Buyers Defy Rate Anxiety as Transactions Hold Firm Nationwide

New data indicating that property buyers are pressing ahead with purchases despite persistent mortgage rate anxiety marks a notable shift in market psychology. After eighteen months in which every Bank of England announcement triggered a fresh wave of buyer hesitation, transaction volumes are proving stickier than the headlines about rate volatility would suggest. This matters enormously for a market that has spent much of 2023 and 2024 oscillating between paralysis and cautious recovery, because it suggests buyers have recalibrated their expectations rather than simply waiting for conditions to return to the ultra-low rates of the 2010s.

The context here is critical. Average two-year fixed mortgage rates have hovered between 4.5% and 5.8% over the past year, a far cry from the sub-2% deals many homeowners locked in before 2022, yet nowhere near the double-digit rates of the early 1990s that older commentators occasionally invoke to suggest perspective. What appears to be happening is a normalisation of expectations: buyers who might have held out for a return to historic lows are instead accepting that 4-5% mortgage rates represent the new baseline, and are structuring their purchasing decisions accordingly. This is a meaningful psychological shift, and one that has direct implications for transaction volumes, which the latest HMRC figures suggest have been running at roughly 85,000 to 90,000 monthly residential transactions—still below the 100,000-plus levels of 2021 but stabilising rather than declining further.

Regionally, the picture is far from uniform. Manchester and Birmingham continue to demonstrate the strongest underlying demand, buoyed by relative affordability and continued inward investment into city-centre regeneration schemes. Average prices in Manchester remain around 40% below London levels, giving first-time buyers and young professionals meaningful headroom even as rates bite into affordability calculations. Leeds and Liverpool show similar resilience, with rental yields in both cities exceeding 6% in prime postcodes, making them increasingly attractive to buy-to-let landlords who have otherwise been retreating from the sector amid tax changes and tighter lending criteria. London and the wider South East, including Surrey's commuter-belt towns, present a more complex picture: higher price points mean monthly repayment increases bite far harder in cash terms, and transaction volumes in prime central London remain notably subdued compared with the regional cities, even as buyers in outer boroughs and Home Counties towns continue transacting at reasonably steady rates.

For buy-to-let landlords, this resilience in buyer behaviour cuts two ways. On one hand, steady transaction volumes support capital values and provide reassurance that the exit strategy—selling into a liquid market—remains viable. On the other, landlords refinancing this year face materially higher borrowing costs than those who fixed in 2020 or 2021, and many are recalculating whether portfolios remain viable without rental increases that tenants can ill afford. First-time buyers, meanwhile, are the cohort most directly affected by the psychological shift described above: mortgage approval data from UK Finance shows first-time buyer numbers holding up better than expected, suggesting that Help to Buy's successors, including extended mortgage terms and family-assisted deposits, are cushioning the affordability squeeze more effectively than many anticipated.

Commercial investors and developers should read this data as a signal that consumer confidence, while fragile, has not collapsed—a distinction that matters enormously for forward planning. Developers who paused speculative schemes in 2023 amid uncertainty over both build costs and buyer appetite are now cautiously restarting phased launches, particularly in regional cities where off-plan sales rates have held up better than in London. Newcastle, often overlooked in national commentary, has seen steady absorption of new-build stock, reinforcing the broader northern resilience narrative. Commercial investors eyeing residential-adjacent opportunities, including build-to-rent and later-living schemes, should note that steady owner-occupier transaction volumes provide a useful proxy for underlying housing demand that supports the wider investment case.

Looking ahead six to twelve months, the most plausible scenario is one of continued gradual stabilisation rather than either a rate-driven crash or a sharp recovery. Should the Bank of England proceed with anticipated rate cuts through the remainder of the year, mortgage pricing should ease modestly, providing further tailwind to the buyer confidence already evident. However, this is not a market in which prices are likely to surge; rather, expect continued modest growth in regional cities of 2-4% annually, with London lagging closer to flat or marginal growth as affordability constraints persist longer in the capital. The clearest takeaway for investors is that waiting for a dramatic rate-driven buying opportunity is likely to mean missing the window entirely—the market is normalising around current conditions, not waiting for a return to the past.