UK house prices edge up 1.4% as mortgage rates settle
House prices in the UK rose by 1.4% in the second quarter, the strongest three-month increase since the post-pandemic peak in 2022, according to the latest Halifax index. The annual rate of growth now stands at 3.1%.
The average property in the UK now changes hands for £298,750, up around £4,100 over the quarter. Halifax attributes the recovery to a combination of steadier mortgage pricing, real wage growth and an unwinding of the buyer caution that dominated 2023 and 2024.
Five-year fixed mortgages for borrowers with a 25% deposit are now widely available below 4.2%, with a handful of products dipping under 4% for borrowers with larger equity. While that is well above the rock-bottom rates of 2021, it is comfortably below the highs of early 2024 — and crucially, lenders are now pricing as if further base rate cuts are coming, rather than waiting for them to land.
Who is buying
Mortgage approvals data from the Bank of England shows that first-time buyers accounted for the largest share of new lending in the period, helped by an extension of the mortgage guarantee scheme and the higher Lifetime ISA threshold introduced in last year's Budget. Home-mover activity, by contrast, remains subdued, with many existing owners reluctant to give up sub-3% fixes secured in 2021 and early 2022.
Buy-to-let activity is broadly flat year-on-year. Landlord exits from the market continue at roughly the pace seen in 2024, offset by a smaller cohort of new entrants targeting higher-yielding regional markets such as the North West and parts of the West Midlands.
Where prices rose fastest
- Northern Ireland: +5.8% year-on-year
- North West England: +4.6%
- Scotland: +4.1%
- Yorkshire and the Humber: +3.8%
- London: +1.2%
London remains the weakest large region, though prime central postcodes have stabilised after a long run of softness. Estate agency Knight Frank said it expected the capital to "catch up rather than lead" over the second half of the year as transaction volumes normalise.
Most major forecasters now expect UK house price growth of between 3% and 5% for 2026 as a whole, with the path heavily dependent on the timing and pace of further interest rate cuts.
