Estate agents and mortgage brokers are facing fresh uncertainty as economists predict an interest rate rise next month. The Bank of England is expected to raise its base rate from 3.75% in November following the latest inflation surge, with the decision coming just a week after Chancellor John Healey's Autumn Budget.
Meanwhile, Propertymark has warned that lenders are already withdrawing some of their more competitive mortgage products.
Mortgage deals withdrawn as uncertainty grows
Nathan Emerson, chief executive of Propertymark, said economic uncertainty was creating fresh affordability concerns. "We remain in a finely balanced economy, where every fluctuation has the potential to raise affordability concerns for many households and influence confidence across the wider housing market."
He also warned that mortgage availability was changing rapidly. "Over the past few weeks, we have seen several lenders withdraw what were previously considered more competitive mortgage offerings, highlighting how quickly conditions can change for those looking to buy a property or secure a new mortgage deal."
Higher energy and food costs are also squeezing household finances. As a result, prospective buyers face growing uncertainty over borrowing costs and affordability.
Economists predict November rate rise
The latest inflation figures have strengthened expectations of an increase at the Bank's next Monetary Policy Committee (MPC) meeting. Thomas Pugh, chief economist at RSM, said the data "almost guarantees an interest rate hike next month". He warned that inflation could exceed 4% early next year, raising the prospect of another increase in 2027.
Meanwhile, David Rees, head of global economics at Schroders, described the economy as facing a "perfect storm of imported inflation pressures". He said a November rate hike now looked like a "done deal".
The Bank held interest rates at 3.75% in September. However, three MPC members voted for an increase. Megan Greene, Catherine Mann and Huw Pill were the dissenters.
Housing market faces further pressure
Higher interest rates could worsen affordability, particularly for first-time buyers and homeowners refinancing their mortgages. Buy-to-let investors could also face higher financing costs, affecting returns and future purchases.
However, the impact on mortgage pricing will depend on how much of the expected increase lenders have already factored in. For estate agents, the concern is whether rising borrowing costs will further weaken buyer confidence and delay transactions.
Budget adds another layer of uncertainty
The prospect of higher rates comes as the property industry awaits the Chancellor's Autumn Budget. Propertymark warned that decisions on taxation, housing supply and household costs could affect market activity.
Emerson said: "With the Autumn Budget now only a week away, expectations will be high regarding any measures that may be announced to address housing and overall household affordability moving forward." He added: "Any decisions affecting taxation, housing supply or the cost of living could have wider implications for consumer confidence and activity across the property market."
Meanwhile, George Lagarias, chief economist at Forvis Mazars, warned that higher rates could restrict economic growth. "If the Chancellor didn't have enough on his plate ahead of the budget, now he will likely have to contend with higher interest rates further constricting economic growth."
Richard Carter, head of fixed interest research at Quilter Cheviot, also warned that higher borrowing costs could affect economic activity in 2027. Although the Bank has yet to make its November decision, the prospect of another rate rise adds to market uncertainty. For agents, mortgage uncertainty and the approaching Budget risk making an already cautious market more difficult.
