UK housing market falls at fastest rate since Great Financial Crash

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House prices in the United Kingdom plummeted at the highest annual rate in 12 years last month, according to Halifax, the country’s largest mortgage provider.

According to Halifax, prices fell 2.6% year on year in June for the third month in a row, following a 1.1% drop in May, the greatest drop since June 2011. According to the lender, the average cost of a home in the United Kingdom last month was £285,932 ($364,320).

The current decline comes amid rising mortgage rates, which have been fueled by the Bank of England’s string of interest rate hikes to combat inflation.

Halifax Mortgages’ Kim Kinnaird stated that the “resulting squeeze on affordability will inevitably act as a brake on demand” as purchasers examine what they can actually afford.

Concerns about continuing inflation, according to Kinnaird, have resulted in a large increase in the cost of funding. When combined with another 0.5 percentage point increase in the base rate to 5%, this added to a “big jump” in typical mortgage rates over the last month.

“With markets now forecasting a peak in Bank Rate of over 6%, the likelihood is that mortgage rates will remain higher for longer, and the squeeze on household finances will continue to put downward pressure on house prices over the coming year,” he added.

Traders predict the Bank of England to raise interest rates to 6.5% by December, the highest level since 1998. Analysts predict that property prices in the UK will fall by up to 10% from their peak in the summer of last year.