By Fatma Younis
UK house prices grew at an annual rate of just 0.5% in October, the slowest pace in more than two years, as higher mortgage rates deterred potential buyers. The average property price stood at £273,566, flat from the previous month and down from 0.8% annual growth in September, according to lender Nationwide.
Mortgage Rates Hit 6% Barrier
The average five-year fixed-rate mortgage reached 5.99% this month, breaching the 6% threshold for the first time in three years, while the two-year rate averaged 5.97%, according to Moneyfacts. Although the Bank of England has held its base rate at 3.75% since December, bond market volatility has pushed up the swap rates that determine fixed mortgage pricing. Markets now expect the Monetary Policy Committee to raise the base rate to 4% next week.
Economists Warn of Further Price Falls
Nationwide chief economist Robert Gardner said the conflict in the Middle East had heightened inflation concerns, driving expectations of higher interest rates. He noted that surveyors report weak new buyer inquiries and that consumer sentiment dipped noticeably in October. Knight Frank’s head of UK residential research, Tom Bill, added that rising mortgage costs “eclipse any support measure announced in this week’s budget.”
Government Scheme Offers Limited Boost
Chancellor John Healey confirmed a new £4.7 billion Your First Home scheme aimed at first-time buyers without family financial support. Pantheon Macroeconomics chief UK economist Rob Wood said the program could provide a “modest boost” but predicted prices would remain “subdued” next year. Bill suggested asking prices must reflect the tougher financial landscape buyers face.
