17 September 2025
If you are covering the latest UK Government House Price Index, please see the following comment from Karen Noye, mortgage expert at Quilter:
UK house prices recorded modest growth in July, with the average property now costing £270,000. Prices rose by 0.3% on the month and are up 2.8% year-on-year, though this marks a slowdown from the revised 3.6% seen in June. The latest figures point to a housing market that is stable but still weighed down by affordability pressures.
The wider economic backdrop remains a crucial factor. Inflation stuck at 3.8% in August, making the Bank of England’s job more difficult. While markets had been anticipating rate cuts before the end of the year, today’s data will reinforce the case for the Bank to tread cautiously. Interest rates staying higher for longer would keep mortgage costs elevated, tempering buyer demand and limiting the scope for a sustained rebound in prices.
In practical terms, fixed mortgage rates have eased slightly from last year’s peaks as swap rates drifted lower earlier in the summer, but borrowing costs remain significantly higher than those faced by buyers just a few years ago. More recently, however, some mortgage rates have begun to edge higher again. Persistent inflation and renewed volatility in swap markets have pushed up lenders’ funding costs, while banks’ caution around the economic outlook has also led to less competitive pricing. For households, particularly first-time buyers, that means affordability tests remain challenging, and many are still forced to compromise on property size or location.
With the budget due in November, households and the housing market will also be alert to any further tax or housing measures from the Labour government. Overall, July’s data shows the market has not ground to a halt, but momentum remains fragile. For would-be buyers, especially first-timers, the combination of high deposit requirements and elevated mortgage costs continues to be a major hurdle.
