UK house prices fell 0.6% in May to £278,024, the biggest monthly drop since
June last year and the first decline in five months, Nationwide said. Healthy
household balance sheets had buffered prices early in the Iran conflict, but
momentum is weakening as borrowing costs spike. Wage growth is trailing
inflation and higher mortgage rates are tightening affordability. Moneyfacts
shows the average two-year fixed mortgage rate at 5.68%, about 0.9 percentage
points above its level before the late‑February US and Israeli strikes on Iran.
The Bank of England has signaled possible further hikes if inflation persists;
money markets price roughly 50bps of tightening by year-end, with traders
expecting additional tightening thereafter.
