Demand and sales rebound, but with fewer affordable mortgages
- The war in Iran has curbed spending power as mortgage rates adjust in anticipation of energy-cost inflation.
- Housing supply is at an 11-year high in some regions, with 5% more homes for sale than a year ago.
- The average 75% LTV fixed rate across the 6 big lenders is over 5% (Mojo Mortgages)
- House prices across England & Wales grew 0.9% YoY to £284,720 (HPI).
- Remortgage approvals are at their highest since 2018 pre-COVID.
- The Base Rate was held at 3.75% on the 30th April, but will likely increase in June if inflation rises.
Despite the economic tremors caused by the conflict in the Middle East, the UK housing market has demonstrated remarkable resilience this April. While consumer confidence dipped following the rise in oil prices and subsequent swap rate volatility, transactional activity remains steady. Nationally, house prices have seen a surprise recovery, with annual growth climbing to 3.0% (up from 2.2% in March).
Demand and Sales: The Easter Rebound
Zoopla data is showing a marked rebound after the Easter holidays:
- Agreed Sales: Levels are holding up well, running 3% below the same period last year.
- Buyer Enquiries: There has been a notable post-Easter bounce. Enquiries are currently at their highest level since February, suggesting that "needs-based" movers are pressing ahead regardless of broader economic noise.
- Stock Levels: Housing supply is at an 11-year high in some regions, with 5% more homes for sale than a year ago, shifting some leverage back to the buyer.
Whilst having a good amount of housing stock is critical, one of the greatest challenges at the moment is the mortgage affordability gap.
Mortgage affordability tightest since 2008
UK Finance has published a new Lending Where We Live report revealing a sharp difference in mortgage affordability and buy‑to‑let (BTL) returns across the UK.
At a UK level, homebuyers spend on average just over a fifth (21.3 per cent) of their gross income on their mortgage – the highest level since 2008. Borrowers in two places – North Norfolk in East Anglia (25.7 per cent) and the London Borough of Hillingdon (25.1 per cent) spent over a quarter of their gross income on mortgage repayments.
It’s been challenging times for those trying to buy a property in recent years, with affordability pressures weighing heavy. But the pain is not felt equally across the country. Property prices, wages and demographics vary greatly across and within regions. All of these have an impact on affordability, and if you’re a landlord, how profitable your investment property is.
Source: James Tatch, Head of Analytics at UK Finance
Mortgage rates jump
Rightmove has reported that the average two-year fixed rates jumped from 4.25% to 5.42%(1) in a matter of weeks, adding roughly £235 to the monthly cost of a typical new mortgage. The increase comes as the Bank of England freezes the base rate for the 2nd meeting in a row.
Financial markets are now largely pricing in further Bank of England Base Rate increases this year rather than cuts. This has fed through into higher mortgage rates compared with earlier in 2026 and this time last year. The initial shock appears to have passed, with mortgage rates stabilising over the past couple of weeks, but they remain elevated. The next moves will depend on upcoming UK inflation data and how the Bank of England responds.
Source: Matt Smith, Mortgage Expert at Rightmove
(1) Data provided by specialist mortgage technology provider Podium Solutions. The data covers 95% of mortgage lending, to exclude specialist lenders.
The North-South Divide
The "North-South divide" has sharpened this April.
- The North: Remain the primary engines of price growth. Markets in the North West and North East are seeing faster sales and more robust price inflation due to better relative affordability.
- London & The South East: Higher mortgage rates are being felt more keenly here. While London house prices rose by a modest 0.8% in April, prime central London saw transaction volumes fall significantly as international and high-end buyers adopted a "wait and see" approach.
The gap in affordability flagged within the Lending Where We Live report is contributing towards this divide as home ownership simply becomes unaffordable for more and more in the south of England.
Will mortgage rates go down in 2026?
As we predicted in our February 2026 Report, the Bank of England held interest rates at 3.75% in their March meeting. This was even on the back of the announced fall of inflation to 3%. Had the Iran War not broken out, a base rate cut would have been needed.
Now, even though there is uncertainty in the mortgage market and talk that inflation will rise, some do not feel that increasing the base rate is the answer. Bank of England policymaker Alan Taylor said he saw a high bar to raising interest rates, and it was preferable to maintain rates until there was greater clarity on the impact of the war in Iran on the economy.
Quite what this looks like is unclear, but the longer the war goes on and the more disruption there is to oil flows to the UK, the more we will see financial countermeasures to combat rising inflation. The Bank of England’s Financial Policy Committee (FPC) have said the conflict in the Middle East will “weigh on growth, increase inflation and tighten financial conditions”, and could push 5.2 million borrowers onto higher mortgage repayments by the final quarter of 2028.
The base rate was held at 3.75% in April, while inflation is at 3.3% and is likely to increase. I expect a base rate increase in June at the end of the energy price cap.
The upcoming MPC announcements on Bank Rates are on the 18th June, 30th July, 17th September, 5th November, and 17th December.
Sales volume shows recovery before the Iran war broke out
England & Wales
Sales volume of property across England and Wales remains subdued, down 31% YoY. Interestingly, the number of transactions rose slightly month-on-month. This shows the market was already picking up, but during the delay window on published data, the Iran war has knocked international markets off track.
The average 75% LTV fixed rate across the 6 big lenders is over 5% (Mojo Mortgages), pushing affordability out of reach for many buyers.
Total property sales were just 47,703 in December, a 44% fall versus a decade earlier.
London
London continues to face challenges. The average property price is £542,304 (February 2026), a 3.3% YoY decrease. House prices in London have been lower year-on-year for seven consecutive months.
Completed property sales in London were just 4,386 in December, a 36% fall YoY and a 55% fall versus a decade earlier.
Property price growth below inflation
Property price growth in the latest data release from the Land Registry was a modest 0.9% growth for February.
- The average price for first-time buyers is now £238,857, a 0.8% annual rise.
- Owner-occupiers paid an average of £345,853 (up 0.9% year-on-year).
- Cash buyers averaged £271,315 (up 0.5% year-on-year).
Mortgage approval reports
Home buyers
House Purchase Mortgage Approvals in March 2026 fell by 1% compared with the previous year, and show how the war in the Middle East impacted home buyers. It is clear that once the Bank of England data for April becomes available, we will see a dramatic fall in mortgage approvals due to uncertainty over the Iran war and the withdrawal of circa 1,500 mortgage products.
Remortgages
Remortgage Approvals reached 51,137 in March 2026, up 52% on last year and the highest number of approvals since 2018 pre-COVID. The base rate falling opened up the door for homeowners to secure affordable mortgages, even in the month the Iran war started. Sadly, this window has been closed, so I am expecting the number of remortgages to fall over the next few months, or until the war ends.
Lowest new build completions since lockdown
Housing completions fell year on year for 5 quarters in a row, until Q4 of 2025, which showed a small 2% increase to 41,570 completed new builds. The Government's building pledge would require close to twice this number of quarterly completions.
To achieve the 1.5 million pledge, Labour needed to deliver 75,000 completed homes a quarter. Since Labour has been in Government (July 2024), they have delivered 216,020 new properties in 6 quarters. To achieve their pledge, they needed to have built 450,000 properties by now. This is a shortfall of 233,980 so far.
We extend our deepest sympathies to those affected by war overseas and those impacted here in the UK. If you are concerned about loved ones in Iran, they can seek emergency help from the British Government. If you would like support in coping with stress, there are resources available from the NHS.
Andrew Boast FMAAT
CEO of SAM Conveyancing
The UK housing market in April demonstrated remarkable resilience in the face of external shocks. Despite the "Iran War" effect driving average two-year fixed mortgage rates up to 5.42%, the market remains functional and resilient.
Buyer enquiries have rebounded to their highest levels since February, proving that needs-based movers are undeterred by the current geopolitical climate. The annual house price growth has remained steady at 1.3% nationally, though this masks a clear North-South divide. The North East continues to outperform, while southern regions face modest price softening amid higher affordability pressures.
This has meant that transaction volumes are holding firm, currently running just 3% lower than the exceptionally strong market of April 2025, and with 5% more homes for sale than this time last year, buyers have more choice, making realistic pricing essential for a successful sale.
In summary, while the market is "shifting" in response to higher borrowing costs and inflation concerns, it is far from stalling. Stability remains the dominant theme as we head into the summer months.
Sources: Latest data from - Gov.UK, Bank of England, UK House Price Index, ONS and Propertymark (NAEA).Frequently Asked Housing Market Questions
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