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What rising property prices mean for homeowners

May 26, 2026

Category: News

Property prices are forecast to experience strong growth over the next five years. Even if you’re not planning to move, this could still affect you as a homeowner.

According to Halifax’s House Price Index (8 April 2026), in March 2026, the average house price neared £300,000 and increased by 0.8% compared to a year earlier.

Looking to the next five years, estate agent Knight Frank (22 April 2026) expects house prices to grow by more than 20% between 2026 and 2030 despite concerns that interest rates could rise. Due to conflict in the Middle East, prices in 2026 are expected to rise by a sluggish 1.5%, but the figure is forecast to increase to 6% by 2030.

House prices have a clear effect on first-time buyers or homeowners planning to move, but they could also affect you if you intend to stay in your current home.

4 reasons rising property prices could affect homeowners

1. It could reduce your mortgage repayments

As the value of your property rises, so does the equity in your home. If you’re a mortgage holder, this could have a positive effect on your repayments.

Lenders consider homeowners with more equity to pose less risk. As a result, they often have access to more competitive mortgage deals, which could reduce the interest rate you pay and your repayments.

Even a small reduction in the interest rate on your mortgage could save you substantial sums.

If you have a repayment mortgage for £200,000 with a 15-year term and an interest rate of 5%, your monthly repayment would be £1,582. Over the full term of the mortgage, you’d pay almost £85,000 in interest.

In the same scenario, if the interest rate fell by just 1% to 4%, your monthly repayment would fall to £1,479. Over the mortgage term, that would mean saving more than £17,000 in interest.

So, if you’re searching for a new mortgage deal, reviewing the current market value of your home could be a savvy move.

2. You may benefit from updating your home insurance

If you haven’t updated your home insurance in a while, you might find that it no longer offers the protection you thought it did. Rising property prices and construction costs may mean your home is now underinsured, and you could face a shortfall if you needed to make a claim.

The good news is that the average cost of home insurance fell by just over 1% in the last quarter of 2025, according to Which? (10 March 2026). So, updating your home insurance to ensure your property is fully protected might not increase your outgoings by as much as you expect.

3. Your borrowing options may increase

If you need to borrow money, securing a loan against your home could allow you to access lower interest rates. As property prices rise, you might find the amount you’re able to access this way could increase, which you might use to fund home improvements or other expenses.

However, keep in mind that if you miss repayments of a loan that’s secured against your property, you could lose your home.

Rising property prices could also mean you’re able to unlock more property wealth through equity release in the future.

Equity release is effectively a loan secured against your home. Unlike a traditional loan, you don’t need to make regular repayments. Instead, the amount you borrowed, along with any interest accrued, is repaid when you pass away or move into long-term care.

You usually need to be 55 or older to use equity release, and it could provide a way to boost your retirement finances.

However, as the interest is rolled up, the amount you owe when the loan is repaid could be significantly higher than the initial amount you borrowed, and equity release can affect what you leave behind for loved ones. If you receive means-tested benefits, taking money from your property could affect your eligibility.

As a result, it’s often beneficial to seek tailored advice before you decide if equity release is right for you.

4. You could benefit from considering your estate plan and Inheritance Tax liability

Finally, rising property prices could unwittingly push the value of your estate above Inheritance Tax (IHT) thresholds.

In 2026/27, you can usually leave £325,000 to your loved ones before IHT is due. If you leave your main home to a direct descendant, you might benefit from an additional £175,000 allowance. With average property prices already accounting for a significant portion of the allowances, you might be closer to the IHT threshold than you expect.

Working with a professional to create a tailored estate plan could help you identify ways to reduce a potential IHT bill to pass on more wealth to your loved ones.

Contact us

Whether you’re looking to move home or remortgage your existing property, we could help you find a mortgage that suits your needs. Please contact us to find out how we could work together.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

HM Revenue and Customs’ practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

The Financial Conduct Authority does not regulate Inheritance Tax planning or estate planning.

A lifetime mortgage is not suitable for everyone and may affect your entitlement to means tested benefits, so it is important to seek financial advice before taking any action. If you are considering releasing equity from your home, you should consider all options available before equity release.

The interest that may be accrued over the long term with a lifetime mortgage, may mean it is not the cheapest solution. As interest is charged on both the original loan and the interest that has been added, the amount you owe will increase over time, reducing the equity left in your home and the value of any inheritance, potentially to nothing.

Although the final decision is yours, you are encouraged to discuss your plans with your family and beneficiaries, as a lifetime mortgage could have an impact on any potential inheritance. We would also encourage you to invite them to join any meetings with your financial adviser so they can ask questions and join in the decision, as we believe it is better to discuss your decision with them before you go ahead.

 

Approved by The Openwork Partnership on 19/05/2026.

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