I’m a mortgage expert and this is why it’s a GREAT time to buy your first home – despite rising rates
Let’s be honest, the headlines this past fortnight have been enough to make any buyer nervous, let alone a first-time buyer.
Mortgage rates are rising again, and they’re rising by fairly significant amounts.
The Middle East war has pushed oil prices up, inflation fears are flooding back in, and lenders are reacting fast.
Products are being pulled and repriced, often at short notice, and we’re seeing rate hikes of 0.35 per cent and above. This is no minor increase.
Suddenly that sense of calm and optimism we had a few weeks ago has disappeared.
Buying opportunity: Mortgage broker Darryl Dhoffer says first-time buyers can use the current uncertainty to negotiate on price
But here’s the part no one is shouting about loudly enough, in my opinion. This tough market with its hefty mortgage rate increases might actually be the best opportunity first-time buyers have had in years.
I know that sounds counterintuitive. Rates going up doesn’t feel like good news.
But property is not just about rates, it’s about the price you pay for a home, how you negotiate and the balance of power.
And right now, the balance of power is shifting back in favour of buyers – and in particular first-time buyers.
When mortgage rates rise, as they are currently, demand drops, buyers hesitate and chains slow down. And when that happens, sellers get nervous.
Very quickly, sellers can be prepared to accept less for their property just to get a sale. Because who knows, rates could rise even higher and they may get an even lower price in the future.
And it’s at this exact moment, for first-time buyers, that opportunity appears.
Even though their mortgage will now cost them more than it would had they taken it out a few weeks ago, the cracks in sentiment that are already forming in the property market means first-time buyers can now confidently offer a lower price than they could previously.
Potentially thousands or even tens of thousands of pounds less, subject to the property’s value.
Things really can turn that quickly.
And here’s a simple truth. A small reduction in purchase price can completely cancel out a rate increase. In fact, negotiating just 1.1 per cent off a property price wipes out the impact of recent rate rises.
But if you push harder, and you absolutely should, the numbers become even more powerful. Let’s look at a real example.
| Three weeks ago | Today |
|---|---|
| Purchase price: £300,000 | Purchase price: £285,000 (5 per cent discount) |
| Deposit (10 per cent): £30,000 | Deposit (10 per cent): £28,500 |
| Interest rate: 3.9 per cent | Interest rate: 4.66 per cent |
| Monthly payment: £1,411 | Monthly payment: £1,446 |
| Balance after 5 years: £234,420 | Balance after 5 years: £227,867 |
| Based on a 5-year fixed rate over a 25-year term, correct as of 18 March 2026 | |
The result? Despite the higher interest rate, your monthly payment is only £35 more. But more importantly, after five years you owe £6,553 less on your mortgage.
That’s more than £6,000 of extra equity, simply from negotiating a better purchase price. Which current market conditions have just empowered you to do.
This is the bit many buyers miss. You can refinance a mortgage. You cannot renegotiate the price you paid for a property. That’s why this moment matters.
Right now, you have three key advantages.
Advantage number one is there’s less competition and fewer buyers, which means fewer bidding wars and less pressure to overpay.
Advantage number two is motivated sellers. People still need to move and, in an uncertain market where the cost of borrowing could rise even more, they’re far more open to realistic offers.
While others are waiting for ‘perfect’ conditions, the buyers who act now are putting themselves in the strongest financial position for the future
Advantage number three is that buying at a lower price improves your loan-to-value and gives you more equity from day one. It’s an equity boost.
Yes, rates are higher today than they were at the end of February before Trump fired his missiles on Iran. But they won’t stay high forever.
If they fall in the next couple of years, and you opted for a two-year fixed rate, you can remortgage. If you overpay today, you’re stuck with that decision for the long term.
So don’t let rate headlines scare you out of the market. Use them.
Because while others are sitting on the sidelines waiting for ‘perfect’ conditions, the buyers who act now, and negotiate well, are the ones quietly putting themselves in the strongest financial position for the future.
Sometimes the best opportunities don’t feel comfortable, and this is one of them. Seize the moment.
Darryl Dhoffer is founder of mortgage broker, The Mortgage Geezer.
