UK house prices grow at slowest pace in two years as mortgage rates rise
UK house prices rose by just 0.5% in the year to October, their slowest annual growth in more than two years. The slowdown matters because higher mortgage costs are discouraging buyers and putting pressure on the outlook for property prices.
Nationwide said the average UK home cost £273,566 in October, unchanged from September, when annual growth was 0.8%. Average five-year fixed mortgage rates reached 5.99%, while two-year rates stood at 5.97%; economists linked rising borrowing costs to bond-market volatility and inflation concerns. The government’s £4.7bn first-home scheme may offer some support, but analysts expect prices to remain subdued.
In short
- Annual house price growth slowed to 0.5%.
- The average home cost £273,566 in October.
- Mortgage rates near 6% are weighing on demand.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Slower house-price growth may make homes more affordable for buyers, particularly first-time buyers, and could ease pressure on households priced out by years of rising costs. With mortgage rates high and prices subdued, the market may be moving towards a more sustainable balance between what homes cost and what buyers can afford.
The case against
A slowdown can also signal that higher borrowing costs are making home ownership harder and weakening demand, rather than improving affordability in a lasting way. Subdued prices may unsettle homeowners and sellers, while continued mortgage pressure could weigh on household finances and the wider housing market.
Explained simply
UK house prices reflect what buyers are willing and able to pay, while mortgage rates affect how much it costs to borrow for a home. Many buyers use mortgages, so even a small rise in monthly repayments can affect what they can afford.
Nationwide is a building society that tracks house prices using mortgage data. The government’s first-home scheme is intended to help people buying a home for the first time; its effect depends partly on whether buyers can manage the cost of borrowing.