyer interest and secure a sale this spring.”
Matt Smith, a mortgage expert at Rightmove, said: “At the start of the year there was growing optimism that (the Bank of England) base rate would continue to fall, but that picture has shifted following the conflict in Iran.”
He added: “The initial shock appears to have passed, with mortgage rates stabilising over the past couple of weeks, but they remain elevated.
“The next moves will depend on upcoming UK inflation data and how the Bank of England responds. If policy decisions align with current market expectations, a period of relative stability is more likely than meaningful falls.”
Several lenders have made mortgage rate reductions in the past week following falls in swap rates, which are used by lenders to price mortgages.