The number of homes sold in September fell by nearly 40% as transaction levels returned to normal following the big spike caused by the Covid stamp duty holiday, with experts suggesting the real “house sales horror story” is still to come. Across the UK, 103,930 transactions were recorded in September, which was 37% lower than the same month in 2021, but roughly the same amount as in August, HM Revenue and Customs (HMRC) figures show. The report said the number of completed deals has been stable in recent months, with the overall number still higher than before the pandemic. However, the housing market was thrown into disarray by the disastrous mini-budget on 23 September, which caused a rise in the long-term borrowing costs that underpin mortgage deals. Home loans were already getting dearer after this year’s run of Bank of England base rate increases. But about 1,700 deals were withdrawn amid the shock from the mini-budget (which was largely reversed this week by the new chancellor, Jeremy Hunt). New mortgage products are much more expensive. The cost of the average two-year fixed mortgage reached 6.55% on Friday, the highest since the financial crisis in 2008, while the average five-year deal is 6.43%, according to the data firm Moneyfacts. Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said the September figures suffered from comparisons with a year ago when the end of the stamp duty holiday led to a rush to complete transactions. “The real house sales horror story will play out in the coming months,” she said. Sales completed in September were largely agreed around June, when demand had started to drop back a little, as rising prices persuaded some to rethink, Coles said. However, while mortgage rates were rising, the average two-year fixed rate was 3.61% at the time so for an awful lot of buyers, monthly payments “still felt within the realms of affordability”. “Sales agreed in the coming weeks are likely to look far uglier, as the chaos unleashed by the mini-budget pushed mortgages well out of reach for an awful lot of buyers,” said Coles, who pointed to the fact that the average two-year fixed rate is almost three percentage points higher than the June figure. “We can expect this to hit completion figures towards the end of this year and into the beginning of 2023, when today’s sense of mounting dread feeds into the figures.” Some homebuyers who already have a mortgage in place may be pressing ahead with their purchase while others may choose to sit it out for a while to see what happens to mortgage rates and house prices in the coming months. Jason Tebb, the chief executive of property search website Onthemarket.com, said its data showed sentiment remained positive in September with nearly 80% of sellers confident they could complete a sale within the next three months. “We wait to see what impact further political events and the appointment of another prime minister will have on buyer and seller sentiment,” he said. “As interest rates and the cost of living continue to rise, buyers have less buying power so new properties coming to market must be priced realistically.”