Sellers are currently accepting the biggest discounts in five years, according to property website Zoopla, knocking £18,000 on average off their property asking prices to secure a sale.

These discounts, combined with stabilising mortgage rates, are making it increasingly affordable to buy a property, with the biggest barrier for buyers often being having to sell their current home to fund their purchase.

The number of properties for sale has increased 34% in a year to a six-year high. The average estate agent has 31 homes for sale on its books at the moment, compared to just 14 during the pandemic.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said it was a “bleak time” for sellers. She said: “They’re having to slash 5.5% off asking prices to secure a sale, providing the biggest discounts for five years. This doesn’t bode well for the future of property prices.

“The root of the problem is a lack of buyers, because higher mortgage rates are pushing potential properties out of reach. Demand is down 13% from this point in 2019. At the same time, we’ve seen a rebound in the number of properties for sale – up a third in a year – so any potential buyers have plenty to choose from.

“It means sellers are having to pull out all the stops to shift their homes – including cutting the price. So far, this is ensuring that sensibly-priced properties are finally shifting, with sales up 15% in a year. However, it’s worth bearing in mind the mini-Budget had unleashed carnage in the mortgage markets 12 months ago, so any comparison was bound to look fairly flattering.”

Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.

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What is happening to mortgage rates?

Even though they remain much higher than they were a couple of years ago, mortgage rates are finally starting to ease, after the government achieved its aim of halving inflation by the end of the year (although it remains more than double their 2% target). According to financial website MoneyfactsCompare, average rates for both two and five-year fixed rate mortgage deals fell for a third consecutive month at the start of November. 

The average two-year fixed rate stands at 6.29%, down from 6.47% in October, while the average five-year fixed rate is now at 5.86%. It’s worth noting however, that best buy rates are much lower than these average rates, although the best deals are typically reserved for those with substantial deposits to put down, or who have a significant amount of equity in their homes if remortgaging.

For example, two-year and five-year best buy fixed rates currently start from around 4.87% and 4.54% respectively, provided you want to borrow no more than 60% of the property value. 

“Financial markets expect the Bank of England to start cutting rates around the summer of 2024,” said Richard Donnell, director of research at Zoopla. “If mortgage rates start to fall further, this will support an improvement in demand, but prices will remain under modest downward pressure.”

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So is now a good time to buy?

Market conditions are certainly more favourable for buyers now than they’ve been for a while, although in many cases a purchase will be dependent on the sale of another property. If you don’t need to sell, perhaps because you are buying a second property or a buy to let property, or because you’re currently renting, then you may find it easier to proceed with a purchase relatively swiftly.

It’s important to remember however, that you’ll need to do your sums carefully to work out how much you can afford to spend on your monthly mortgage payments.

Our mortgage affordability calculator can help give you an idea of how much you might be able to borrow based on your income and outgoings. If you prefer to speak to someone – arrange to get expert mortgage advice from an experienced mortgage advisor.

You also need to think carefully about what type of mortgage you want. For example, you may need budgeting certainty, in which case a fixed rate mortgage may be the best option for you, or if you think interest rates are likely to fall further imminently, you may prefer to opt for a variable rate mortgage. You can find out more about comparing mortgages in our guide What’s the best way to compare mortgages?

Remember that buying a property is likely to be the biggest financial commitment you’ll ever make, so it’s important not to make any rushed decisions. For tips on how to protect yourself during the home-buying process, read our article 11 Common mistakes homebuyers make (and how to avoid them)

Ms Coles said: “If you can afford to buy at the moment, you’re in luck, because there’s plenty around and some bargains to be struck. However, if you’re planning to postpone a purchase, it makes sense to shop around for the best possible savings account for your deposit while you wait. Higher savings rates and lower inflation mean that if you get a really competitive deal, you should be able to hang onto the buying power of your cash, even if you can’t afford to move for six months or longer.”

You can find all the most competitive savings deals in our articles Best instant access savings accounts and Best cash ISA rates – which cash ISAs pay the most interest? Both these articles are updated weekly.

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