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The average UK house price falls to £293,835

For the second time in three months, the price of the average home in the UK has seen a marginal decrease.

A 0.1% drop in UK house prices is the second marginal decrease of the past three months, putting the average house price in the UK at £293,835. Halifax said house prices had been “largely flat” since June.

Kim Kinnaird, director of Halifax Mortgages, said “While stamp duty cuts, the short supply of homes for sale and a strong labour market all support house prices, the prospect of interest rates continuing to rise sharply amid the cost of living squeeze, plus the impact in recent weeks of higher mortgage borrowing costs on affordability, are likely to exert more significant downward pressure on house prices in the months ahead.”

The rate on a typical five-year fixed rate mortgage deal has also increased to above 6% for the first time in 12 years, with the rate now at 6.07%.

Mortgage rates have been on the rise for months, but experienced a sharp increase following the mini-budget in September. Uncertainty over future interest rates after the mini-budget also resulted in lenders pulling more than a thousand mortgage deals from the market.

On Thursday the 6th of October, the bosses of multiple major UK banks met the Chancellor, Kwasi Kwarteng, to discuss the latest developments in the mortgage market.

It was reported that the chancellor is considering extending the mortgage guarantee scheme beyond the end of 2022, when it is due to end.

Launched in April 2021 during Covid, the scheme was designed to help people get on to the property ladder, enabling homebuyers to buy a property with only a 5% deposit. It is available to anyone buying a home costing up to £600,000, excluding buy-to-let or second homes.

Under the scheme, the government offers a partial guarantee, generally of 15%, to compensate lenders if the borrower defaults on repayments.