Home prices fell again in October, down 0.4%, the biggest drop in value since February 2021.

House prices continued to fall in October, falling 0.4 percent compared to a decline of just 0.1 percent in the previous month, according to the latest House Price Index for Halifax.

This is the third drop in the past four months, which means the cost of a typical property in the UK is now £292,598, down £1,066 from £293,664 last month.

Year-over-year prices are still rising, though the growth rate has slowed.

The Fall: Home prices fell 0.4% in October, down from a 0.1% decline in September

The Fall: Home prices fell 0.4% in October, down from a 0.1% decline in September

The mortgage bank said rates rose 8.3 percent in the 12 months through October, down from 9.8 percent in the year through September.

The monthly decline is the largest drop in prices since February 2021.

Kim Kinnaird, director of Halifax Mortgages, said: ‘While the recent period of rapid house price inflation may now be over, it is important to maintain this context, as average property prices have risen by more than £22,000 in the 12 months. past, and about £60,000 or 25.7 per cent over the last three years, which is significant.

While a post-pandemic slowdown was expected, there is no doubt that the housing market took a major shock as a result of the micro-balance sheet which saw a sudden acceleration in the mortgage rate increase.

While it’s possible that those rates may have peaked right now – after a reversal of previously announced fiscal measures – recent events seem to have encouraged those with existing mortgages to consider their options, and some potential homebuyers to pause.

“Understandably, we have also seen an increase in consumer caution, as industry data shows a decline in mortgage approvals and borrowing demand.”

The median home price in the UK is now £292,598, down from £293,664 last month.

The median home price in the UK is now £292,598, down from £293,664 last month.

Kinnaird added that the combination of the ongoing cost of living and the affordability of a mortgage will continue to influence activity levels.

Furthermore, with tax increases expected in next fall’s fiscal statement, “the economic headwinds point to a much slower period for home prices.”

Data released by the Bank of England revealed a staggering rise in mortgage rates over the past year.

For a two-year fixed-term loan at 75 percent LTV, the rate rose 4.72 percent — from 1.68 percent in October last year to 6.15 percent last month.

High-deposit mortgage products have also been hit. A long-term loan of 60 percent for two years increased by 4.8 percent, from 1.13 percent in October 2021 to 5.93 percent in the same month this year.

There has also been a sharp increase in mortgage rates since the end of September this year, just days after Prime Minister Liz Truss’ bad mini-budget.

On a two-year flat deal of 86 percent, cost increased 1.76 percent over the month from the end of September to October. On a £200,000 mortgage, this adds £208 to the monthly payments, making it £1,307.

However, there are still important factors supporting housing prices as the housing stock remains low and employment is high.

The extent to which a recession in the UK leads to unemployment is likely to determine how house prices perform over the coming months.

Tom Bell, UK head of residential research at Knight Frank, said: ‘There was quite a bit of breathing space in the UK housing market last month due to the impact of the micro budget, but that doesn’t mean prices are now steeper. descent path.

We expect mortgage rates to cool off in the short term as financial markets respond to the new government, but the fair assumption is that home prices have peaked after growth of more than 20 percent during the pandemic.

“After 13 years of very low borrowing costs, anyone who buys or remortgages a home will know that the ground has changed hands, which is why we expect prices to drop to where they were in the summer of 2021.”

Ian McKenzie, chief executive of The Guild of Property Professionals, added: ‘We continue to see demand for quality housing among first time buyers, however lower mortgage availability and higher interest rates may cause some to hold out on their deposits until the market stabilizes. .

Rent prices are still on the rise for many families, and despite changes in mortgage affordability, it still makes sense for potential buyers to try to get their feet on the property ladder.

“Buying confidence will remain strong if the government sticks to procurement incentives.”

What to do if you need a mortgage

Borrowers who need to find a mortgage because their existing fixed-rate deal is coming to an end, or because they’ve agreed to buy a home, are urged to act but not panic..

Banks and building societies are still lending and mortgages are still being accepted with applications accepted.

However, rates change quickly, and there is no guarantee that deals will stick and won’t be replaced by mortgages that charge higher rates.

This is Money’s best mortgage rate calculator powered by L&C that can show you deals that match the value of your mortgage and property.

What if I need to re-travel?

Borrowers should compare rates, talk to a mortgage broker, and be prepared to work to secure a rate.

Anyone with a fixed-rate deal that expires within the next six to nine months should consider how much a remortgage will cost now — and consider a new deal.

Most mortgage deals allow a fee to be added to the loan and then only charged when you take it out. By doing this, borrowers can secure a rate without paying expensive arrangement fees.

What if I’m buying a house?

Those who have agreed to buy homes should also aim to lock in prices as early as possible, so they know exactly what their monthly payments will be.

Homebuyers should beware of overexerting themselves and be prepared for the possibility of home prices falling from their current high levels, due to high mortgage rates limiting people’s ability to borrow.

How to compare mortgage costs

The best way to compare mortgage costs and find the right deal for you is to talk to a good broker.

You can use our best mortgage rates calculator to show matching deals for your home value, mortgage size, term needs and flat rates.

Be aware that rates can change quickly, so the advice is that if you need a mortgage to compare rates then speak to a broker as soon as possible, so they can help you find the right mortgage for you.

> Check out the best fixed rate mortgages you can apply for

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