Fears over higher mortgage rates led to a decline in UK house buying demand last month. A survey from the Royal Institution of Chartered Surveyors (RICS) found that 22 per cent of property professionals saw buyer inquiries fall in September, an increase from 18 per cent in August.
Agreed sales also decreased, with 18 per cent of professionals reporting a fall, compared to 16 per cent previously. Tarrant Parsons, head of market research and analysis at RICS, noted that a "renewed rise in interest rate expectations has created a fresh headwind for the housing market."
House prices across the UK were unchanged in September both monthly and year-on-year, an improvement from a 0.3 per cent drop in values last month. However, in London, the average house price fell by 2.2 per cent to £531,548 in the year to September, according to Lloyds data.
The average five-year fixed mortgage rate has now surpassed six per cent for the first time in three years, following rate hikes from several lenders including Barclays, HSBC, Lloyds, Nationwide, Natwest, Santander, and TSB. Rachel Springall, a finance expert at Moneyfacts, described the rise in average fixed mortgage rates as "disastrous news for borrowers."
While the Bank of England has kept rates at 3.75 per cent, some economists anticipate a potential hike when the Monetary Policy Committee meets in November. Interest rate-setter Dave Ramsden stated last week that inflation risks have "tilted more to the upside" since the Bank's last decision.