Interest rates and house prices are both rising - adding more pressure to first-time buyers who are so desperately trying to get on the property ladder.
The Bank of England last week hiked its base rate to 2.25% - its highest level in 14 years - with analysts fearing they could go as high as 6% next year.
If you have a tracker mortgage, your monthly repayments will move in line with the base rate - meaning you’re paying more for your mortgage.
Most standard variable rate (SVR) deals will also become more expensive, although it is down to your lender to decide whether they put up your rates.
If you have a fixed-rate mortgage, then you’ll be protected from any rises until your current deal comes to an end.
The issue with this is, homeowners will face paying thousands of pounds more when they come to remortgage due to how much rates have risen.
Has your mortgage already gone up because of rising interest rates? Let us know: mirror.money.saving@mirror.co.uk
“Someone who fixed for 2% two years ago could be looking at a remortgage rate at 5% by next week,” said Sarah Coles, senior personal finance analyst at Hargreaves Lansdown.
“If they had a £200,000 mortgage over 25 years, that’s a rise in monthly payments from £848 to £1,169 – or £321.”
As interest rates rise, house prices have been steadily going up - although economists say they could fall next year if interest rates continue to rise.
Latest figures from Land Registry data show the average UK house price was £292,000 in July 2022 - up 15.5% annually and the highest annual rate since May 2003.
Analysts say this figure was distorted by last year’s stamp duty holiday, when the threshold for when you need to start paying this tax was raised to £500,000.
Economists at Capital Economics and Credit Suisse now predict that house prices could fall by between 10% and 15%, if interest rates are hiked to 6%.
This comes despite another cut to stamp duty having been announced in the Mini-Budget.
The threshold for when you pay stamp duty in England and Northern Ireland has risen to £250,000, or to £425,000 for first-time buyers.
The value of the property on which first-time buyers can claim relief will has also gone up from £500,000 to £625,000.
Unlike the stamp duty holiday announced during Covid, there is no deadline for these new thresholds - they’re a permanent measure.
So, is now the right time to buy a property?
There isn't really a yes or no answer to this - it depends entirely on your circumstances, both your personal life and your financial situation.
Instead, we spoke to several finance experts to go through the pros and cons.
Whatever stage of the property buying journey you're at, make sure you get independent financial advice and go through all your options before making any decision.
Of course, no one knows how house prices or interest rates will change over the next few months - or years.
A property is a long-term investment, so it is important to look at the bigger picture and your life goal before making any big decisions.
"Buying a home is about more than just the finances, and people will be driven by their own life events," said Ms Coles.
"If you’re in a one-bedroom flat with a baby, for example, then now is going to be the right time to consider a move – the current market may just dictate where you decide to move to. It’s also important to think about timescales.
"If you were planning to move somewhere that will suit you for a year or two before another move, you’re going to be far more concerned about the immediate future of the property market, and you may well think twice - especially if you only have a small deposit.
"If this is a home where you’ll be happy for the longer term – and you have a decent chunk of equity, and can comfortably afford your mortgage payments – then even if we have a few incredibly difficult years for the market, it’s not necessarily going to be a problem for you."
Of course, you can't ignore the cost of living crisis - and long-term affordability must be taken into account if you're considering buying a property.
Always make sure you're financially secure enough to keep affording your mortgage payments even if they do rise.
"My view is that this is a terrible time to over-stretch yourself," said Ms Coles.
"If you’re planning to borrow to the max and your new mortgage payments will stretch your budget too tight, you need to reconsider."
If you are a first-time buyer, and you're set on purchasing your first home now, then you should also be careful not to be left with negative equity.
Negative equity is when a house or flat is worth less than the mortgage you took out on it.
Karen Noye, mortgage expert at Quilter, said: "If you buy a house now with a high loan to value mortgage and then house prices do crash they could be left with negative equity and this will hamper your chances of moving in the future until prices rebound.
"If you are looking to downsize now will be the time to sell as you will likely be able to get the most amount for your property. However, those looking to upsize might choose to wait a bit as there may be more choice in a few months’ time.
"For cash buyers it may be sensible to opt to get into the market sooner rather than later considering inflation is marching ever higher as house prices are likely to increase again at some point.
"Ultimately, it comes down to the individual personal and financial circumstances of the borrower."
The key message is be cautious and look at your finances over the long-term.
One thing that experts do think could help bring down house prices, is more housing.
At the moment, demand for properties is still way outstripping supply, warns Rachel Springall, finance expert at Moneyfacts.
“We may see a seasonal slowdown towards the end of 2022, but the demand in the property market may well be volatile during these unusual circumstances, especially when affordable housing is not being built fast enough," she said.
"The stamp duty cut may be good news to some buyers, but housing supply will need to be addressed for many first time buyers to even consider getting their foot onto the property ladder."
