House prices fell again in October slipping 0.4%, the sharpest drop in value since February 2021

House prices fell again in October, slipping 0.4%: Sharpest drop in value since February 2021 as buyers battle cost of living and mortgage hikes

House prices across the UK fell 0.4% in October – the third fall in four months
The average UK house price is now £292,598, down from £293,664
The acceleration in mortgage rates and cost-of -living crisis is hitting the market

By Fran Ivens For This Is Money

Published: 08:57 GMT, 7 November 2022 | Updated: 08:57 GMT, 7 November 2022

House prices continued to fall in October, dropping 0.4 per cent compared to the dip of just 0.1 per cent seen the month before, according to Halifax’s latest house price index.

It is the third decrease in the past four months, meaning the typical UK property now costs £292,598, a reduction of £1,066 down from £293,664 last month.

Year on-year prices are still climbing, although the rate of growth is slowing.

Fall: House prices dropped 0.4% in October, down from the dip of 0.1% seen in September

Prices rose 8.3 per cent in the 12 months to October, down from 9.8 per cent in the year to September, the mortgage lender said.

The monthly fall is the steepest drop in prices since February 2021.

Kim Kinnaird, director, Halifax Mortgages, said: ‘Though the recent period of rapid house price inflation may now be at an end, it’s important to keep this is context, with average property prices rising more than £22,000 in the past 12 months, and by almost £60,000 or 25.7 per cent over the last three years, which is significant.

‘While a post-pandemic slowdown was expected, there’s no doubt the housing market received a significant shock as a result of the mini-budget which saw a sudden acceleration in mortgage rate increases.

‘While it is likely that those rates have peaked for now – following the reversal of previously announced fiscal measures – it appears that recent events have encouraged those with existing mortgages to look at their options, and some would-be homebuyers to take a pause.

‘Understandably we have also seen consumer caution grow, as industry data shows mortgage approvals and demand for borrowing declining.’

The average UK house price is now £292,598 down from £293,664 last month

Kinnaird added that the combination of the ongoing cost of living crisis and mortgage affordability will continue to impact activity levels.

Furthermore, with tax increases expected in the upcoming autumn fiscal statement the ‘economic headwinds point to a much slower period for house prices’.

However, there are still significant factors propping up house prices as housing stock remains low and employment is high.

The extent to which a UK recession increases joblessness will likely determine how house prices fare over the coming months.

What to do if you need a mortgage

Borrowers who need to find a mortgage because their current fixed rate deal is coming to an end, or because they have agreed a house purchase, have been urged to act but not to panic.

Banks and building societies are still lending and mortgages are still on offer with applications being accepted.

Rates are changing rapidly, however, and there is no guarantee that deals will last and not be replaced with mortgages charging higher rates.

This is Money’s best mortgage rates calculator powered by L&C can show you deals that match your mortgage and property value

What if I need to remortgage?

Borrowers should compare rates and speak to a mortgage broker and be prepared to act to secure a rate.

Anyone with a fixed rate deal ending within the next six to nine months, should look into how much it would cost them to remortgage now – and consider locking into a new deal.

Most mortgage deals allow fees to be added the loan and they are then only charged when it is taken out. By doing this, borrowers can secure a rate without paying expensive arrangement fees.

What if I am buying a home?

Those with home purchases agreed should also aim to secure rates as soon as possible, so they know exactly what their monthly payments will be.

Home buyers should beware overstretching themselves and be prepared for the possibility that house prices may fall from their current high levels, due to higher mortgage rates limiting people’s borrowing ability.

How to compare mortgage costs

The best way to compare mortgage costs and find the right deal for you is to speak to a good broker.

You can use our best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.

Be aware that rates can change quickly, however, and so the advice is that if you need a mortgage to compare rates and then speak to a broker as soon as possible, so they can help you find the right mortgage for you.

> Check the best fixed rate mortgages you could apply for

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