Housing market opinion
The mortgage shock: trying to afford the home you already own
A message from a friend brought the affordability debate back to where it belongs: the household trying to make the monthly numbers work.
I received a message from a friend this morning that said more about the pressure of mortgage costs than a polished market commentary ever could.
Two parts of his mortgage are coming to the end of their fixed periods. One is fixed at 1.94%. The other at 2.14%. He is facing significantly more expensive borrowing when those arrangements end.
His response was blunt:
“I’m fucked either way mate.”
Forgive the language. I’ve included it because it captures how he feels. There is no property-market spin in that sentence. There is somebody looking at the household finances and wondering how to make them work.
He is not looking for a bigger garden. He is not trying to climb the property ladder. He is trying to afford to stay in the home he already owns.
That deserves a place in the conversation about the housing market. Behind the discussions about instructions, asking prices and confidence are people whose financial commitments are changing, sometimes quite substantially.
The house hasn’t changed. The monthly commitment has.
When a fixed deal ends, a homeowner can be facing a very different monthly payment without having bought anything else, extended the house or increased the borrowing.
The kitchen is the same. The bedrooms are the same. The commute is the same. But the cost of keeping that home can move materially.
That is why I think we sometimes misunderstand the pressure when we frame everything around the next buyer. Affordability matters to people who are already in their homes too. They may have no desire to move and no particular interest in the latest asking-price headline. Their immediate concern is what leaves the bank account each month.
Of course, each household’s position is different. The amount borrowed, the remaining term, earnings and other commitments all matter. One friend’s message cannot describe every homeowner. But it is a very clear reminder that a market discussion can sound reassuring while an individual household feels anything but reassured.
A lower rate can still feel expensive
There is a question I keep coming back to when people discuss mortgage rates: lower than what?
A rate can be lower than an earlier offer and still be considerably higher than the deal somebody is leaving. Those two statements can both be true.
For someone coming off borrowing close to 2%, the relevant comparison is often their existing payment. They are looking at the difference between what they have been paying and what they will need to pay next. A more encouraging headline does not erase that difference.
That is why I am cautious about treating any improvement in borrowing costs as an automatic return to confidence. It may help. It may make a particular move possible. But the household still has to put the proposed payment alongside its actual income and everything else it needs to fund.
The comparison that matters at the kitchen table can be very different from the comparison being made in a market report.
Financial commitments do not reset neatly
During the years of exceptionally cheap borrowing, people made decisions about the lives they wanted to build. They chose homes, took on commitments and worked out what they could manage on the information available to them.
When the mortgage payment changes, the rest of that life does not reorganise itself automatically.
Childcare does not become cheaper because a fixed rate has expired. The journey to work does not disappear. Other bills still arrive. The household has to find the difference somewhere, or reconsider its arrangements.
Some people will have substantial room to absorb it. Some will have prepared carefully. Others may find the available room is much smaller than they expected. I do not think we help the discussion by treating all those situations as interchangeable.
Nor do I think the answer is to criticise people for ever having borrowed at a low rate. The useful question is what the change means for their choices now, and whether the property advice they receive takes that reality seriously.
Staying put is a market decision too
An owner who decides against moving is easy to miss in an agency’s figures. They do not become a valuation appointment, an instruction or a buyer registering for a viewing.
But they may still have made a very deliberate housing decision.
Perhaps they had planned to move and have now decided the additional borrowing feels uncomfortable. Perhaps the new mortgage payment has absorbed the money they would have used for moving costs. Perhaps they simply want a period of certainty before considering another commitment.
Those are possibilities an agent needs to understand, rather than assuming that a quiet applicant or a postponed valuation reflects a lack of interest.
This is part of my concern about judging the market through activity alone. The people who proceed tell us something. So do the people who would like to proceed but decide they cannot justify it. A good conversation can reveal the difference between a move that has been abandoned and one that needs a different plan.
What buyers can pay still matters
I have been saying for some time that expectations need to adjust to what buyers can actually support.
That does not mean I want homeowners to lose value. It means an asking price needs a credible relationship with the people who might buy the property and the alternatives available to them.
An owner can hope for any figure they like. An agent can recommend an ambitious asking strategy. The eventual transaction still needs a buyer who is willing and able to proceed at an agreed price.
For a buyer relying on a mortgage, the monthly commitment is part of that decision. So are their deposit, other obligations and the terms on which borrowing is available. An attractive house does not remove those constraints.
Affordability is not the only influence on prices. Supply, local demand, cash buyers, property condition and individual circumstances matter too. But an agent who talks enthusiastically about value while showing little interest in the buyer’s financial position is missing an important part of the picture.
We should be careful about sweeping predictions
I do not believe one story proves that every property is overpriced or that every local market will move in the same direction. It does neither.
There are people with little or no mortgage borrowing. There are buyers with strong deposits and households whose incomes have changed. Different properties attract different buyers. Even within a small area, the response can vary considerably.
That is precisely why the advice should become more specific.
Which buyers are likely to want this home? What competing properties can they choose? What is the evidence from actual enquiries, viewings and offers? What do we know about their ability to proceed?
My view is that the effect of more expensive borrowing can continue to work through individual households as their arrangements change. That is a reason to pay attention, rather than a basis for pretending to know the exact path of every house price.
Confidence in your advice should come from understanding the evidence, including its limits.
The valuation conversation needs some honesty
For estate agents, there is a temptation to make the first conversation the easiest one. An encouraging price, a confident marketing presentation and the promise of buyers waiting.
That can feel persuasive when several agents are competing for the instruction. But the owner still has to live with the strategy after the presentation is over.
If there is a gap between their expectation and the evidence, discuss it. If you recommend testing a higher asking price, explain the reasoning, the risks and the review points. Make sure the seller understands what would cause you to recommend a change.
You can be positive about a property and honest about the conditions in which it is being sold. In fact, that combination is part of giving useful advice.
What worries me is an instruction won through confidence that the agent cannot support, followed by a much less confident conversation several weeks later. The household may already be under pressure. It deserves a clear explanation of its options from the beginning.
An online-view report will not answer the difficult question
Imagine the seller receiving another report showing how many people have looked at the listing. The numbers might be accurate. The presentation might be excellent. But the seller’s question is whether the move is achievable.
If the marketing is attracting attention without meaningful enquiries, what does that suggest? If people are viewing but not offering, what have we learned? Are the objections consistent? Is the price position credible against the available alternatives?
The report can help prepare that conversation. Somebody still needs to have it.
I would want an agent to explain the evidence, check whether the seller’s circumstances or priorities have changed and recommend a next step. That could mean adjusting the strategy. It could mean staying with it for an agreed period. It could mean acknowledging that the move is not right at present.
Whatever the recommendation, the seller should understand why it is being made. Sending more information will not compensate for avoiding the advice they need.
Understand the chain of decisions
A property transaction brings together people making separate financial decisions. The seller has a view of what they need. The buyer has a view of what they can manage. Other people in the chain may be working through the same tension.
That is one reason proper qualification matters.
An enthusiastic buyer is encouraging. Understanding the basis on which they can proceed is more useful. Has their position been discussed with an appropriate mortgage professional? Are there assumptions about borrowing or sale proceeds that still need checking? What has to happen before they can commit?
An estate agent should know where their role ends and specialist advice is needed. They can still ask sensible questions, identify uncertainty and help the parties understand what information is outstanding.
If a concern emerges, bring it into the conversation early. Leaving everybody to proceed on a different assumption is a poor foundation for a transaction, especially when the financial room for manoeuvre may be limited.
What I would ask in an agency meeting
I would start by asking what the team is actually hearing from homeowners and buyers. Not just whether the market feels busy or quiet, but which decisions are becoming difficult and why.
Then I would look at how those conversations are recorded. Can the next colleague understand the person’s position? Is there a useful next step? Have we followed through on the information or advice we promised?
I would also review a few properties where the response has been weaker than expected. What was the original pricing rationale? What has the marketing taught us? Has that been explained to the seller? Are we discussing the evidence or repeating that the market is difficult?
Finally, I would ask whether the team feels equipped to handle those conversations. If somebody is uncomfortable discussing a gap between expectations and reality, give them preparation and support. A difficult subject does not become easier for the client because the agent delays raising it.
Remember the household behind the headline
My friend’s message stayed with me because it was about the simple objective of remaining in his own home.
That is a different starting point from the upbeat language we sometimes use about the next opportunity in the property market. Both conversations can exist, but we should not allow one to obscure the other.
The homeowner worried about a payment needs empathy. The seller considering a move needs honest advice. The buyer working out their borrowing needs realistic expectations. All of them deserve somebody willing to listen before reaching for a reassuring line.
So my question remains: are we properly appreciating the financial pressure some homeowners are under, or allowing broad market commentary to distract us from it?
I would be interested to hear from homeowners, mortgage brokers and fellow estate agents. What are you experiencing, and where do you think the biggest gap between expectations and reality sits?
The useful answers will come from understanding the people making those decisions. Their monthly numbers matter far more than the confidence of somebody else’s headline.