2 June 2025
If you are covering the latest Nationwide house price index, please see the following comment from Karen Noye, mortgage expert at Quilter:
“The latest data from Nationwide shows that house prices rose 0.5% in May, bringing annual growth to 3.5%. The figures suggest the housing market has adjusted well following the expiry of the temporary stamp duty threshold reduction, which had caused a rush to complete before the deadline. With that incentive now removed, there was a fear that buyer urgency would ease.
“However, mortgage rates continue to improve meaning more buyers are finding the confidence to enter the market. Although lenders have started to reduce rates, many borrowers are still facing higher monthly costs than they would have a couple of years ago, particularly those coming off ultra-low fixed deals. Affordability stress testing also remains a barrier, with lenders continuing to apply caution particularly for those with smaller deposits or variable income.
“Some existing borrowers are resorting to term extensions or interest-only arrangements to ease the pressure on monthly budgets, but these are not long-term fixes and often result in higher overall repayment costs. The underlying issue is that property prices remain significantly out of line with average earnings, particularly in southern England, and that mismatch is limiting how far the market can stretch.
“Looking ahead, if interest rates fall further, we may see further house price increases. But with ongoing economic uncertainty, many would-be movers may decide to hold off until the outlook becomes clearer. The market is still navigating a complex landscape.”
