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UK house prices fall as higher mortgage rates squeeze buyers
Lloyds said mortgage approvals were at their lowest level since the start of 2024, while the average two-year fixed rate stood at 5.63% and the average five-year rate at 5.68%.
UK house prices in the UK fell for the first time since 2023, with Lloyds attributing the drop to higher borrowing costs, geopolitical uncertainty, and stretched affordability, according to Guardian Business. Lloyds reported that the average property cost £298,468 in August, down 0.4% year on year, the first annual decline since November 2023. The lender also said prices fell 0.2% or £685 versus July, and that the result came below economists expectations for a 0.2% annual rise, according to Reuters polling cited by the outlet. Guardian Business said Lloyds suggested homeowners were reluctant to reduce asking prices further, describing a market that is “subdued” amid higher inflation, borrowing costs, and geopolitical tensions. A director at Lloyds said the market is not seeing a rush of price cuts, but more sellers are choosing to wait for offers that meet their expectations, while some buyers are waiting to see how conditions develop. The article also pointed to mortgage market pressure, citing Moneyfacts data showing the average two-year fixed residential mortgage rate at 5.63% on Monday and the average five-year deal at 5.68%, both above levels at the start of the year. Lloyds added that mortgage approvals were at their lowest level since the start of 2024, and an estate agent in north London described a standoff between nervous buyers and sellers holding out for prices they believe have already adjusted enough.