Mortgage rates hitting affordability - Nationwide

High mortgage rates mean affordability is still "stretched" for many home buyers, according to the Nationwide.

The building society said that while earnings had been rising faster than house prices in recent years, this had not been enough to offset the impact of more expensive mortgages.

Its comments came as it said house price growth had been "broadly stable" in June, with prices up 0.2% from the previous month.

The average house price is now £266,604, the lender said.

Prices were up 1.5% from a year earlier, but Nationwide said activity in the housing market had been "broadly flat" over the past 12 months, with transactions down by about 15% compared with 2019.

The lender said the market was still being affected by the increase in mortgage rates, which started climbing after the Bank of England began to raise its key interest rate in late 2021.

Robert Gardner, Nationwide's chief economist, said that mortgage rates are "still well above the record lows prevailing in 2021 in the wake of the pandemic".

"For example, the interest rate on a five-year fixed rate mortgage for a borrower with a 25% deposit was 1.3% in late 2021, but in recent months this has been nearer to 4.7%.

"As a result, housing affordability is still stretched."