UK house prices fall for first time this year amid rising interest rates

House prices fell in the UK for the first time this year in May, as rising interest rates triggered by the war in Iran hurt homebuyer demand. The price of the average UK home dropped 0.6% in May compared with the month before, according to the lender Nationwide. The typical house price was 1.7% higher than the same point last year, at £278,024. However, that marked a slowdown from an annual growth rate of 3% in April. Robert Gardner, the chief economist at Nationwide, said a “loss of momentum was to be expected” given uncertainty caused by conflict in the Middle East and the subsequent rise in energy prices and market interest rates . Mortgage rates have broadly risen across the market in recent months. The average two-year fixed rate was 5.68% at the end of May, while the average five-year fix was 5.63%, according to the financial data provider Moneyfacts. Tom Bill, a researcher at the estate agent Knight Frank, said Nationwide’s figures showed the housing market was slowing down “at precisely the time of year when you would expect momentum to be building”. “There won’t be a cliff-edge moment, but the impact of higher borrowing costs will erode spending power and squeeze house prices this year as mortgage rates agreed before the Middle East conflict gradually disappear,” he said. The estate agent Savills has forecast that house prices will fall this year owing to rising mortgage rates. …