Key facts
- Lloyds said UK house prices fell 1.2% year on year in October, the steepest annual decline since October 2023.
- The average UK property price was £296,285 in October, down £1,882 or 0.6% from September, Lloyds said.
- Andrew Asaam, mortgages director at Lloyds, said housing demand was being tested by a challenging economic backdrop.
- The Bank of England base rate rose 0.25 percentage points to 4% on Thursday, the first rise in more than three years.
- UK Finance said tracker mortgage holders would pay £30.72 more a month on average after the rate rise.
- Some 2.3 million fixed-rate UK mortgage deals are due to expire in 2027, according to UK Finance analysis.
UK house prices fell 1.2% year on year in October, the steepest annual decline since October 2023, according to an index published by Lloyds. The average property price was £296,285, down £1,882 or 0.6% from September.
Andrew Asaam, mortgages director at Lloyds, said: "Housing demand is currently being tested by a challenging economic backdrop." He said renewed inflationary pressures, driven in part by the conflict in the Middle East, were keeping borrowing costs high and adding to the squeeze on household finances, making some buyers more cautious.
Asaam said house prices had changed relatively little over the past couple of years as the market adjusted to higher interest rates, and that some adjustment in prices was not surprising given recent rises in energy and other household costs. He said Lloyds did not expect the fall to lead to a sustained period of falling house prices, and that wages rising faster than property prices should gradually narrow the gap between earnings and house prices.
The Bank of England base rate rose 0.25 percentage points to 4% on Thursday, the first increase in more than three years. UK Finance said the increase would cost homeowners on tracker deals £30.72 a month on average, based on typical outstanding mortgage balances. Around 87% of outstanding homeowner mortgages are fixed rates, and 2.3 million fixed-rate deals are due to expire in 2027, according to the analysis by UK Finance.