Nationwide’s latest figures reveal a small uptick in property prices, and the latest base rate cut may be another boost to the housing market
UK house prices increased by 0.3% month on month in July, according to Nationwide. The lender has published its July House Price Index, which also shows that annual house price growth increased by 2.1% from 1.5% in June. The lender says this marks the fastest pace of growth since December 2022.
The average UK house price, according to Nationwide, was £266,334 in July compared to £266,064 in June.
Nationwide’s Chief Economist, Robert Gardner, says that housing market activity has been relatively steady in recent months, with mortgage approvals at around 60,000 per month. He describes this as a ‘respectable pace’ given the challenges faced by homebuyers.
Gardner says that borrowers with a 2% deposit can expect to secure a rate of around 4.6% on a five-year fixed-rate deal, which is more than double the 1.9% average the lender recorded in 2019.
Affordability challenges
Affordability is still a challenge for many homebuyers due to living costs and higher interest rates, but Nationwide expects affordability to improve due to wage growth outpacing house price growth, combined with ‘modestly lower borrowing costs’.
The Bank of England’s decision to reduce the base rate from 5.25% to 5% on 1 August will no doubt be a boost for the market. The rate has remained the same since August 2023 and it’s the first time in four years it has been reduced. Before that, it increased consistently between December 2021 and August 2023.
Those on tracker rate mortgages will see a reduction in their monthly payments, while those on standard variable rates may see a reduction depending on their lender.
Some high-street lenders, including Santander, Halifax, and NatWest, had already reduced their mortgage rates in anticipation of the Bank of England’s base rate cut.