London house prices fall by 2.2% as five-year mortgage rates break 6% mark for the first time in three years

From the Newshound archive · first published 7 October 2026.

Lloyds' latest house price index shows UK property values stalled at 0% growth in September, but London bore the brunt with a 2.2% annual fall to an average of £531,548 — steeper than August's 1.5% drop. Mortgage rates have surged since the US and Israel's invasion of Iran in February, pushing the average five-year fixed rate above 6% for the first time in three years. Barclays, HSBC and Lloyds all hiked their rates last week following a surge in global borrowing costs.

The South East fell 2.1% year on year to £380,829, and eastern England dropped 1.6% to £330,151.

Lloyds mortgages director Andrew Asaam warned the market remains 'subdued' despite prices proving 'resilient' overall.

Rising stamp duty costs are compounding mortgage pressure in London and the South East, where the slowdown is worst.