Nationwide released the May UK house price index this morning. Prices fell 0.6% in the month, the first monthly fall this year. Annual growth slowed from 3.0% in April to 1.7% in May.
The driver is mortgage rates. The average UK two-year fix is 5.73% as of late May, up from 4.83% start of March. About 90 basis points in under three months. On a £200k 25-year mortgage that's roughly £109 a month extra, or £1,300 a year.
The chain: Iran war pushes oil prices, oil pushes inflation expectations, inflation pushes UK gilt yields, gilt yields push the swap rates that set fixed mortgage prices, mortgage rates push housing demand. Halifax's index showed a 0.1% April fall and an average UK house price of £299,313. RICS April balance was -34, weakest since November 2023.
Several lenders (Nationwide, HSBC, Santander, Halifax, TSB) have cut rates again in the last few days, but only modestly. The Times reports a forecast of around a 2% UK house price fall over the rest of 2026.
About 1.6 million households are coming off a fix between now and end of 2027. Worth modelling the new payment now if you're one of them.
Full Nationwide / Halifax / RICS breakdown + the Iran-war mortgage channel: trendingsheet.com/article/uk-house-prices-fall-may-2026-nationwide-iran-war-mortgage-rates
Anyone here remortgaging soon and seeing the shock?