With interest rates on the rise across the UK, is now a good time to sell your home?

In this article, we explore the impact of higher interest on any future property sale and purchase, as well as examining how this change is likely to affect the wider property market.

What will Higher Interest Rates Mean for Homeowners?

Many people are making the decision to sell their property now instead of waiting any longer, as interest rates continue to increase.

As a large number of homeowners rely on mortgages to purchase a new property, there is an element of concern that – if they do not act now – they will not be able to secure a borrowing rate that is affordable in the foreseeable future.

Getting onto a fixed rate mortgage sooner rather than later is a sensible approach, as it means that buyers will be guaranteed the same repayment amount throughout the set period of their choosing, whether that be for the next two years, five years or more.

For this reason, if you plan to sell with a high street estate agent or a property management company, we highly recommend that you share your listing far and wide on social media and via other routes in order to attract as much interest as possible.

interest rates and selling house

What about buy-to-let mortgages?

When interest rates rise, the cost of borrowing money increases. This in turn increases the amount of money a borrower has to pay back on their buy to let mortgage. Add in costs to a letting agent, and crucially the tax changes from 2023 tax year based on income, and being a landlord is not so appealing.

This will have a detrimental effect on the return on investment for a buy to let property, as the amount of rent a landlord can charge may not increase in line with the increase in interest rates.

How Will this Impact the Wider Market?

The knock-on effect of this increase in house sales will be a larger buyer pool, which is potentially an attractive prospect if you yourself are planning to sell your property. 

Up to this point, demand for property has far outstripped supply – partly due to the increased drive for UK residents to secure a more appealing property (following the significant rise in home working).

Now, as interest rises, the buyer pool is likely to increase still further as homeowners seek new properties for which they can leave their old ones. However, there will also be a rise in supply as these buyers vacate their previous properties.

When selling your house in a high-interest rate environment, it’s important to choose a real estate agent who can guide you through the process using the most user-friendly strategies.

How Are Interest Rates Likely to Change?

There has already been a rise in the base rate from 2.25% to 3%. This occurred on 3rd November 2022 and represented the largest rise in over 30 years.

It is predicted, however, that interest is likely to rise still further over the next year. 

The personal finance journalists at Money to the Masses have reported that the base rate is predicted to jump even further in early 2023 – potentially to more than 4% – and a rate of 4.8% is possible by the middle of the second quarter.

This means that borrowing is likely to get a great deal more difficult soon. 

How to Get Started Fast

Getting your property on the market and attracting a buyer quickly may well help you to secure a lower rate on your next mortgage before interest rises further. 

For this reason, if you plan to sell with a high street estate agent, we highly recommend that you share your listing far and wide on social media and via other routes in order to attract as much interest as possible.

Selling via auction could be a great alternative, as you will usually be able to plan around the sale of your property taking place on a set date.

You can also opt for an “express estate agency” sale, where an agent promotes your property to a trusted panel of investors, or a cash home buying company, who may be able to buy your property from you directly in as few as seven days.

A sale via this final method is perhaps the least likely to fall through, due to there being no third party involvement.

If you are planning to sell your home and purchase a new one in the near future – and particularly if you are looking to upsize into a larger property – it is almost certainly better to get started sooner rather than later.