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Mortgages

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Interest rates play a crucial role in the housing market, influencing affordability, mortgage costs, and overall demand for property. Whether rates rise or fall, homebuyers must understand how these changes impact borrowing power, monthly repayments, and long-term financial commitments. 

1. How Interest Rates Affect Mortgage Costs 

The most immediate effect of interest rate changes is on mortgage repayments. When interest rates rise, borrowing becomes more expensive, while lower rates make mortgages more affordable. 

  • Higher Interest Rates: 
  • Increase monthly mortgage repayments. 
  • Reduce borrowing capacity, as lenders assess affordability based on repayment levels. 
  • Can deter some buyers from entering the market. 
  • Lower Interest Rates: 
  • Reduce monthly repayments, making homeownership more accessible. 
  • Increase the amount buyers can borrow, potentially allowing them to purchase higher-value properties. 
  • Drive higher demand in the housing market, often leading to increased property prices. 

2. Impact on First-Time Buyers 

First-time buyers are particularly sensitive to interest rate changes. A higher rate can reduce affordability, requiring larger deposits or lower borrowing amounts. Conversely, lower rates create a more favourable environment, making it easier to step onto the property ladder. 

  • Rising Rates: May push some first-time buyers into renting longer or seeking lower-priced properties. 
  • Falling Rates: Encourage more first-time buyers to enter the market, increasing competition for homes. 

3. The Effect on Homeowners and Remortgaging 

For existing homeowners, interest rate changes affect those on variable-rate mortgages or those approaching a remortgage

  • Fixed-Rate Mortgages: Those on a fixed-rate deal are protected from immediate changes but may face higher rates when their term ends. 
  • Variable-Rate Mortgages: Monthly repayments fluctuate with interest rate movements, meaning homeowners could see costs rise unexpectedly. 
  • Remortgaging Considerations: When interest rates are low, homeowners may switch to a new deal to secure lower repayments. 

4. House Prices and Market Demand 

Interest rates influence property demand and house prices

  • When rates rise, borrowing becomes more expensive, often leading to reduced demand. This can slow house price growth or even cause declines in some areas. 
  • When rates fall, more buyers enter the market, increasing competition and driving prices higher. 

5. Strategies for Homebuyers in a Changing Interest Rate Environment 

To navigate fluctuating interest rates, homebuyers should: 

  • Compare mortgage deals – Fixed-rate mortgages provide security against future rate increases, while variable rates may be beneficial if rates fall. 
  • Use mortgage calculators – Estimate affordability based on different interest rate scenarios. 
  • Plan for potential rate changes – Consider whether current rates are sustainable for long-term financial stability. 
  • Save a larger deposit – A bigger deposit can unlock better mortgage rates and reduce monthly repayments. 

Interest rate changes directly affect home affordability, mortgage repayments, and the overall housing market. Whether rates are rising or falling, buyers must assess their financial positionexplore mortgage options, and plan for potential changes to ensure a stable and manageable home purchase. 

 

Whatever your position in the housing market—whether you're a first-time buyer or a homeowner looking to remortgage—it may be worth getting in touch with us today to book an appointment and discuss your options.  Richard Kendall Estate Agent works in partnership with SMH Finance LLP who would provide the mortgage advice. Speak to one of SMH Finance LLP specialists today and telephone 01924 291294.

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What Our Customers Say...

Fantastic service Very productive in a market that is difficult and stressful. Helpful and always keeping you up to date with great advice in the process. John 09/06/2025
Wonderful, friendly service from Francesca and the team. Thankyou for making the whole experience from viewing to signing up and getting the keys a 5 Star service. Susan 09/06/2025
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Roger Hall visited us and gave us a valuation in October, after reviewing other estate agents we agreed to go ahead with Richard Kendall a week later. In the space of just 15 days we had an offer we had accepted on our property. We were buying a new build property with a long lead time (6 months), and Richard Kendall were fantastic in ensuring our prospective buyers (and anyone else in the chain) knew of the situation. I can't fault the speed or communication of the team, particularly Karen Dawson who helped us at every step. Andrew 09/06/2025
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We’ve just sold a property with Richard Kendall and couldn’t be happier with the excellent service received from Lucy and the team. Their professionalism and communication throughout was spot on and made the whole process much less stressful. We were also really impressed with their marketing of the property which resulted in lots of viewings, offers and the sale price we wanted. We actually moved to Richard Kendall from another local agent and couldn’t believe the difference in all aspects of the process. Brilliant from start to finish, can’t recommend Lucy and the team highly enough. Lydia 09/06/2025
The entire process of selling my parents' property during a difficult time was handled with exemplary care and professionalism. Amanda and the team at the Wakefield office were fantastic throughout. Their attention to detail, clear communication, and supportive approach made a challenging situation much easier to navigate. Special thanks again to Amanda, Andy and Donna for their invaluable input and assistance. Their expertise and dedication truly stood out. I highly recommend this team for anyone seeking a smooth and supportive property sale experience. Ben 09/06/2025
We sold out flat through Richard Kendall, working mainly with Karen Marijewko and we could not have had a better experience than we did. Karen kept in touch through the full process without any prompting required, she was so supportive and helpful! We really couldn’t have asked for more from the agency in general but especially from Karen. The process wasn’t the smoothest but Karen helped move it along and always kept us in mind to get us the best experience, we are so grateful for everything Karen has done for us! Sarah & Warren 09/06/2025
The support that Liz from the Wakefield office, gave at this time is unmeasurable. Many thanks for going above and beyond and endeavouring to get our sale over the line. Ricahrd 09/06/2025

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