UK House Prices Stall in September as Mortgage Costs Climb

UK house prices stood still in September 2026 at £298,441 on average, according to the Lloyds tracker previously known as the Halifax HPI. The Guardian

The reading, published on 7 October, left prices roughly flat both from August and from a year earlier. The result was just below expectations. Economists polled by Reuters had a median forecast of a 0.1% rise for the month and a 0.2% rise for the year.

It followed a 0.3% fall in August, the first decline in three years. Prices are now essentially in the same place as one month ago and twelve months ago.

Mortgage costs rose at the same time. The average five-year fixed-rate mortgage, where the interest rate is locked for five years, reached 6% in early October for the first time in three years. Loan demand fell. Mortgage applications for purchases were down 18.2% in the third quarter from a year earlier, according to Stonebridge, while first-time buyer applications were down 18.6%.

This September figure ends a choppy year for the measure. Halifax had expected 1-3% annual growth in 2026. Reuters Prices unexpectedly fell in May, according to Halifax data. Reuters In April the index dipped 0.1% after a 0.5% drop in March, and stood 0.4% higher than a year earlier. Reuters A year earlier the picture was steadier. In August 2025 prices rose 0.3%, a third monthly rise in a row, leaving them 2.2% higher than a year earlier, according to Halifax. Reuters The Lloyds Banking Group index page later put August 2026 at £298,468, down 0.4% from a year earlier, while Halifax's September update put August at £298,395 against £298,441 in September.

The broader context here is how borrowing costs feed through to sales and then to prices. Mortgage rates moved first. Purchase applications then fell at a double-digit annual pace in the third quarter. Headline monthly and yearly price growth then stalled. That lag, from credit to transactions to prices, is familiar in a housing market sensitive to borrowing, like an engine losing fuel before it slows.

Looking ahead to the next readings, the mix of the pullback matters. The fall in first-time buyer applications was slightly steeper than the overall fall. First-time buyers usually borrow a larger share of the price, known as a higher loan-to-value ratio, and have less housing wealth to cushion higher monthly payments. A sharper pullback there points to affordability pressure at the edges, rather than a broad step back by existing owners moving by choice. If that holds, price measures could stay flat while sales stay soft, as sellers wait to list and buyers wait to offer until borrowing costs settle.