UK’s rising cost of living [and what it means for first time buyers]

The UK’s rising cost of living has made for some alarming headlines, so it’s no surprise that it has sparked anxiety in many aspiring first time buyers.

But is it all doom and gloom? We’re going to demystify the UK’s recent interest rate increases and explain why now could actually be a good time to buy your first home.

It’s our job to get middle earning Londoners onto the property ladder, no matter how tough it is out there. Read on to find out why the rising cost of living shouldn’t deter you from becoming a homeowner.

Interest rates are historically low

We’re hearing a lot about rising interest rates in the news, but did you know that interest rates are still historically low? For context, during the 1980’s the base rate reached over 15%, whereas last month we saw the Bank of England increase its base rate to 1%.

Do note, however, that the base rate has been forecasted to further increase to 2.5% next year, which means that mortgage interest rates will also increase. If you want to get onto the property ladder, now could be a good time to act before interest rates rise again. To lock in a lower rate, speak to an Independent Financial Advisor (we recommend Censeo Financial) and seek out some of the good deals on homes that are still out there.

Some more good news – the Bank of England has just closed a consultation on the easing of affordability testing, which mortgage lenders are obliged to carry out on applicants. This could help balance out the increase in the base rate in the months ahead.

Rent is rising

Another argument for why it’s a good time to get onto the property ladder is that the cost of renting privately has soared over the past few months.

One member of Team Pocket, who lives in Haringey, has had a rent increase of 25% this year, and she isn’t alone; according to Zoopla, prices in every region are higher than they were before the pandemic, leaving tenants feeling squeezed as their overall costs of living increase.

Shared ownership is no exception. Annual rent increases for shared ownership homes are usually in line with RPI, so inflation has contributed to soaring monthly costs for shared owners.

If you’re sick of paying out to a landlord and are also struggling to save whilst renting, we recommend using our First Time Buyer Guide to explore your buying options. If you are able to purchase a home with a mortgage, your interest rate can be locked in for a number of years (most buyers fix for two or five years). This will give you some certainty in household costs and protect you from sudden rental increases imposed by a landlord.

Many of our residents report that their monthly outgoings actually decreased once they were on the ladder. Have a think about the pros and cons of renting before you make your decision, and keep in mind that Pocket homes are 20% discount, 100% ownership, making them a good option for middle earners.

Register with Pocket Living

New builds save energy

Findings from the HBF show that new build flats are 46% cheaper to heat on average, collectively saving new build owners an estimated £435 on household bills per year. We’ve seen unprecedented rising energy prices this year, so this is good news for first time buyers looking to buy a new build home.

In April, there was a £700-a-year increase in energy prices for millions across the country, and the cost of food, petrol and household goods has also risen. The cost of living increase has made it more important than ever to save on monthly costs, so buying a new build should be considered when exploring your buying options.

Some mortgage lenders will also offer lower interest rates for homes with higher EPC ratings, which can help with monthly household costs. In fact, a green mortgage rate can be up to 0.5% lower than the mortgage product available on a less energy-efficient home. When you go on viewings, remember to ask about the EPC rating of the home and any sustainable features.

Buying a home that saves energy can make a big difference to your bank account in the long run whilst also reducing your carbon footprint.


Interest rates are historically low but we’re seeing them rise, so if you’re in a position to do so, now is an opportune time to lock in a good deal on your first home. Getting out of the rental market will free you from the burden of sudden rent increases and may actually lower your monthly costs; buying a new build home could actually save you money on energy bills before you’ve even started making changes to your lifestyle.

Designed for middle earning Londoners, Pocket homes could present the opportunity for you to secure your future in the midst of a rising cost of living.

Our mission is to help aspiring homeowners onto the property ladder, so if you have any questions about buying a Pocket home, email our friendly sales team at sales@pocketliving.com. If you have any queries on affordability, we’ll put you in touch with a mortgage broker.

Share this page

Leave a Reply

Your email address will not be published. Required fields are marked *