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High interest rates have caused mortgage demand to fall in the UK and house prices to fall at their fastest rate since 2009, a major mortgage lender told Bloomberg.
Nationwide Building Society said the average cost of a home fell 5.3% in the year to August and 0.8% during the month, which was double the drop economists were expecting, following a 0.3% decline in July , Bloomberg said.
The decline follows 14 consecutive interest-rate increases from the Bank of England (BoE) to tame inflation .
While mortgage rates have begun to fall slightly, borrowing costs for households remain far higher than they were a year ago , Bloomberg reported, citing Nationwide chief economist Robert Gardner, who said: “The softening is not surprising, given the extent of the rise in borrowing costs in recent months, which has resulted in activity in the housing market running well below pre-pandemic levels .”
Bloomberg said figures added to a picture of “wilting demand” for UK property, with BoE data showing mortgage approvals fell almost 10% in July, and property portal Zoopla claimed home sales are on track to drop to the lowest level since 2012.
House prices peaked in August and have fallen 10 out of 12 months since, the report added.
Data last week revealed that one third of UK mortgage holders are doing extra amid higher borrowing costs.
(Reporting by Imogen Lillywhite; editing by Daniel Luiz)
