Fear of rising interest rates puts off Britain’s house buyers

By the Editorial Team · Friday, October 9, 2026

British property agents have seen a drop in buyer interest in September as expectations of an upcoming Bank of England rate hike increase mortgage costs and reduce market activity. This slowdown, marked by falling house prices and fewer mortgage approvals, suggests the housing market may face continued weakness and stagnant or declining prices over the next year.

British property agents report a decline in buyer interest amid growing concerns over rising interest rates as the Bank of England (BoE) signals a potential rate hike later this year. According to the Royal Institution of Chartered Surveyors (RICS), new buyer inquiries fell four points to minus 22 in September, marking the first drop since March. The negative reading indicates that more surveyors observed a decrease, rather than an increase, in demand.

The BoE has maintained interest rates since the beginning of the conflict between Israel and Iran but market expectations have shifted, with at least one rate increase anticipated before year-end due to mounting inflationary pressures. This has reversed earlier expectations of a possible rate cut prior to the outbreak of the Middle East conflict. Mortgage rates for two-year fixed deals have climbed by nearly one percentage point since the war started, approaching 6%.

Tarrant Parsons, head of market research and analysis at RICS, noted that the renewed anticipation of higher rates has dampened housing market activity. “Buyers have become more cautious and sales activity has lost momentum this month,” Parsons said. Property agents have also reported a decrease in agreed sales and a broader occurrence of falling house prices, the first in four months.

The housing market situation appears particularly challenging in London, where the index tracking home values recorded its lowest reading. Supporting data from the BoE showed mortgage approvals fell to their lowest point since 2023, while lender Nationwide reported the largest drop in house prices since May.

RICS forecasts continued pressure on home sales and prices over the coming three months, with the longer-term outlook also weakening. Surveyors now expect house prices to remain flat or decline over the next 12 months, reflecting a shift in confidence. Parsons highlighted that the market may face an extended period of subdued activity as households adapt to the reality of higher borrowing costs than previously expected.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.