Halifax has cautioned that escalating tensions in the Middle East could hamper the expected decline in mortgage rates throughout 2024, as the lender reported a marked deceleration in UK house price growth during February. The bank, which forms part of the Lloyds Group and represents Britain's largest mortgage provider, noted that the average home value increased by just 0.3% last month to reach £301,151.
The warning comes as global markets grapple with the economic implications of the US-Israel military action against Iran, which Halifax suggests could influence monetary policy decisions and lending costs. The conflict has already driven significant volatility in oil markets, with energy prices experiencing their largest weekly surge in four years amid concerns over potential disruptions to shipping through the strategically vital Strait of Hormuz.
For prospective homebuyers who had been anticipating further reductions in borrowing costs following the Bank of England's recent policy stance, this geopolitical uncertainty introduces a fresh layer of complexity. Mortgage rates had begun showing signs of stabilisation after reaching multi-year highs, but the current international tensions may prompt lenders to adopt a more cautious approach to pricing.
The modest house price growth recorded by Halifax reflects the broader cooling evident across regional markets, from the prime London boroughs to key northern cities including Manchester, Birmingham, and Leeds. This tempered growth, whilst providing some relief for first-time buyers, also signals the ongoing adjustment within the housing market as affordability constraints continue to weigh on transaction volumes and buyer confidence.
