House prices fall by 4.6% after mortgage rate hikes

House prices fell at their fastest annual rate in 14 years in August, according to the Halifax, as rising mortgage rates affected the market.

The lender said that property values had dropped by 4.6% in the year to the end of August, representing a fall of £14,000 for the average home.

However, it pointed out that this was compared to record high property prices last summer.

The Halifax is predicting further falls through the rest of the year.

It said prices had dropped by 1.9% between July and August alone.

"We may now be seeing a greater impact from higher mortgage costs flowing through to house prices," said Kim Kinnaird, director of mortgages at the Halifax.

"The market will continue to rebalance until it finds an equilibrium where buyers are comfortable with mortgage costs in a higher range than seen over the previous 15 years."

Since December 2021, the Bank of England has lifted interest rates 14 times in row in a bid to clamp down on rising consumer prices in the UK. The bank's base rate now stands at 5.25%.

The Halifax is part of Lloyds Banking Group, the UK's biggest mortgage lender.

Its figures only take into account buyers with mortgages and do not include those who purchase homes with cash or buy-to-let deals. According to the latest available official data, cash buyers account for over a third of housing sales.

Last week, rival lender the Nationwide said that house prices had fallen by 5.3% in the year to August, which it also described as the biggest annual decline since 2009.