Shifting expectations for UK interest rate cuts have contributed to a dip in house price growth, according to a closely watched measure.
Nationwide reported a 0.4% fall in average property costs last month compared with March, taking the annual rate of growth to 0.6% from 1.6%.
The lender’s report said the easing reflected “ongoing affordability pressures, with longer term interest rates rising in recent months, reversing the steep fall seen around the turn of the year”.
The cost of fixed rate mortgage deals has risen due to market expectations that a Bank of England interest rate cut is looking further away than had been anticipated at the start of the year.
According to separate data from the financial information service Moneyfacts, the average two-year fixed residential mortgage rate is creeping back up towards the 6% mark for the first time since December.
It charted a figure of 5.9% on Monday – up from 5.87% seen last Friday.
The average five-year rate is nearing 5.5%.
The increases reflect rising borrowing costs for lenders themselves.
It is all based on market expectations that a UK interest rate cut will now not take place until August.
Earlier bets had been on May but the Bank has signalled no let up in its concerns about the pace of wage growth remaining too high in the economy to row back in its battle against inflation.
Other indicators also remain stubbornly high.
Nationwide said wider cost of living pressures continued to weigh on buyers during April, despite the pace of wage growth standing at almost double that for price growth.
Its chief economist, Robert Gardner, said: “Recent research carried out by Censuswide on behalf of Nationwide found that nearly half (49%) of prospective first-time buyers (those looking to buy in the next five years) have delayed their plans over the past year.
“Among this group, the most commonly cited reason for delaying their purchase is that house prices are too high (53%), but it is also notable that 41% said that higher mortgage costs were preventing them from buying.
“Coupled with this, 84% of prospective first-time buyers said that the cost of living has affected their plans to buy, for example through having less money each month to save for a deposit.”
Source Agencies
