UK house prices starting to look weak – is this bad for GBP?

Last week the UK's largest mortgage lender, Halifax, reported a 1% decline in house prices compared to the previous year, marking the first such drop since 2012.

According to the lender, typical house prices in May were £3,000 lower than the previous year and £7,500 below their peak in August. This decrease in prices coincides with Halifax's decision to raise its mortgage rates, as it believes that higher borrowing costs are dampening confidence in the housing market.

In recent weeks, certain mortgage rates have experienced significant increases. Lenders are also predicting further rises in the Bank of England's base rate due to a sustained period of higher inflation than initially anticipated.

These factors are expected to impact confidence in the housing market, leading both buyers and sellers to adjust their expectations. As a result, Halifax Mortgages Director Kim Kinnaird stated that further downward pressure on house prices is anticipated, highlighting a cooling demand in the housing sector.

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