21 October 2026
If you are covering the latest UK house price index, please see the following comment from Karen Noye, mortgage expert at Quilter:
“The housing market is beginning to feel the squeeze from an increasingly difficult economic backdrop. UK house prices were up just 0.9% in the year to August, while transactions were 1.9% lower than a year earlier. London and the South East were already recording annual price falls.
“These figures also tell us where the market was during the summer rather than where it is today. The UK House Price Index is based on completed transactions and a purchase will typically take six to eight weeks to reach completion, so there is a significant lag built into the data. As we move towards winter, the picture facing prospective buyers is darkening.
“Today’s inflation figures will do little to improve the mood. CPI inflation jumped from 3.1% to 3.5% in September, with core inflation and services inflation also moving higher. That makes meaningful interest rate cuts harder to envisage and increases the risk of mortgage costs remaining higher for longer. Affordability is already stretched for many buyers and uncertainty over where mortgage rates go next is adding another reason to hesitate.
“The difficulty is that buying a home is such a significant financial commitment that even a relatively small amount of uncertainty can give people pause for thought. Mortgage pricing can move quickly as expectations for interest rates change. Fixed mortgage rates are heavily influenced by swap rates, and these can move rapidly in response not only to economic data but also geopolitical shocks and changing expectations for the economy. That means someone who starts looking at a property based on one mortgage deal can find that deal has disappeared by the time they are ready to act. That feeling of having the rug pulled from under you is hardly conducive to confidence.
“There are some potential silver linings. The Budget should give us greater clarity on the government’s plans to help first-time buyers, including further detail around the proposed first-time buyer ISA and the First Homes scheme. If those measures genuinely improve affordability and help more people make the first step onto the property ladder, the benefits could travel further up the chain as existing owners are put in a stronger position to move.
“But those measures will be pushing against a difficult backdrop. A healthier first-time buyer market would undoubtedly help, but unless buyers have greater confidence over their monthly mortgage costs, it will be difficult to generate significant momentum across the wider housing market.”
