HOUSE prices have soared to a “surprising” record high ahead of the Bank of England’s interest rate decision today.
The average house price was £293,999 in October, according to one of the UK’s biggest mortgage lenders, Halifax.
House prices last peaked in June 2022 when the average cost of a property hit £293,507.
The surge came towards the end of the pandemic-era ‘race for space’, the lender said.
Amanda Bryden, head of mortgages at Halifax, said: “That house prices have reached these heights again in the current economic climate may come as a surprise to many, but perhaps more noteworthy is that they didn’t fall very far in the first place.
“Despite the headwind of higher interest rates, house prices have mostly levelled off over the past two and a half years, recording a 0.2% increase overall.”
Prices increased by 0.2% in October compared to the previous month – the fourth month in a row that property prices grew.
They were also up 3.9% compared to the same time last year, easing back from growth of 4.6% in September.
Northern Ireland continues to record the strongest annual house price growth, with prices up by 10.2% year-on-year, Halifax said.
The average price of a property in Northern Ireland is now £204,242.
Scotland was the weakest performing region, with prices rising by 1.9% over the year to £206,480.
The North West once again recorded the strongest house price growth of any region in England, up by 5.9% over the last year to £235,587.
London continues to have the most expensive property prices in the UK, now averaging £543,308, up 3.5% compared to last year.
However, this is still some way below the capital’s peak property price of £552,592 set in August 2022.
Overall, across the UK, prices were up 1.2% compared with the third quarter of 2024.
What’s happening with house prices and mortgages?
The Bank of England’s Monetary Policy Committee (MPC) meets at midday today to decide whether or not the base rate will be cut from 5%.
Economists are widely predicting that interest rates will fall by 0.25 basis points to 4.75%.
This move would spell good news for borrowers, including homeowners, who could see a reduction in mortgage rates.
That’s because the base rate is used by lenders to set the interest rates they offer customers on savings and borrowing, including mortgages.
Generally, higher mortgage rates deter buyers, which can have a knock-on effect on house prices as demand falls.
Lower mortgage rates help buyers as it means their monthly mortgage repayments are lower.
But this can increase demand and push up house prices.
Holly Tomlinson, financial planner at Quilter, said: ” [A] decreasing base-rate plays a huge part in increasing buyer confidence.
“However, that said, borrowers just yesterday had to face a flurry of lenders pulling five-year fixed rate deals, which may have been in response to the US election news or anticipation of the Bank of England interest decision.
“With so many moving parts in today’s housing market, from policy shifts to evolving mortgage rates, now is an essential time for home buyers and investors alike to seek mortgage advice to ensure they are getting the best possible deal for their circumstances.”
How to get the best deal on your mortgage
IF you’re looking for a traditional type of mortgage, getting the best rates depends entirely on what’s available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.
Interest rates climbed from a record low of 0.1% in December 2021 to 5.25% in 2023.
The BoE made it’s first cut since the cost of living crisis to 5% in August this year.
However, following the Chancellor’s Autumn Statement, interest rates may remain higher for longer.
Markets are now pricing fewer than four quarter-point cuts from the Bank up to the end of next year, down from a little under five before the Budget.
Amanda added: “Looking ahead, borrowing constraints remain a challenge for many buyers.
“Following the Budget, markets expect the Bank of England to cut rates more slowly than previously anticipated, which could keep mortgage costs higher for longer.
Experts have also warned that the Chancellor’s decision to let the price at which buyers start paying stamp duty fall back to pre-2022 levels in the Budget will dampen rises in the future.
Amanda added: “New policies like higher stamp duty for second home buyers and a return to previous thresholds for first-time buyers might also affect demand.
“While we expect house prices to keep growing, it will likely be at a modest pace for the rest of this year and into next.”
Alice Haine, personal finance analyst at Bestinvest, said: “The current relief on stamp duty thresholds introduced by the former Conservative government will expire at the end of March next year, a move that could catalyse buying activity in the run-up to the deadline as buyers rush through deals to avoid a bigger tax bill.
“The temporary uplift in activity could then be followed by a slump in demand as people reassess their affordability position once the deadline has passed.”
Who else tracks house prices?
Halifax is part of Lloyds Group, which is the UK’s biggest mortgage lender.
Its monthly house price index is based on the mortgage data it holds and has been going since 1983.
It’s one of several key barometers of the property market.
The official measure of house prices is from the Office for National Statistics, which uses data from the Land Registry where the actual sold price is recorded.
This is the most accurate of all the indices, but the figures come out three months after the homes are sold, so there’s a big time lag.
Halifax and Nationwide each publish a monthly index tracking the average prices of homes on which they provide mortgages.
While they do adjust their figures to iron out big outliers, both lenders measure average house prices based on the properties they see.
As it’s based on mortgage approvals, this doesn’t include “cash buyers” who buy without needing a mortgage.
Rightmove also publishes monthly house price data.
Its data is based on asking prices from the property listings on its website.
The property website doesn’t consider the price a property sold for, like the ONS Land Registry, which could end up being higher or lower – and some might not even sell at all.
Here’s the latest data from other indices:
- Nationwide – House prices grew by 0.7% in September and increased 3.2% annually, with the average property now at £266,094.
- ONS – House prices increased by 1.5% in August and 2.8 percent annually, with the average property now at £293,000.
- Rightmove – House prices increased by 0.3% in October, and increased 1.3% annually, with the average new seller asking price now at £371,958.
The Sun’s view on rising house prices
By Laura Purkess, consumer features editor and consumer champion, The Sun
These latest figures show the housing market is continuing to recover after seeing a significant lull following Liz Truss’ mini-budget of 2022.
The latest data shows the Bank of England cutting its base rate for the first time in four and a half years in August had the desired effect, with lenders slowly reducing mortgage rates since then.
High rates and a stagnant market over the past few years have left homeowners with the thankless task of paying significant sums every month while seeing little gain long-term in the way of increased equity in their homes.
So, rising prices may give households looking to move some confidence to start looking around, which will hopefully lead to even more movement in the market.
However, while rising house prices and easing mortgage costs are good news for the market, affordability is still a major challenge for first-time buyers, and mortgage rates are still far higher than two years ago.
The Bank of England decided to hold its base rate last month, but hopefully this continued house price boom will help give it confidence to cut rates again in the near future.
Further rate cuts, coupled with further support from the government to get people onto the housing ladder, will hopefully keep pushing the market in the right direction.