House prices fall at fastest rate in 14 years — dropping 3.8%
HOUSE prices have seen their biggest fall in 14 years.
But hopes that the figures for the year up to July could make homes more affordable have been scuppered by mortgage rate increases.
Nationwide building society said prices dropped 3.8 per cent to an average £260,828.
That is 4.5 per cent below the peak it reached in August 2022.
However, Nationwide chief economist Robert Gardner said: “Housing affordability remains stretched for those looking to buy a home with a mortgage.”
He noted that a typical first-time buyer would now have to spend 42 per cent of their take-home pay on mortgage payments.
He added: “That is up from 32 per cent a year ago and well above the long-run average of 29 per cent.”
The typical two-year fixed mortgage rate is now 6.85 per cent, and 6.37 per cent for five-year fixes, according to rates analysts Moneyfacts.
They could rise higher on Thursday with the Bank of England expected to increase the base rate from 5 per cent to 5.25 per cent.
“With another 25 basis points interest rate rise expected from the Bank of England later this week, we are not out of the woods just yet when it comes to rising mortgage costs,” warned Mark Harris of mortgage broker SPF Private Clients.