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This Is Money request: First-time buyers are feeling the brunt of rising mortgage rates: Could this lead to collapsing chains and house price falls?

ended 31. March 2026

This Is Money request: 

First-time buyers are feeling the brunt of rising mortgage rates: Could this lead to collapsing chains and house price falls?

Collapsing chains: If mortgage offers expire first-time buyers face 1% extra on their rates causing them to pull out?

Majority of first-time buyers rely on a mortgage making them sensitive to rate hikes and therefore likely to hold off?

Or could this be a good opportunity for first-time buyers to bag a discount?

Responses asap.

4 responses from the Newspage community

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Editor
Craig FishVerified
Director at Lodestone Mortgages
Rising mortgage rates are hitting first-time buyers hardest. Entirely dependent on mortgage finance, even a modest rate increase can push affordability over the edge, causing some to pause, reassess, or pull out of purchases altogether. In some cases, unless vendors are willing to discount, buyers simply have no choice but to walk away and focus on cheaper properties. I'm seeing this with clients right now, and it's contributing to chain collapses. But buyers who can still proceed are in a strong negotiating position. Vendors know the pool of viable purchasers is shrinking, and sensible ones are open to a conversation on price. Bargains are there for buyers to negotiate on. Short-term price softness? Quite possibly. A crash? Unlikely. Undersupply, strong employment, and a generation of would-be buyers who've waited years don't support a collapse in values. This is a market under pressure, not one that is falling apart.
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Bob SinghVerified
Founder at Chess Mortgages
Whilst those on fixed rates can sleep easy for now, the poor first-time buyer is having a torrid time.

The Middle East conflict has spooked the energy markets with the rise in fuel prices affecting the entire planet at a time when only a month ago rates were on a downward trajectory.

With the spectre of inflation and recession again in the headlines it doesn’t bode well for home buyers. Lenders have hurriedly withdrawn rates and relaunched them with little notice affecting many buyers who hadn’t made an application to secure their rate.

Now with the prospect of higher monthly payments and an uncertain markets, only the brave will step forward and buy. Many first-time buyers may defer their decision till the conflict subsides leading to a slowdown in the market and consequently a fall in prices.

Lenders who allow buyers to secure a rate at the AIP stage will pick up the lion’s share of business in the coming months

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Justin MoyVerified
Managing Director at EHF Mortgages
FTB’s are so essential to the whole property market, as they push on the homeowners further up the ladder, and make the whole property cycle work. Whilst the recent rate changes haven’t been ideal for FTB’s, they will be the first to be offered bettered rates, with lenders such as Coventry BS already reducing their FTB deals, and we may see more selective improvements over the coming weeks. This all creates a buyers market and price challenges to save money overall. Higher rates but lower prices.
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Jamie AlexanderVerified
Mortgage Director at Alexander Southwell Mortgages
Rising rates are acting as a brutal filter for the market. We are seeing chains collapse specifically where mortgage offers expire. A 1% rate jump overnight is often the difference between a "yes" and a "walk away."

This volatility is creating a buyer’s strike that actually benefits the resilient. With less competition, those who can still move are in their strongest negotiating position in years. We aren't seeing a crash, but we are seeing a price correction, smart first-time buyers are trading higher monthly interest for significant discounts on the purchase price. It’s a transition from a seller’s market to a negotiator’s market.