Why Britain's housing market is losing momentum as mortgage rates rise again

Britain's housing market showed signs of slowing down in July, as rising mortgage rates, affordability challenges and uncertainty due to the Iran war dampened demand, according to Lloyds, a mortgage lender.The average house price remained flat in July compared to the previous month, and the annual increase was only 0.1%, falling short of the 0.7% growth seen in June.Lloyds' data revealed that the average UK property price was £299,253 in July, a £143 decrease from the previous month's figure.Mortgage rates continued to rise amid stretched affordability, with Amanda Bryden, head of mortgages at Lloyds, attributing this to recent developments in the Middle East.

She noted that housing demand remained steady, but was reacting swiftly to changes in mortgage rates.Lloyds expects market activity and house prices to remain relatively stable for the rest of the year, depending on mortgage rates, inflation and household confidence.The Middle East conflict has contributed to inflation concerns and expectations of higher interest rates.

Average rates on two-year and five-year fixed residential mortgages were 5.63% and 5.67% respectively, both below 5% at the beginning of the year.The Bank of England's data indicated that mortgage approvals in June exceeded expectations, despite higher borrowing costs. Investors are also anticipating a 25-basis-point rate increase from the Bank of England in December.Underlying the housing market slowdown is a north-south divide, with Northern Ireland experiencing the strongest price growth at 7.4%, while London saw a 1.3% decline, and Greater London dropped 1.3% to £533,930.