Housing Market Stalls After Six Months of Growth as Mortgage Volatility Returns

The UK housing market has stalled after a six-month period of gradual recovery as mortgage lenders repriced their products upward in response to the Bank of England’s decision to hold interest rates and the renewed inflationary pressures flowing from the Iran war. House price indices from major mortgage lenders showed flat to marginally negative monthly movements in March and April, reversing a trend of cautious growth that had emerged in the second half of 2025.

Buyer confidence deteriorated sharply in the weeks following the outbreak of the US-Iran conflict. Survey data from the Royal Institution of Chartered Surveyors showed a significant fall in new buyer enquiries and agreed sales during the conflict period, as prospective purchasers put decisions on hold pending greater clarity about the interest rate and inflation outlook. Estate agents in several major regional markets reported the most difficult trading conditions since the market correction of 2023.

The repricing by mortgage lenders was particularly damaging for first-time buyers, who had been the group most reliant on the sustained improvement in fixed-rate products that followed the Bank of England’s initial rate cuts in late 2024 and early 2025. Several major lenders withdrew their most competitive two-year fixed deals within days of the Bank’s rate hold decision, replacing them with products priced between 0.3 and 0.5 percentage points higher.

Property market analysts noted that the underlying demand pressure for homes — driven by structural undersupply and continued population growth — remained intact, providing a floor against a significant sustained fall in house prices. However, the pace of transactions was expected to remain subdued until greater clarity emerged about the trajectory of mortgage rates, which in turn awaited a clearer signal from the Bank of England on the resumption of its easing cycle.