Mortgage rates have seen a sharp increase once again as global uncertainty continues to impact financial markets. The ongoing Middle East tensions, coupled with persistent inflation and escalating oil prices, have heightened expectations that interest rates could stay elevated for an extended period, or even climb further, despite earlier hopes this year that borrowing costs would begin to decrease.

For borrowers, especially first-time buyers, this shift has been disconcerting. Many would have commenced the year feeling hopeful, only to witness mortgage products being repriced, withdrawn or hiked rapidly.

Deals that appeared affordable just weeks ago may no longer be as viable, leaving buyers pondering whether they should proceed or hold off. However, whilst much attention has been directed towards rising rates, another factor may be subtly re-emerging in the market, according to one expert.

Gazundering is the act of a buyer reducing their offer on a property at the 11th hour, typically just prior to the exchange of contracts. It’s a contentious practice and generally frowned upon – but in the worst-case scenario, it’s something that responsible buyers must contemplate.

As affordability becomes more strained and borrowing costs escalate, the figures behind agreed property purchases can alter swiftly. What once seemed manageable can suddenly feel stretched, particularly for first-time buyers who often possess less financial leeway.

Patricia Ogunfeibo, founder and non-practising solicitor at tenant2owner, said purchasers should not feel bound to decisions that no longer represent sound financial judgement.

She said: “Gazundering could be back. With mortgage rate volatility driven by geopolitical uncertainty and the Bank of England holding firm, the numbers that worked a few weeks ago might no longer work.

“But, for well-informed first-time buyers, this need not be a crisis. If your borrowing costs have materially changed since your offer was accepted, or you are rightly worried about the impact of the current crisis on your finances more generally, such as gas and electricity bills, you simply must revisit that offer. That is not gazundering for sport, that is a responsible reassessment of your financial wellbeing.”

While gazundering has traditionally been perceived negatively, frequently linked with opportunistic conduct late in the transaction process, the present climate is different, stated Patricia. Climbing rates are not a question of negotiation tactics, but a fundamental transformation in affordability.

‘Not prudent’

Purchasers who proceed without re-evaluating their position risk committing to an acquisition that may no longer be viable – particularly if they’re on a tracker mortgage with rates potentially set to rise. Patricia emphasised that re-evaluation is especially crucial for first-time buyers, who are more vulnerable to fluctuations in borrowing costs.

She continued: “People in the middle of a chain might be able to absorb moderately higher costs, but it is not prudent for a first-time buyer to. My advice is know your numbers, protect your position and never proceed with a transaction that no longer adds up for you just to be polite.

“First-time buyers shouldn’t think they are committing a crime by seeking to start a reassessment dialogue because sometimes, with co-operation, the whole chain will re-jig their numbers.

“In a volatile market, being decisive is important. But being financially secure, especially when buying a first home, is essential.”

Borrowers are being encouraged to take a step back and reconsider. That may mean renegotiating the purchase price, exploring alternative mortgage options or, in some instances, walking away altogether – the very last thing anyone desires.

Experienced sellers comprehend the cost of fall-throughs and, given a choice, would probably rather renegotiate on price, said Patricia. For first-time buyers navigating rising rates and shifting affordability, she said the message was clear: do not ignore the warning signs and do not be afraid to protect your position if the figures no longer work.