Is now a good time to buy a house?

With mortgage rates falling and affordability pressures easing, now could be a good time to buy a house.

Although average mortgage rates remain higher than their long-term average, sub-4% deals have returned to the market as the Bank of England cut interest rates.

At the same time, house price growth has remained slow this year, up just 1.3% in the last 12 months, serving as an annoyance for sellers but a boon for buyers.

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The housing stock available to buyers is also high, giving them more freedom to shop around before committing themselves to a particular property.

This being said, buyers still face some challenges. A hike in stamp duty implemented in April has meant home movers are shelling out more to the taxman, while rumours persist that property taxes could be hiked in the Autumn Budget.

Amanda Bryden, head of mortgages at Halifax, said: “While affordability remains a challenge, a relatively lower mortgage rate environment and steady wage growth have helped support buyer confidence.

“Although the broader economic outlook remains uncertain, with the affordability picture gradually improving, we continue to expect modest growth through the remainder of the year.”

We look at whether now is a good time to buy a house.

What’s happening with mortgage rates?

In its latest meeting on 18 September, the Bank of England’s Monetary Policy Committee (MPC) voted to hold interest rates at 4%, the third time the base rate was lowered this year.

However, despite expectations earlier this year that the central bank would lower interest rates for a fourth time at the MPC’s next meeting, stubbornly high inflation could slow the pace of cuts. CPI inflation remained at 3.8% in August for the second successive month, nearly double the Bank of England’s target 2% rate.

For prospective home-buyers, this means that borrowing costs are broadly expected to remain around their current level until another interest rate cut is enacted by the central bank.

The overall average mortgage rate was 5.01%, according to data from Moneyfacts on 6 October. This dips slightly to 4.98% for the average two-year fixed mortgage, but climbs to 5.02% for a five-year fix and 5.71% for a ten-year fix.

The MPC is due to meet two more times before the end of 2025, on 6 November and 18 December.

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “Despite the uncertainty, mortgage rates have eased from the peaks seen at the height of the cost-of-borrowing crisis thanks to five interest rate cuts since August last year.

“Those hoping for further respite may have to wait a little longer. The Bank of England has signalled caution towards further rate cuts as it continues to battle sticky inflation, suggesting there will be no further relief for mortgage borrowers in the short term.”

The average price of a house in the UK was £298,184 in September, according to Halifax, 1.3% higher than it was a year ago, but 0.3% less than a month prior.

Slow house price growth will not be celebrated by those wishing to sell their property, but buyers will enjoy the boost in affordability.

Home buyers also have greater choice as the number of homes listed for sale has ballooned in some regions of the UK.

The number of homes for sale in the south of England is 9% higher than a year ago, compared to 2% elsewhere, according to the latest data from Rightmove.

Is now the right time to buy for you?

As well as raiding your savings for a deposit or relying on family for help, prospective buyers will need to weigh up whether they can afford monthly repayments – particularly in light of rising costs elsewhere.

While inflation is far from the sky-high levels during the worst of the cost of living crisis in 2022, price growth has remained stubbornly high, meaning your money is worth less in real terms.

Sarah Coles, head of personal finance at Hargreaves Lansdown, told MoneyWeek the big unknown when it comes to buying a home is your own financial position.

“The huge amount of uncertainty in the wider economy could mean some jobs become less secure. Nobody is forecasting major job losses at this stage, but it’s worth thinking about how you might be affected by a global slowdown, and whether you feel your position is robust enough to make a financial commitment like this,” she explains.

Building a robust property deposit, and keeping emergency savings on hand, should help shelter you from more unsettling forces in the wider world, she said.

Aim to have three to six months’ worth of essential expenses in a competitive easy-access savings account, which can help protect you from unexpected expenses.

It’s worth doing the maths to understand what your monthly outgoings are likely to look like once you have completed a property purchase. Factor in any potential bill hikes, and plan for how you would manage if you were to experience a shock event like redundancy.

If you have accounted for these costs, you have the money and you are ready to go, then there is no need to hold back.

But if you are unsure and feel that buying now would stretch your monthly income to the max and leave you with limited emergency savings, it is probably better to wait. You might want to build up a larger deposit, negotiate a pay rise, or wait until mortgage rates are lower.

Home buyers set to receive more information before purchase

Home buyers are set to be given “vital” information about properties up front under new rules proposed by the government intended to save buyers time and money.

If made law, sellers and estate agents will be required to provide buyers with more details on the condition of the home being sold, leasehold costs, and the chain of people waiting to move.

With more information given up front, it will reduce the need for buyers to carry out their own searches and surveys. The government says the average first-time buyer could save £710 when they buy a home thanks to the changes.

Binding contracts may also be introduced to stop sellers walking away from agreements after buyers spend months in negotiations.

The extra information could halve the number of last-minute property transactions failures that cost the economy £1.5 billion a year, according to estimates by the Ministry of Housing, Communities and Local Government (MHCLG).

The reforms are made with the intention to “rewire a chaotic system which has become a barrier to homeownership,” according to the MHCLG.

Housing secretary Steve Reed said: “Buying a home should be a dream, not a nightmare. Our reforms will fix the broken system so hardworking people can focus on the next chapter of their lives.”

Johan Svanstrom, CEO of Rightmove, welcomed the announcement and said: “The home-moving process involves many fragmented parts, and there’s simply too much uncertainty and costs along the way. Speed, connected data and stakeholder simplicity should be key goals.

“We believe it’s important to listen to agents as the experts for what practical changes will be most effective, and we look forward to working with the government on this effort to improve the buying and selling process.”

Critics have highlighted that while buyers will save money, sellers will face increased costs.

Conservative shadow housing minister Paul Holmes said the reforms “risk reinventing the last Labour government's failed Home Information Packs - which reduced the number of homes put on sale, and duplicated costs across buyers and sellers."

Similar reforms were already made law by the previous Labour government in 2007 but were repealed in 2010 during the coalition.

The new rules will be consulted on alongside other reforms that include a new code of practice for estate agents and conveyancers.

Five vital questions for property viewings

If you’ve decided to go ahead with buying a house or flat, it’s important to take your time during property viewings and ask lots of questions.

According to St. Modwen Homes' property expert Alison Maclean, there are five overlooked questions that could save house-hunters a small fortune. She reveals the smart questions to ask that could protect your bank balance (and your sanity):

• What’s lurking in the loft? Rodent droppings, old asbestos insulation, and dodgy DIY wiring can all be hiding in plain sight. So, during your visit, ask when the loft was last inspected and whether it's been properly insulated – and don’t be afraid to request access during your second viewing.
• How old is the boiler – and when was it last serviced? Boilers typically last 10–15 years, and a full replacement can cost thousands of pounds. So, if the boiler is towards the end of its lifetime, it’s worth negotiating on price – or asking for it to be replaced before completion.
  Read more: ‘I replaced a gas boiler with a heat pump - here are five things I’ve learnt’
• What’s the parking situation really like? A designated space on the listing doesn’t always guarantee stress-free parking. Ask neighbours or check during peak hours to see how crowded the street gets – especially if the property is near a school or high street.
• What is the EPC? The Energy Performance Certificate rates a property's energy efficiency on a scale from A (most efficient) to G (least efficient) and gives an indication of how much it will cost to heat and power the home. Energy bills are rising, so taking a look at the EPC can provide insight into the potential running costs of the home.
• What’s the broadband speed and mobile signal like? Hybrid working is here to stay, and digital connectivity is more important than ever – yet it’s one of the most commonly overlooked details when buying a property. Check speeds using broadband checker tools, and ask the current owner about blackspots or dropped calls.