House prices set to fall as rising mortgage rates and cautious buyers stall the housing market

From the Newshound archive · first published 8 October 2026.

Five-year fixed mortgage rates have climbed back to 6% for the first time since September 2023, while the number of fixed-rate deals priced below 5% has collapsed from 1,494 to just nine in a single month. Knight Frank's Tom Bill warns there is 'pain in the post' for the housing market as higher borrowing costs pile pressure on buyers ahead of the October 28 Budget. Estate agents surveyed by the Royal Institution of Chartered Surveyors report growing numbers of unsold properties and fewer agreed sales, with London underperforming the rest of England by a notable margin.

House prices are now flat year-on-year at an average of £298,441, according to Lloyds Bank's latest index.

The Budget is adding to the chill, with buyers and sellers holding back amid speculation over property tax hikes.

One Derby agent called this 'possibly the most difficult quarter' he has seen in four decades in the industry.