UK House Prices Stagnate in July as Middle East Tensions Push Up Mortgage Costs
UK house prices were flat in July, with annual growth slowing to 0.1% — the weakest since November 2023 — as Middle East tensions lifted mortgage rates.
Britain's housing market lost further momentum in July, with prices flat on the month and annual growth slowing to its weakest pace in nearly three years, according to mortgage lender Lloyds.
Prices were unchanged from June, falling short of the 0.2% rise seen the previous month and below the 0.1% gain economists had forecast. Compared with a year earlier, prices were just 0.1% higher — the slowest annual increase since November 2023 and well down from the 0.7% annual rise recorded in June.
Lloyds said affordability remains a major hurdle for prospective buyers. Amanda Bryden, head of mortgages at Lloyds, noted that mortgage rates have ticked up again after easing earlier in the summer, largely due to recent events in the Middle East.
The conflict has pushed up borrowing costs, tempering demand and undermining what had been a strong start to 2026 for the housing market. Despite the higher rates, separate data from the Bank of England showed mortgage approvals in June came in above expectations.
Investors are now fully pricing in a quarter-point increase in the Bank of England's main interest rate in December, reflecting the renewed upward pressure on borrowing costs.