Falling Mortgage Rates Boosts UK Housing Market

(RTTNews) - Easing mortgage rates as well as softening inflation helped to lift British home buyers' confidence that pushed up house prices for the fourth straight month in January, taking the annual growth rate to the highest level in a year.

Data published by the Lloyds Bank subsidiary Halifax and S&P Global showed that house prices grew at a faster pace of 1.3 percent month-on-month in January.

That followed a 1.1 percent gain in December. The pace of growth was forecast to slow to 0.8 percent.

The annual price growth accelerated to a 1-year high of 2.5 percent in January from 1.8 percent a month ago.

A typical house costs GBP 291,029 in January, compared to GBP 287,244 in December.

"The recent reduction of mortgage rates from lenders as competition picks up, alongside fading inflationary pressures and a still-resilient labor market has contributed to increased confidence among buyers and sellers," Halifax Mortgages Director Kim Kinnaird said.

"Looking ahead, affordability challenges are likely to remain and further modest falls should not be ruled out, against a backdrop of broader uncertainty in the economic environment," said Kinnaird.

Northern Ireland recorded the strongest growth across all the nations or regions within the UK, with house prices rising by 5.3 percent on an annual basis in January.

London remained in the top of the list with the highest average house prices at GBP 529,528. At the February rate-setting meeting, the bank rate was kept unchanged at a 15-year high of 5.25 percent.

Interest rates have now peaked and markets are pricing in a rate cut as early as June.

In December, mortgage approvals, an indicator of future borrowing, increased to a six-month high of 50,500 as the effective interest rate dropped for the first time since November 2021.