UK House Price Growth Halves as Mortgage Rates Soar

Annual house price growth in the UK halved in September, according to data from Nationwide, as a fresh wave of mortgage rate hikes pushed the lowest five-year fixed rates above 5%. The slowdown marks a sharp deceleration from earlier in the year, with prices falling unexpectedly in some regions as the market reacts to higher borrowing costs.

The decline comes amid a broader tightening of monetary policy, with lenders raising rates in response to expectations of further Bank of England base rate increases. Nationwide reported that the annual rate of growth dropped to its lowest level in months, while separate figures from other indices showed monthly price falls. The average five-year fixed mortgage rate has now surpassed 5%, a level not seen since the financial crisis, significantly eroding buyer affordability.

Analysts warn that the housing market is likely to remain subdued as households face squeezed budgets and higher repayments. The slowdown could have wider implications for consumer spending and economic growth, with estate agents reporting a drop in inquiries. The Bank of England is expected to continue raising rates in the coming months, further pressuring mortgage holders and potential buyers. The government is under increasing pressure to address the affordability crisis, but no immediate policy interventions have been announced.