Average UK house prices unexpectedly fell by 0.1% in May to £298,806, the third consecutive monthly decline. Rising mortgage rates fueled by the war in Iran are the cause, according to Halifax.
Analysts had expected a 0.1% rise. The May drop follows declines of 0.1% in April and 0.5% in March. “House prices continue to reflect the uncertainty surrounding developments in the Middle East,” said Amanda Bryden, head of mortgages at Halifax.
“Despite recent mortgage rate cuts, higher inflation expectations have kept borrowing costs above levels seen at the start of the year, continuing to weigh on affordability for many buyers and dampening demand,” Bryden said. On an annual basis, prices rose 0.5%, slightly above April’s 0.4% but well below the expected 1%.
Halifax expects house prices to remain “broadly stable” in the coming months, despite stubbornly high mortgage rates. The lender has already halved its forecast for annual price growth this year. On Thursday, the average two-year fixed rate stood at 5.66%, up from 4.83% at the start of March, according to Moneyfacts. The five-year fixed rate was 5.62%, up from 4.95%.
Jason Tebb, president of OnTheMarket, said the market had shifted in favor of buyers, despite pressure on people looking to buy or move home.
Source: www.theguardian.com
