UK house prices fall for third successive month amid Iran war uncertainty

UK house prices fell unexpectedly in May as rising mortgage rates fuelled by the war in Iran affected affordability and homebuyer demand. The average price of a typical UK home fell by 0.1% in May to £298,806 compared with April, the third consecutive monthly drop recorded by the lender Halifax. Analysts had been expecting a return to growth, with a consensus of a 0.1% rise forecast for May. The monthly drop followed falls of 0.1% in April and 0.5% in March. “Property price trends continue to reflect the uncertainty linked to developments in the Middle East,” said Amanda Bryden, the head of mortgages at Halifax. “Despite recent cuts to mortgage rates, higher inflation expectations have kept borrowing costs above the level seen at the start of the year, continuing to stretch affordability for many buyers and temper demand.” However, Halifax said that on an annual basis house prices grew by 0.5%, up slightly from 0.4% in April, although this was still well below analysts’ expectations for 1% growth. Bryden said that house prices were expected to “remain broadly stable” in the coming months despite interest rates on mortgages remaining stubbornly high. Halifax has already slashed its expectation of annual house price growth this year in half. On Thursday the average two-year fixed mortgage rate stood at 5.66%, up from 4.83% at the start of March, according to Moneyfacts. The average five-year fixed-rate mortgage was 5.62%, up from 4.95%. …