SHARPLY rising mortgage rates should be seen by first-time buyers (FTBs) as a boost rather than a blow to their homeownership dreams, brokers and property experts have claimed, as the higher rate can be easily offset by the size of the discount they can secure off the asking price.
With the Middle East war pushing oil prices up — Brent crude was closing in on $115 a barrel on Thursday morning — markets are pricing in rising inflation and higher interest rates to control it, which is seeing lenders pull or reprice their mortgages to protect their margins.
Lenders large and small have been upping their rates since Trump launched missiles on Iran, with Santander increasing its rates by 0.65% this week alone in two separate rate announcements.
But experts say savvy first-time buyers will not dive behind the sofa in the current market but seize the opportunity to shave thousands, or even tens of thousands, off the property they are buying — because the balance of power is now firmly in their favour.
Buyer’s lever
Darryl Dhoffer, Founder at Bedford-based The Mortgage Geezer, said: “What many people forget amid the rising mortgage rate hysteria is that higher borrowing costs are actually a powerful buyer’s lever.
“When rates climb, the pool of qualified buyers shrinks, causing properties to sit on the market longer. This shift in momentum moves the upper hand from the seller to the buyer. Instead of fixating on the interest rate, people should focus on the purchase price.
“Fortune favours the bold and the money you can shave off the purchase price can more than make up for the slightly higher mortgage rate. Don’t dive behind the sofa because of higher mortgage rates, use them to your advantage.”
Education matters
Patricia Ogunfeibo, Founder and non-practicing Solicitor at London-based tenant2owner, agreed and urged FTBs to be savvy and understand the opportunity afforded by rising mortgage rates.
She said: “When rates rise, buyers tend to panic and step back, even more so if they’re buying for the first time. But those who understand how the numbers work can turn that panic into their advantage because there is less competition and more negotiating power.
“In times like this, motivated sellers drop their prices. Think landlords selling up, for example. A 5% discount on a £200,000 home saves £10,000 off the mortgage balance, permanently.
“Meanwhile, someone who bought at a ‘better’ rate but a higher price would likely owe more after five years. Rates can always be refinanced, but the price paid is locked in forever. This is why education matters.
“The headlines shout ‘rates up, dreams over’. The reality? Informed first-time buyers are negotiating hard and building equity from day one, especially in areas where landlords are selling fast.
“Knowledge can therefore be the best deposit top-up, and higher rates now can be very good news for the savvy first-time buyer.”
Power has shifted
Louis Mason, Communications Director at London-based Oportfolio Mortgages, also described current market conditions as a “window of opportunity” for FTBs.
He said: “The ‘rates are rising, it’s game over’ narrative misses what’s really changed. Power has shifted back to buyers. In a low rate market, first-time buyers were often overpaying just to compete.
“Today, pricing is softer, sellers are negotiable and there’s far less pressure to rush, so the overall deal can actually be better, even with higher borrowing costs.
“It’s not universally easier, unfortunately. Affordability is still tight, but for well-prepared buyers, this is one of the first markets in years where you can act strategically rather than reactively. For many, that makes it less a crisis and more a window of opportunity.”
Active not defeated
Nouran Moustafa, Practice Principal and IFA at Roxton Wealth, agreed: “Yes, rates rising is painful, but I do think a lot of people are missing the other side of the story. A higher rate environment does not automatically mean game over for first-time buyers.
“In some cases, it can actually create better opportunities, because when borrowing gets harder, the frenzy cools, sellers become more realistic and buyers finally get room to negotiate properly. That matters.
“A first-time buyer is not just buying a rate, they are buying a property, a price point and a long-term position. If you can secure a discount on the purchase price, avoid a bidding war and buy in a calmer market, that can outweigh paying a bit more on the mortgage in the short term.
“With this in mind, aspiring buyers should be active, not defeated. This is not a market for panic, but it can absolutely be a market for smart, informed first-time buyers who are ready to move when others are frozen.”
Up for sale
Sarah Fox-Clinch, Director at Fox Davidson, a broker, said other forces are also coming into play that will provide support to FTBs.
She added: “When mortgage rates rise, affordability becomes stretched and buyer demand falters. This can result in property prices remaining flat and even falling.
“Add in buy-to-let investors coming off lower fixed rates onto much higher rates, and holiday let investors trying to manage the upcoming tax changes and regulation around the holiday let market, and we may see property prices fall as buy-to-let and holiday let properties are put up for sale.
“These properties tend to be smaller, lower value homes that make ideal first-time buyer purchases.
“Rising rates and the upcoming withdrawal of holiday let tax breaks and increasing Governmental regulation could constitute a ‘perfect storm’ to the benefit of the savvy first-time buyer.”
