House prices rise as mortgage rates ease from Iran war highs

House prices inched up in June as mortgage rates softened following a sharp spike in response to the Iran war. The average UK property price rose by 0.2 per cent in June to £299,330, compared to a 0.

2 per cent fall in May, according to the Lloyds house price index. Inflationary fears and expectation of higher interest rates caused by the Middle East conflict have damaged property market confidence in recent months, but lenders have begun to lower their mortgage rates in past weeks. Leading building society Nationwide chopped its home loan prices on two separate occasions last month, as US-Iran peace talks cooled inflation fears.

Lloyds said that easing borrowing costs are helping house prices to inch back up, as June marked the first price rise in four months. Easing rates ‘offer encouragement’ to buyers The annual rate of price growth also edged higher to 0.6 per cent, while a 0.

8 per cent jump in prices for first time buyers indicated recovering demand, Lloyds said. Amanda Bryden, head of mortgages at Lloyds, said: “While affordability remains stretched for many buyers, mortgage rates have eased from their recent highs, offering some encouragement to those considering a move.” Though mortgage approval rates dropped in May, Lloyds said this was a reaction to the earlier spike in borrowing costs.

Activity should cover as mortgage rates fall further, the lender said. “Looking ahead, we expect the housing market to continue moving at a measured pace. Lower borrowing costs should provide some support for demand, though affordability constraints remain an important factor,” Bryden added.

Southern house prices remain weak Property markets in the south of England continued to be weak compared to the rest of the country. Average prices fell by two per cent to £381,654 in the South East and by 1.1 per cent to £534,831 in London.

England’s northern regions again dragged up the national average rise, as prices jumped by 2.8 per cent to £181,133 in the North East and by 2.4 pe