High mortgage rates stretching housing affordability, says Nationwide

Prices were up 1.5% from a year earlier, but Nationwide said activity in the housing market had been “broadly flat” over the past 12 months, with transactions down by about 15% compared with 2019.

The lender said the market was still being affected by the increase in mortgage rates, which started climbing after the Bank of England began to raise its key interest rate in late 2021.

Robert Gardner, Nationwide’s chief economist, said that mortgage rates are “still well above the record lows prevailing in 2021 in the wake of the pandemic”.

“For example, the interest rate on a five-year fixed rate mortgage for a borrower with a 25% deposit was 1.3% in late 2021, but in recent months this has been nearer to 4.7%.

“As a result, housing affordability is still stretched.”